Procter & Gamble Manufacturing Thailand, the maker of consumer products under the Pantene and Olay brands, has requested more support from the government regarding tax incentives and education to drive the competitiveness of the Thai beauty business.
Managing director Jutapat Boonvongsakorn said the US parent company is confident of further investment in Thailand, which is now the third-largest skincare manufacturing base for P&G after the US and France.
Thailand's beauty industry is likely to expand further if the government gives more tax incentives to support the manufacturing industry in a bid to increase the cost competitiveness for local producers.
For example, the Chinese government provides land for investors free of charge, while the corporate tax rate is 20% in Singapore and 21% in Vietnam. The rate in Thailand, by contrast, is 22%.
Moreover, P&G wants to see improvements to the Thai educational system that encourage students to develop critical thinking and good digital management and arrangement skills, among others.
Ms Jutapat said P&G moved its haircare production base from Vietnam to Thailand in October last year. Haircare production capacity in Vietnam is about 10% of that in Thailand.
"Currently, the skincare operating costs in Thailand are the cheapest in the world," Ms Jutapat said. "And risks regarding labour costs here are less than in China so far, due to proper government policy."
P&G Thailand exports roughly 70% of its products with the "Made in Thailand" label -- including brands like Pantene, Head & Shoulders, Rejoice, Vidal Sassoon and Olay -- to more than 20 countries worldwide, with a combined value of several hundred million US dollars. Japan and Asia are major export markets.
P&G Thailand is now the company's second-largest haircare production base after China.
"We aim to become the world's largest production base for haircare products, outpacing China within the next 2-3 years," Ms Jutapat said.
Kannika Jarusuraisin, the company's external relations director for Thailand, Myanmar & Laos, said P&G will continue to invest in Thailand every 3-5 years.
P&G Thailand has huge potential to expand business. The sales contribution from Asia was only 9% of P&G's global sales in 2016, while middle-income earners in the region are projected to increase.
In addition, Kitirote Thammarate, group manager at Bangkok Plant Engineering, said P&G is determined to maintain business sustainability and is concerned about long-term environmental protection issues.
The company's vision entails ramped-up recycling and use of renewable energy for all of its production and packaging activities, yielding zero waste.
To reach this goal, P&G aims for a 20% cut in energy and water consumption, as well as waste production, by 2020.