FTI urges slow move on oil price hikes

"We worry that the tax hike will boost the cost of transportation and production, which will make businesses less competitive during the unfavourable market climate," FTI chairman Santi Vilassakdanont said. "The government should raise such taxes step by step when people have more confidence in the economy."

Fisheries would be another hard-hit industry, as fuel was its main cost, he said.

On Tuesday, the Cabinet approved the first round of excise-tax increases, covering beer and liquor, to generate Bt6.3 billion in extra revenue annually.

The Finance Ministry may propose lifting the petrol excise tax by 10 per cent in the second round.

Santi said that as part of the government's four-year, Bt800-billion investment funding plan, the amount should be enough to stir up the economy.

However, the government should consider other options, such as encouraging foreign direct investment by, for example, granting more concessions.

Industry Minister adviser, Sorayud Petchtrakul, said the Industry Ministry told the Cabinet meeting the government should focus on boosting liquidity for SMEs, especially for productivity improvement projects.

"The Small and Medium Enterprise Development Bank of Thailand is considering approving Bt20 billion loans for SMEs. The government should back up this decision because this is the best time to promote investment, as the cost will be very cheap thanks to the low interest rates," he said.

Pak Tongsom, acting director-general of the Office of Small and Medium Enterprises Promotion, said only 40 per cent of the 2.4 million SMEs in the country could access the loans, while the remaining 60 per cent failed because of a lack of collateral.

Panit Laosirirat, executive director of the Thailand Productivity Institute, said the agency would hold "Productivity Expo 2009: An Insightful Exhibition on Productivity Knowledge to Strengthen the Thai Economy" next month, the second since 2003, in order to educate and help local operators.

The event would address not only manufacturers, but also tourism and service operators.