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Thailand’s SME lag behind neighbours under AEC framework

The delayed expansion of business among small and medium enterprises may lead to Thailand failing to keep pace with the ASEAN Economic Community (AEC)

Boris Sullivan

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The delayed expansion of business among small and medium enterprises may lead to Thailand failing to keep pace with the ASEAN Economic Community (AEC), due to be launched next year, a senior Commerce Ministry said today.

Pongpun Gearaviriyapun, director general of the Business Development Department, said the political turmoil has disrupted coordination among state agencies in executing the plan to develop Thailand’s small and medium businesses to become competitive with neighbouring countries.

Business operators have also delayed their investment expansion until the political direction is clear, she said.

She said the department will move on with the plan by coordinating with related agencies and private institutes to provide knowledge and understanding to entrepreneurs of small and medium businesses so that they prepare themselves for competition with neighbouring countries under the AEC framework.

Ms Pongpun said many business operators focus on competing domestically instead of internationally but the business and service sectors in Southeast Asian countries will penetrate Thailand, becoming their competitors, when the AEC is active.

She said the department will help business operators find overseas distribution channels through trade fairs and raw material sourcing to improve the quality and standards of Thai products. (MCOT online news)

85% of Thai SME affected by political crisis

Eighty-five per cent of Thailand’s small and medium businesses have been affected by the months-long political conflicts, a senior official reported.

Patima Jeerapaet, director of the Office of Small and Medium Enterprises Promotion (OSMEP), said a survey of 500 small and medium enterprises found that 50 per cent have encountered declining sales.

There was no sign of closings among enterprises which have continued to receive assistance from the OSMEP on cost reduction, revolving fund and debt payment extension to prevent bad debt, he said.

If the political impasse carries on during the next few months, the impact on small and medium enterprises (SMEs) especially micro enterprises with registered capital at less than Bt20 million, will be more severe, he said.

Out of 2.8 million SMEs nationwide, two million are small enterprises with registered capital at Bt20-200 million, enabling them to survive for a few years.

Mr Patima said the political stalemate has compelled the OSMEP to adjust the SME growth target to 40 per cent of gross domestic product in 2017, from the present ratio of 37-38 per cent of GDP.

Patchara Samalapa, executive vice president of Kasikorn Bank, said the number of SME customers who delayed loan payments has increased 10 per cent, or at a total Bt1 billion – a minimal ratio compared to the total Bt500 billion credit.

The delayed payments are from customers in the hotel industry, and businesses related to agriculture and electronics, he said, adding that the debts could possibly become non-performing loans (NPL).

The number of NPLs in the first quarter was stable at 2.8 per cent while the economic slowdown has decreased loan requests, he said. (MCOT online news)

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