Garment makers body requests tax relief

March 17, 2012
Bangkok Post

The Thai Garment Manufacturers Association has asked the government to help improve labour efficiency and reduce the income tax levied on revenue from investments abroad.

Such assistance could reduce the burden manufacturers will face after the daily minimum wage increase in Bangkok and six provinces next month.

The global market is very tough these days for garment makers, as it is difficult to increase unit prices because economies are weak and the competition is fierce, said Vallop Vitanakorn, an adviser to the Thai Garment Manufacturers Association (TGMA).

Garment exports will be US$3.2 billion this year, the same as last year, he said. Rising production costs in Thailand are a factor in flat exports.

Effective April 1, a minimum wage of 300 baht a day will be required for workers in Bangkok, Samut Prakan, Samut Sakhon, Nakhon Pathom, Nonthaburi, Pathum Thani and Phuket.

The increase is a big concern for small entrepreneurs. It will be difficult for them to compete with factories in Vietnam, Cambodia, Indonesia, Sri Lanka, Bangladesh and India.

A TGMA study showed many small Thai manufacturers will be affected if they cannot improve efficiency to cope with rising costs.

''The association will help them to increase efficiency to maintain their export volume,'' said Mr Vallop.

He said several big garment exporters have already set up operations in neighbouring countries such as Laos, Cambodia and Vietnam to avoid higher costs resulting from rising wages.

Investment in the three countries has totalled $200 million so far.

After the Myanmar election, he believes there will be an influx of investment into the country including from Thai garment manufacturers.

Mr Vallop suggested Thai garment manufacturers may joint venture with local partners.

To assist Thai investors abroad, Mr Vallop said the government should reduce income tax from foreign revenue from the current rate of 30%.

He said Malaysia and Hong Kong already waive this tax for their businesses.

TGMA president Sukij Kongpiyacharn, president of the TGMA, said Thailand has encountered double difficulties _ it is not attractive for foreign investors, and Thai businesses do not have the nerve to invest more.

He said Thai garment and textile exports in January contracted by nearly 19% year-on-year to $544 million due to falling cotton prices.