Thai Retailers Association (TRA) has responded to a letter from Prime Minister Gen Prayut Chan-o-cha and has suggested opinions on pathways to revive the retail sector in the midst of the current crisis. The vision and core role of the Association is focused on driving local economies to build robust economic foundations for the country.
TRA President Yol Phokasub commented that the retail and service business was one of the country’s major arteries nourishing various systems such as the agricultural sector, employment, distribution, services, and tourism, and accounting for strong GDP growth. If retail and service was strong, it would lead the rest of the country and Thais in every sector, from upstream to midstream to downstream, to grow together sustainably.
Regarding this, Thai Retailers Association had adopted a core vision to become the “Lifestyle Hub of Asia” by developing people, being driven by technology and innovation, and creating added value for the Thai economy by many hundreds of billions of baht through three core pillars:
- Promoting the Thai trade sector and wholesale trade to be world-class
- Upgrading the Thai manufacturing sector to serve the global market
- Full integration of the Thai service sector (food, health and recreation)
The critical roles of the retail sector in national development include:
1. Creating over 1.3 million SMEs in the trade sector
2. Directly creating over 6.2 million jobs
3. Generating tax revenues for the state of over 500 billion baht
Suggestions and proposals for the government to develop the retail sector are divided into short-term measures to stimulate consumption and development guidelines to operate business transparently:
Short-term development measures
1. Maintaining employment
1.1 Hourly employment: The retail business has intermittent periods of providing service, with the times of highest footfall at lunch time and in the evening, as well as weekends, which is completely different from the manufacturing sector. If the government announced a minimum hourly pay rate during the economic recovery, this would better distribute employment. Employees could take on work flexibly, and have longer working hours (being able to work for many companies in a single day). Meanwhile, employers could increase their rate of employment to better match the demand in peak hours. The Association is thus proposing the Ministry of Labour to announce a legal and appropriate minimum hourly rate of pay to give greater flexibility. If it is possible to employ 20% more, this would create an additional 1.2 million jobs. This would not only benefit the retail sector, but every business sector and every scale of business, whether hotels, restaurants or other service businesses.
1.2 Stimulating consumption through the Shopping for the Nation campaign budgeted at 50,000 baht over a 60-day period. This would put 75 billion baht in circulation within 60 days.
1.3 Stimulating consumption among shoppers with high spending power: Imported lifestyle goods in particular, which currently attract import duties of 30%, the highest of 15 Asian countries, induce people to shop abroad instead. Therefore, it is proposed to trial reducing import duties temporarily for 4 months. For instance, a reduction from 30% to 10% could put 25 billion baht in circulation within four months.
2. Enabling SMEs to survive and grow strongly: it is proposed to give soft loans all of 0.1% through large retailers, with budgets of 25 billion baht taken from the fund of 500 billion baht which the government has put aside. Reducing payment terms for SMEs from 30 days to 7 days would boost liquidity for over 500,000 SMEs without creating bad debt for the commercial banks.
Development guidelines for transparent business operations
1. Measures to regulate e-commerce in the areas of price and tax: It is suggested that the government collect import duties and Value-Added Tax (VAT) from the first baht and forbid e-commerce operators from selling below cost. This severely impacts SMEs and Thai retailers. This tax collection would enable governments to generate tax revenue from e-commerce of over 20 billion baht per year while dealing with black market products which have grown up alongside e-commerce.
2. Oversight and regulation of all retail channels which is transparent and fair: Oversight should not be limited to bricks-and-mortar retail which pays taxes in full compliance, while online retail and travel retail still lack clear regulatory criteria. Transparent oversight is suggested, with the enforcement of fair trade laws to create a level playing field for all retail channels. This would also maintain employment levels at bricks-and-mortar retailers of over 6.2 million, and allow Thai SMEs in the conventional system to prosper.
Approving all of the aforementioned suggestions would ensure the survival of over 1.3 million SMEs and expand employment from 6.2 million jobs to 7.4 million. It would bring cash into circulation of more than 100 billion baht, while generating revenues for the state of over 30 billion baht. It can be seen that the Association’s proposals require only modest budgets compared with the benefits to SMEs and the increased employment. These would positively benefit the national economy at the macro level during the current crisis. The results would be swift and according to clear goals.