Economic Recovery: Think Small

Economic Recovery: Think Small
Thai Business Box .

Economic Recovery: Think Small

Policy makers need to move away from grand schemes and long term mega projects if they wish to see a quicker return to economic normalcy. Think small, think SMEs.

Small and medium-sized enterprise (SMEs) are significant contributors to economic activity and employment globally, and so it is in Thailand.
In 2018, 3 million companies came under the classification of SMEs, making up 99.8% of all companies, accounting for 14 million jobs or 86% of total employment,  according to the Office of SMEs Promotion(OSMEP 2019).
The Thai Chamber of Commerce believes the real number of SMEs could be as high as 5 million, as many smaller operators do not register with the authorities.

The current Covid wave has seen many small and medium-sized enterprises (SMEs) struggle with crushing debt loads that could force them out of business. 
The pandemic first affected the tourism industry which then led to a chain effect that affected other sectors. More so, incessant lockdowns and stringent policies to control the pandemic led to many businesses shutting down and laying off workers.

It should be noted though that pre-pandemic Thailand’s SMEs had limitations and flaws in business infrastructure, that made the Covid effect so devastating.

In the past, national policies did not set clear goals and directions for developing SMEs. The focus on large corporates for foreign investments to bring in technology into the country did not materialize or when it did, was a slow trickling down process that left Thai SMEs with out-of-date technology.
The undermining of the importance of SMEs resulted in a lack of creativity, innovation and technology amongst Thai SMEs.
The problems they face mainly stems from access; access to skilled labour, to marketing knowledge and information, to modern business management, to up-to-date technology and most importantly to financial resources.

During the current crisis, support has been given to SMEs through stimulus and relief packages. However, efforts by the government to channel billions of dollars of credit at low interest rates, provide credit guarantees and loan-payment holidays have not revived the sector. If SMEs had the “ability to grow” problems earlier, they are facing “ability to survive” problems today.

Recently, policy makers were toying with the idea of allowing wealthy foreigners to buy land in Thailand to attract investments and generate revenue for the country. The move drew criticism that the government was trying to sell off the country making it more expensive and difficult for locals to buy or rent property in the future.

A less drastic way that would jumpstart the economy and SMEs is to invite foreigners to invest in all sectors of SMEs with a Thai partner, where the foreigner can own 51%.
Thai entrepreneurs can register with the authorities if they wish to participate in this scheme. When the deal is struck, they should register their company under this scheme with the supervision of Thai authorities who then can provide the Thai entrepreneur a credit guarantee based on the investment brought in by the foreigner.

An app can be created where foreigners interested in investing in Thailand can browse through and contact potential Thai business partners.

As a campaign we can position Thailand as a SME & Startup hub.

Though the amount of money invested is not as much as those from FDI of large corporations, the foreign SME investors will bring in expertise, technology or just new, creative innovative way of thinking and in general create a bustling ecosystem for SMEs and startups. 

This in turn will revive the economy and provide a larger, more attractive domestic market.

Today, large corporations do not only focus on infrastructure and facilities in host countries in their decision to invest. A substantial domestic market should exist that would tilt the decision outcome towards the country.

If Thai policy makers keep their focus on SMEs, the country will revive swifter, stronger and better.

Written By - Thai Business Box.