Sino-Thai Firm Moves Furniture Factory Out of Thailand’s Deep South

Mariyam Ahmad
Pattani, Thailand
2020-10-05
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201005th-ch-deepsouth-worker1000 Thai workers design a pattern for upholstery at Superb Creation Furniture’s factory in Nong Chik, a district in Pattani province, southern Thailand, Oct. 2, 2020.
[BenarNews]

A Chinese-Thai furniture factory is moving most of its operations out of Thailand’s insurgency-wracked Deep South less than a year after it set up shop there, because it could not secure a government subsidy to help reduce high shipping costs, a senior company official told BenarNews.

Superb Creation Furniture (Thailand) Co. Ltd.’s move from the Pattani border province to the Eastern Economic Corridor (EEC) near Bangkok will lead to layoffs of 180 local workers as well as a loss of millions of dollars that the company paid in land acquisition, company director Sumet Sukphanphotharam said.

“We have been loading equipment onto trailers to move to Lam Chabang in Chonburi,” Sumet told BenarNews Monday, referring to an industrial estate in the Eastern Economic Corridor, situated to the east of Bangkok.

“The company was promised but hasn’t received U.S. $500 in subsidy for each container of goods it has shipped out,” he said. The southern province has no deep sea ports and depends on expensive land transportation to ports in central Thailand.

The Southern Border Province Administration Center (SBPAC), the government body that administers the Deep South, confirmed to BenarNews that it was unable to get approval for the subsidy from the Ministry of Finance and the House committee on economy, despite Prime Minister Prayuth Chan-o-cha’s signature approving it in an initial agreement.

The company – a joint venture between Shenzhen, China-based Superb Creation Limited and Thai businessmen – was set up last December in Pattani’s Nong Chik district, and anticipated creating 3,500 jobs over three years. It currently employs 200.

Sticky subsidy

The venture had initially considered a location in Laos or the EEC, but decided to come to Pattani because of the quality of the province’s workforce and an invitation from local authorities, who along with regional military commanders agreed to the transportation subsidy, Sumet said.

“But it’s been almost a year now and we haven’t received the subsidy of $500 per container,” said Sumet.

The company has already shipped some 200 containers packed with around 7,000 furniture items to the United States, Sumet said. That means it has not received about $100,000 in promised subsidies, according to his figures.

Sumet said the SBPAC, in March 2019, sought approval from Prayuth for the transportation subsidy. The prime minister approved the subsidy before the factory opened, according to an SBPAC progress memo Sumet showed BenarNews and that was signed by the prime minister.

“We saw the document so we were confident and went ahead with the project,” he said.

Chanathan Sangpum, SBPAC deputy director, told BenarNews on Monday that his office had tried its best to negotiate for the subsidy.

“After the premier’s initial agreement, we sent a letter to the Ministry of Finance requesting the subsidy because the SBPAC is not authorized to pay it, but the ministry replied that it is not possible to reimburse the company in cash and the house committee on economy said such a subsidy goes against ASEAN trade rules,” Chanathan told BenarNews.

He did not elaborate on what rules of the Association of Southeast Asian Nations would have been violated had a subsidy been approved. The Finance Ministry’s stated reason for not approving what it said would have been a cash subsidy was that other firms may complain about preferential treatment, Chanathan said.

For his part, Sumet said he had no knowledge about subsidy criteria but believed the prime minister’s endorsement should allow it.

“Whether it is breaching ASEAN trade rules or not, we don’t know, it’s a matter for the government, but when the SBPAC gained the prime minister’s endorsement, then it must be doable,” he said.

Blow to local economy

Meanwhile, the company also counts as a loss the 400 million baht ($12.7 million) it spent on a 99-acre plot it bought to set up its factory, Sumet said. That’s because the province has not been able to designate it as suitable for industry, which will make it difficult for the company to sell it, he added.

The Malay-speaking and Muslim-dominant Deep South is one of the most impoverished regions in Buddhist-majority Thailand, fueled by a 16-year separatist insurgency that has killed more than 7,000 people.

The Thai government has attempted to boost the economy in the region, which sits on the border with Malaysia.

Now, Superb Creation Furniture’s move has caused some concern in the region.

“Two hundred of us still went to work today but we don’t know what will happen tomorrow, we and our families are in a dire situation,” Summari Bin Jemu, a worker at the company, told BenarNews.

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