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Thailand garment businesses consider relocation
18
May '12
Garment entrepreneurs in Thailand are seriously considering shifting their production bases outside the country, to ease the additional financial burden caused due to the implementation of the 300 baht minimum wage policy.

According to the Thai Garment Manufacturers Association (TGMA), the new minimum wage policy is posing challenges before the apparel entrepreneurs of the country, mainly because of the sector being highly labour intensive.

The Thailand Textile Institute noted that the hike in the minimum wages has pushed up the textile production cost by four percent, while that for garments the cost has gone up by eight percent.

The increased wages along with the scarcity of workers is forcing them to consider shifting their production bases to nearby countries like Cambodia, Myanmar and Laos, where labour costs less.

However, the SMEs which lack the ability to relocate may be left with no option but to shut down, according to industry analysts.

Garment exports form Thailand for the initial three months of the current year were valued at US$ 749 million, which indicates a negative 6.94 percent growth over the last year.

TGMA expects the country to witness a limited garment export growth during the second part of the current year, as the EU and the US, the main trade partners of the Thai garment sector are experiencing financial crunch. The Thai industry thus needs to modify its trade policies and shift its focus to Asian markets like Japan, China and ASEAN markets, experts aver.

If the Thai garment sector fails to meet its export target for the second quarter, which is considered to be the peak season for clothing exports, it can be presumed that the sector's export growth for the whole year would keep negative.

Since very start of the current year, the growth of Thailand's textile and garment industry has been on a declining trend, mainly due to financial crisis faced by its key trade partners. However, Asian markets have started showing some positivity, according to the Thailand Textile Institute.

Fibre2fashion News Desk - India

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