Key business body urges government to increase rates gradually
The Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB) on Wednesday pleaded with the Thai government to raise electricity bills, wages and interest rates gradually in order to mitigate the negative impact of the Covid-19 pandemic on businesses.
Upping all costs at once in October will do nothing but harm the country's still fragile economy, said Payong Srivanich, chairman of the Thai Bankers' Association and chairman of the JSCCIB.
His comments came following a monthly meeting with business representatives from across the country on Wednesday in Bangkok. The attendees all agreed that it would be difficult to avoid price increases in this period of high inflation.
They are concerned, however, that the government's proposed method will only result in a vicious cycle of high inflation.
Payong noted that the current economic scenario is fraught with uncertainties, including tensions between Russia and Ukraine, rising global central bank rates, inflation and the risk of recession, the ongoing pandemic, and China's slowdown.
These circumstances, he explained, have an impact on global logistics and energy prices.
Thailand's businesses will have to incur this rising cost. Hence, it would be preferable for the government to gradually raise the prices so that the country's economy and the consumers’ purchasing power can catch up with the hike.
Payong said that electricity bills were of utmost concern now.
"We propose that the government carefully and cautiously consider increasing electricity prices by separating it into two phases rather than a one-time hike," said Payong.
Thailand's Energy Regulatory Commission has approved an 18 per cent rise in the price of electricity for September-October, to a record-high 4.72 baht per unit.
The JSCCIB stated that the change will affect the cost of living and business operations because it accounts for 30 per cent of the total cost of producing goods and services.
Other JSCCIB concerns include interest rate and wage increases, said Payong. He revealed that the Thai Bankers' Association has continued to consult with the Bank of Thailand, particularly regarding the rising fee for the Financial Institutions Development Fund (FDIF).
"Commercial banks must support both the country's economic recovery and their customers, so rate increases may not be implemented immediately. We must devise a strategy to protect our vulnerable customer groups from the negative consequences of the FDIF increase," Payong stated.
Poj Aramwattananont, vice chairman of the Thai Chamber of Commerce, said the wage increase is necessary, and all business operators have agreed to comply, but they want other measures to support them, such as allowing goods price hikes or low-interest rate business reform loans.
Meanwhile, there are more pressing labour issues to address than wage increases, such as a shortage of labour, particularly in the services sector. He stated that the hotel representative had requested the Ministry of Labour to relax more regulations so that they could hire foreign labourers.
The JSCCIB has maintained its GDP growth projection for the year in the range of 2.75 to 3.5 per cent, while export growth will remain at 6-8 per cent and inflation was as predicted previously at 5.5 to 7 per cent.
