Toyota Motor Thailand (TMT) has spoken out against plans by the newly-elected government led by the Pheu Thai Party to raise the minimum wage to THB300 per day, fearing the increase would raise production costs among its parts suppliers.

TMT president Kyoichi Tanada warned that it may need to source cheaper parts from other countries in the region to keep its car exports competitive.

Achana Limpaitoon, president of the Thai Auto Parts Manufacturers Association (Tapma), told local reporters that labour typically accounts for around 10% of the cost of car parts made in Thailand. She added that other industries such as textile, garment and other labour-intensive manufacturing industries will be more affected more by the labour cost increase.

Achana said that switching sources of car parts to other countries in the Asean region will not be easy – as most countries are currently struggling to meet local demand following the recent strong market growth. 

She conceded that new investments may well be switched to Indonesia and Vietnam, where labour costs are cheaper, and she sees a growing threat from imports from China and India.

Achara added that the Thai auto parts industry accounts for more than half of the total parts used in ASEAN-built vehicles and employs 400,000 workers.