UTCC study highlights expected 'rising star' businesses of 2013

However, a study by the UTCC also found that toys, home stays, traditional retail shops, handicrafts, textiles and garments, dried fruits and vegetables, leather goods, footwear would be in decline because of high competition in the coming year.

Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, said increasing incomes could create a double-edged sword for businesses. Many businesses will benefit from higher spending, but some, especially small and medium-sized enterprises, will be hit hard and have to shut down.

"About 200,000 companies, especially SMEs, could collapse within the first quarter of next year as a result of the rising cost of labour. However, if the government immediately launches a plan to remedy the impact, those enterprises could survive," Thanavath said.

The survey found that the rising stars included medical and beauty, followed by telecommunication, TV programming, service stations offering natural gas for vehicles and liquefied petroleum gas, traditional and alternative energy, food, alcoholic beverages and tobacco, electronics, education, financial institutions, construction and construction materials, condominiums, and logistic services.

The higher minimum wage, along with the reduction of corporate and personal income tax, will result in higher demand for quality living and entertainment. Beauty and medical businesses, providers of alcohol and tobacco products, and condominiums will enjoy higher sales and profit next year.

Clear policies on third-generation wireless broadband, more free TV offerings, and the Kingdom’s transition to digital broadcasting will also promote expansion of telecommunication and TV media.

Thanavath pointed out that the alcohol and tobacco and education sectors were two newcomers among rising-star businesses in 2013 as people with higher incomes would put more emphasis on getting quality education and being entertained.

With expected economic growth of 4.3-4.8 per cent next year, and continued stronger growth of 5-7 per cent in the next five years, the UTCC foresees that many businesses will enjoy higher sales and profits despite facing higher production and labour costs.

Wachara Kuntaweethep, a lecturer at the university, said the study was based on an expectation of 7-per-cent export expansion next year, investment growth of 14.7 per cent, domestic consumption rising by 4 per cent, industrial-sector growth of 5.3 per cent, and agricultural-sector growth of 4 per cent, while annual inflation will be 3.5 per cent.

But the UTCC warned that an unexpected natural disaster could create both positive impacts and challenges for the food industry next year. The study also warned that businesses that rely on old-fashioned design and slow development such as textiles and garments, leather goods, and handicrafts were expected to show poor performance because of lower demand and high competition from China.

Manufacturers will have to bear higher production costs because of the increase in the minimum wage, and that could lower the competitiveness of Thai enterprises.