Few SMEs have capacity for business abroad

Most Thai small and medium-sized enterprises have the competency to do business in their local markets, but fewer than 1 per cent have ability to do business outside the country, according to a survey by the University of the Thai Chamber of Commerce(UTCC).

The survey derived from 1,451 businesses found that Thai SMEs had become less competitive amid rising costs of production and lower sales during the slow economic recovery in the second and third quarters of this year.

“SMEs will continue to have less of a competitive edge in the remaining period of the year because the economy has not grown strongly, while they have small budgets to develop themselves in many areas, including human resources, research and development, and liquidity,” said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre.

The survey put the “SME competitiveness index” at 53.5 points out of 100 in the second quarter, down from 56 points in the first quarter. The index dropped even lower, to 52.4, in the third quarter amid slow economic growth.

The competitiveness index will continue to drop while purchasing power remains low. 

Thanavath noted that slow sales and low liquidity had combined to create overstocking.

The survey also found that only 0.4 per cent of SMEs had the ability to do business abroad, and about 2.7 per cent to do business nationwide. 

Most do not venture outside their own province.

Thanavath said that with their low development capacity, SMEs could find it difficult to survive amid the upcoming Asean integration. The government needs to help them urgently to ensure their survival.

 

Govt support sought  

To support SMEs, the government should provide development plans, particularly for human resources, and encourage them to adopt more technology while helping them improve their financial liquidity.

Meanwhile, the UTCC foresees that the government’s spending of Bt360 billion on many development projects and Bt40 billion to support rice farmers should help stimulate the economy this quarter.

Thanavath said gross domestic product in the fourth quarter could grow by 3-4 per cent. 

As a result, full-year GDP growth is expected to be 1.5-2 per cent. With stronger economic growth, SMEs should do better in the final three months of the year and into 2015, 

he said.