Most CEOs believe high baht hurting business, survey finds .

Krungthep Turakij, in collaboration with Dhurakij Pundit University Research Centre, asked 409 CEOs from April 29 to May 12 about their companies’ performances and their expectations for the overall business and economic situations.

About 82 per cent said the baht’s appreciation affected their business, while 18 per cent did not feel any impact. Among those affected, 15 per cent said the impacts were more than anticipated, 44 per cent said they were about what was as anticipated and 23 per cent said less than anticipated.

To cope with the impacts, 42 per cent look for new overseas markets, 41 per cent put more effort in the domestic market, 35 per cent try to cut either production costs or the cost of doing business, 33 per cent scale back long-term investment, 26 per cent outsource, 25 per cent trim business processes, 22 per cent focus more on marketing, and 15 per cent opt for other measures such as downsizing and substituting machines for workers.

The chiefs were asked to rate on a scale of 1-5 the importance of several factors that could potentially affect their businesses. The top five were cost of production (3.8), currency appreciation (3.5), higher wage costs (3.4), overall economic condition (3.4) and decreased demand (3.3).

There was a slight improvement in the overall economic index from 2 points in April to 4 in May. The index is expected to fall to 3 this month. The May-June index is well below the first quarter of this year, signifying vague long-term economic prospects.

Four business-performance indices – revenue, cost, employment and liquidity – continued to suggest that doing business this quarter would be a challenge.

Slight improvements in the revenue index – from 4 points in April to 6 in May and 9 expected in June – imply that revenue growth is attributable to business-level adjustment rather than overall economic improvement.

The rise in the cost index to 46 last month and its expected fall to 43 this month suggest that rising costs remain an issue for this period. Rising costs and slow revenue growth affect liquidity, so the liquidity index remained at negative-2. Slower employment growth is captured by the employment index, which was 4 last month and 6 this month. 

The results assert that the CEOs consider currency appreciation a long-term problem, so they have started to take several steps to cope with this challenge. The liquidity crunches may also pose risks for the long-run growth of businesses as well as the economy as a whole.