More new businesses than closures in Thailand, employment stable

New business registrations in Thailand continue to outpace factory and business closures, with employment figures remaining stable, according to the Bank of Thailand.

Assistant Governor for the Monetary Policy Group and Secretary of the Monetary Policy Committee, Piti Disyatat stated that the central bank is not alarmed by the current rate of factory and business closures, as they are fewer than new business registrations.

Piti highlighted that the registered capital of newly established businesses exceeds that of those closing down. Additionally, employment in the newly registered businesses has increased, reflecting a positive business environment. Piti commented on the cause of factory closures.

“Factory closures often result from relocations aimed at boosting business efficiency, which is a routine aspect of operations.”

The Department of Industrial Works reported that in May, 171 new factories were inaugurated, compared to 143 in the same period last year. Investment in the new factories amounted to 16.8 billion baht, doubling from 8.12 billion. The number of workers employed by these factories rose to 9,836 in May, from 3,936 last year.

Data from the Business Development Department revealed that 6,530 new businesses were registered in April 2024, marking an 8.09% increase from 6,041 businesses in April last year.

Brighter future

The total registered capital for new businesses in April reached 27.3 billion baht, up by 30.5% from 20.9 billion in 2023. Conversely, business closures dropped by 13.5%, from 936 to 810, according to the Business Development Department.

In another development, Piti noted the central bank’s recognition of the need to enhance credit access, particularly for small and medium-sized enterprises (SMEs). The central bank supports targeted measures such as credit guarantee schemes to address this issue.

These initiatives aim to improve credit access for SMEs, which is crucial for economic growth. Last week, the Cabinet approved a low-interest loan programme worth 5 billion baht to support the government’s ‘Ignite Thailand’ vision.

Additionally, a credit guarantee fund valued at 50 billion baht through a new portfolio guarantee scheme was established to facilitate SME access to credit.

Piti mentioned that the private sector’s borrowing costs from commercial banks have remained relatively stable. Business loans have increased overall, while household loans have grown at a slower rate, driven by hire-purchase and credit card loans, as credit quality has worsened.

According to data from the central bank, new household loan growth declined in the first quarter of this year, mainly due to financial institutions’ debt deleveraging in response to lower asset quality.

However, new SME loans have increased without debt deleveraging issues, although access to funding sources remains a significant challenge for SME loan growth, reported Bangkok Post.