Businesses unimpressed by govt 'compensation' to deal with wage hike

The Cabinet yesterday approved 16 measures aimed at helping owners of small and medium-sized enterprises (SMEs) affected by the Bt300 daily minimum wage, said Finance Minister Kittiratt Na-Ranong. Key among the measures is an increase in the profit ceiling for tax exemption, from Bt150,000 to Bt300,000 per annum, which will benefit around 210,000 SMEs at a cost to state revenue of Bt2.8 billion, said Kittiratt.

Another key policy, which proposed reducing SMEs' withholding tax from 3 to 2 per cent, has been withdrawn by Kittiratt, pending further consideration. SMEs want the reduction to reach 0.01 per cent.

The 16 measures include 11 that were proposed and informally approved last year, plus five new ones covering case-by-case soft loans subject to conditions, cost-reducing incentives, productivity-boosting measures, profit-increasing conditions and stimulus and sales promotion.

The measures have been greeted by a chorus of criticism from owners of large-scale businesses and SMEs. Bhumindr Harinsuth, vice chairman of the Chamber of Commerce, has criticised government plans to relieve the financial impact of daily minimum wage increases on business.

He said 16 planned measures were inadequate in helping enterprises, especially small and medium-sized enterprises (SMEs), and the policy had shocked them.

"The government has too many conditions and offers low tax cuts to help small and medium-sized businesses. It should come up with more robust actions to help eliminate the rising cost of production for SMEs," he said.

Some SMEs have had to close ahead of the wage hikes taking effect and more business closures would be seen this year, he said.

The chamber has sent out questionnaires to provincial chambers in 70 provinces to gauge the effect of minimum wage hikes.

Thanit Sorat, secretary-general of the Federation of Thai Industries, said most SMEs want financial support and liquidity, but the government has no such plan for assistance. Thanit said enterprises want the government to set up a fund to help them rather than cut small taxes or other fees. SMEs face rises in the cost of production of 10-15 per cent from the wage hikes, he said.

The FTI yesterday submitted a letter to Prime Minister Yingluck Shinawatra saying the government needs to come out with more measures to help SMEs, in particular exporters, who cannot increase retail prices because of competitiveness.

Thai Credit Guarantee Corporation (TCG) senior executive vice-president Vallobh Tejapaibul said TCG would extend its loan guarantee period to seven years, from the normal five, for SMEs hit by the daily minimum wage hike. The fee rate would be maintained at 1.75 per cent year.