Business sector urges government support to ease power bill burden

The Federation of Thai Industries (FTI) revealed on Tuesday its proposal during the monthly press conference on Thailand Industry Sentiment Index (TISI) for August 2022.

FTI chairman Kriengkrai Thiennukul said businesses overall would tend to grow positively due to the easing Covid-19 pandemic situation. However, most entrepreneurs are concerned about the rising electricity cost right now because it will affect their overall costs and profits.

He noted that material prices were still high, so rising electricity bills would do more harm than good to businesses that are still recovering from the pandemic.

Meanwhile, FTI vice chairman Isares Rattanadilok na Phuket explained that electricity bills in Thailand are higher than in neighbouring countries as the kingdom is overly reliant on liquified natural gas (LNG) as the primary source of energy for power generation. The country lacks a free market system in the energy sector, resulting in the country having few players while having plenty of idle infrastructures that only adds to the cost burden, Isares said.

Thailand will need to reform its electricity system in the long run. However, because the business sector cannot wait, the federation has developed a short-term plan for the government to consider in order to reduce the electricity cost, Isares said.

"The first proposal is to import oil from Russia as an alternative source of LNG, and then the Energy Regulatory Commission should open a bidding round for purchasing electricity from idle small power producers rather than importing LNG to produce power," Isares explained.

Kriengkrai also urged the government to take steps to mitigate the effects of the incremental increases in minimum wage and electricity charges, such as by granting an electricity subsidy to SME entrepreneurs and subsidising employment promotion to assist entrepreneurs in cost reduction.

The business sector requested that the government ease the import of foreign workers from neighbouring countries in order to alleviate labour shortages, including assisting entrepreneurs in using more machines for manufacturing.

Besides, the public and private sectors must work together to develop flood mitigation measures in economic areas, as well as systemic flood management plans to address the impacts of inundation and drought.

The FTI also revealed the latest TISI for August 2022, which increased from 89.0 in July to 90.5, as business returned to near normal with an improvement in domestic consumption while demand for industrial products continues to expand.

Meanwhile, the cancellation of the Thailand Pass and the implementation of a tourism stimulus measure called “We Travel Together” to promote domestic travel by Thais has given the tourism industry an additional boost.

Although fuel costs appeared to be improving in August 2022, entrepreneurs are still concerned about rising production costs such as logistics, and prices of raw materials such as animal feed, steel and aluminium, electricity fees, as well as a shortage of foreign labour in the manufacturing sector.

There are also some negative factors to be concerned about, such as the global economic slowdown, high inflation, and tensions between Russia and Ukraine.

The survey was conducted in August 2022 among 1,304 enterprises represented by 45 industry clubs affiliated with the FTI. The findings revealed more factors of concern for business owners, such as the global economy (75.9 per cent), domestic politics (42.8 per cent), the baht’s exchange rate against the US dollar from an export perspective (39.3 per cent), and loan interest rate (35.7 per cent).

The TISI for the next three months is expected to be 99.5, up from 98.7 in July 2022, because entrepreneurs believe the Thai economy will gradually expand due to recovery of the tourism sector, increasing domestic demand, and the government's economic stimulus measures.

Entrepreneurs are concerned about an incremental increase in the minimum wage rate from October 1, 2022, as well as a new round of rising electricity fees from September to December 2022, which will result in higher production costs. Similarly, risks associated with economic slowdown and geopolitics may have an impact on the Thai export sector, Kriengkrai concluded.