18-8-2023 (BANGKOK) The Federation of Thai Industries (FTI) has raised alarm bells over the dire circumstances faced by small and medium-sized enterprises (SMEs) in Thailand, beset by mounting operational and financial challenges. As the city of Bangkok witnesses a struggle among these enterprises, a plea for government intervention has taken centre stage.
Apichit Prasoprat, Vice-Chairman of the FTI, emphasised the urgency of the situation, stating, “SMEs have been grappling with profound setbacks since the pandemic took hold. Many of them find themselves grappling with severe liquidity issues, further exacerbated by the stringent lending criteria adopted by banks.”
This financial bottleneck has coincided with a surge in daily minimum wages, soaring electricity bills, and the escalating costs of essential raw materials, contributing to a dismal financial outlook for the beleaguered SMEs.
The stumbling block to economic revival stems from both domestic constraints and international challenges. The Thai economy has yet to reclaim its pre-pandemic vigour, leading to lacklustre revenue generation for these SMEs. Additionally, Thailand’s export trajectory has experienced a protracted slump, spanning nine consecutive months, casting a pall over the nation’s economic prospects.
Commerce Ministry statistics lay bare the predicament, with June recording a disheartening 6.4% decline in the customs-cleared value of exports, plummeting to a meagre US$24.8 billion.
The FTI has voiced unease regarding the recent upswing in interest rates, amplifying the financial burdens faced by SMEs. The enigmatic trajectory of rate adjustments by the Bank of Thailand further compounds the uncertainty.
August 2 marked a pivotal moment, as the Monetary Policy Committee (MPC) of the central bank opted unanimously to enact the seventh successive rate hike, propelling the policy rate from 2% to 2.25%, marking the highest level in nearly a decade.
Apichit Prasoprat underscored, “Should the MPC opt for stability in these rates, it could yield substantial long-term benefits for myriad businesses.”
Heightening the pressures on SMEs is the surge in competition triggered by an influx of Chinese consumer and industrial goods flooding into the nation. Online retail platforms have expedited this import surge, compounding the challenges faced by indigenous SMEs.
Apichit Prasoprat urged the impending government to address this critical concern and institute measures to shield Thai SMEs from these external pressures.
While Bangkok’s economy gains traction, driven by the resurgence in tourism post the July 2022 reopening, the panorama isn’t universally rosy. Apichit Prasoprat noted, “Certain factions of SMEs are reaping rewards from the tourism resurgence. However, a sizeable contingent is grappling to sustain operations as domestic economic health wavers and the global economic landscape remains lackadaisical.”
In this juxtaposition of economic recovery and enterprise struggles, the clarion call for proactive governmental measures has gained prominence, setting the tone for the path forward for Thailand’s SMEs.
