Garment bosses decry higher wages

Sukij Kongpiyacharn, president of the Thai Garment Manufacturers Association (TGMA), said that many industries were suffering not only from higher labour costs but from workers' low skill levels.

"The government has only concentrated on increasing the cost of labour, which has spoiled labourers into ignoring their skill development," he said.

Vallop Vitanakorn, secretary-general of the association, said many Thai garment manufacturers were establishing factories in neighbouring countries that have lower labour costs but high competency for developing needed skills.

This will result in enterprises downsizing their factories in Thailand.

Because of higher labour costs and a strong baht, Thai garment exports will gradually decrease, while exports from neighbouring countries will increase after Thai factories move there, he said.

The country's five largest garment factories have expanded into Vietnam because of lower labour costs. The five companies - Nice Apparel, Hong Seng Knitting, Thong Thai Garment, Hi-Tech Apparel and Liberty - have combined investment of about Bt1.5 billion and a labour force of 24,000.

Each of their factories in Vietnam has initial investment capital of about US$8 million to $10 million (Bt240 million to Bt300 million).

Vallop predicted that the number of garment factories in Thailand would gradually plunge to 500-600 from the current 1,600 plants in the next five years as they are moved overseas. Other countries targeted for investment are Bangladesh, Indonesia, Burma and Cambodia.

Moreover, he said, Thai garment exports would drop along with the reduction in factories in the country, while indirect exports from Thai enterprises overseas would increase from 5 per cent currently to 20 per cent by 2015.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

However, the TGMA is confident that exports of Thai garments will grow by 5 per cent this year to $3.5 billion, from $3.2 billion last year, thanks to a lower supply of Chinese garments in the world market.

Sukij said exports from China had dropped significantly in the past year as it faced |higher labour costs and a shortage of workers in the garment industry. Exports from Thailand were benefiting from these problems in China.

Meanwhile, the association reported that Thai garment exports to Japan had not been affected by The tsunami crisis.

Sukij said the Japanese economy should rebound rapidly in the second half of this year after major stimulus by the government. However, it must closely monitor the impact of the problems at the Fukushima nuclear plant if they are not resolved soon, as this might affect Japanese consumer sentiment in the long run.

Sukij said garment exports to Japan were expected to grow from between $240 million and $250 million to between $270 million and $300 million this year.

Japan is Thailand's third-largest garment-export market, accounting for 7 per cent of export value, after the United States and the European Union.

Japan has begun relying less on imports of Chinese garments, which used to account for 90 per cent of total garment-import value of $26 billion but are now at only 83 per cent.