Big corporates' confidence up but SMEs worried

The overall Thai Industries Sentiment Index (TISI) dropped from 98.8 in December to 97.3 last month after the boost in the minimum wage nationwide. However, large manufacturers' confidence rose, remaining above the 100 baseline indicating a positive outlook.

Payungsak Chartsutipol, chairman of the Federation of Thai Industries (FTI), claimed that many business operators and exporters were concerned about the adverse impacts of the higher wage, especially labour-intensive industries, rising oil prices, and the strong baht. He urged the government to advise small and medium-sized enterprises on how to minimise financial risks.

The TISI survey last month polled 1,085 manufacturers in 42 industrial groups. Payungsak attributed the drop in industry confidence to lower orders, lower output and higher production costs, particularly labour and fuel costs.

The major factor eroding confidence of SMEs was the nationwide rise in the daily minimum wage to Bt300, Payungsak said. The continuing strength of the baht and global economic uncertainty were other negative factors affecting SMEs, whose confidence index dropped to 83.6 last month from 93.2 in December.

The index for medium-size businesses in January was 98.8, down from 99.4 the previous month.

However, the confidence index for large businesses rose in January to 107.2 from 104.4 in December, thanks to increases in orders, sales and production output. This segment includes oil refineries, consumer electronics, electrical appliances, air-conditioners and refrigerators.

Manufacturers are most concerned about rising oil prices and volatile currencies, and to a lesser degree the weak global economy, domestic political stability and interest rates. Some (65.3 per cent) manufacturers surveyed last month felt that rising oil prices had adversely affected their businesses, compared with 64.5 per cent in December. Retail petrol and gasohol prices increased four times in January, by Bt0.50 per litre each time.

Some (56.6 per cent) operators believed exchange rates had depressed their businesses, up from the 35.5 per cent of operators surveyed in December.

The sub-index on industrial confidence for the next three months was 101.5, up from 100.6 in December, on rising orders, stronger sales, higher output and improved operating results, Payungsak said.

Manufacturers want the government to provide training for SMEs in managing their foreign-exchange risk, provide exemptions or reductions of corporate-income withholding tax for those hired to manufacture goods, and help manufacturers set up business alliances or networks to strengthen business and trade competitiveness.