Thai SMEs boxed in by debt and dwindling demand

Small and medium-sized enterprises (SMEs) in Thailand are on the ropes, grappling with crippling debt and plummeting sales as the country’s economic engine sputters, warns the Federation of Thai Industries (FTI).

The financial plight of these crucial businesses is worsening, says the FTI, with government support measures arriving too little, too late. Yet, the federation, the voice of Thailand’s SMEs, remains tight-lipped on the exact number caught in the liquidity trap or struggling to secure much-needed funding.

Earlier figures paint a bleak picture: 667 factories slammed their doors shut in the first half of 2024, a staggering 86.3% leap in closures from the previous year.

Gloomy prospects abound, with FTI Vice-Chairman ML Peekthong Thongyai blaming weak consumer spending and the upheaval caused by fierce floods in northern Thailand.

“Severe floods have left people digging deep to repair their homes.”

The deluge inflicted massive damage on households and businesses, causing financial chaos estimated between 30 billion and 50 billion baht, as weak economic sentiment took a nosedive. The Thai Industries Sentiment Index dropped from 89.3 points in July to a mere 87.1 in September.

Adding salt to the wounds, a torrent of bargain-basement Chinese goods floods Thai markets, squeezing local enterprises, including beleaguered SMEs, Peekthong added.

The FTI is clamouring for swift government intervention, calling for urgent economic lifelines to keep these businesses afloat, said Peekthong.

“We need the cabinet to approve fresh stimulus measures immediately.”

Stalwart Industry Minister Akanat Promphan has risen to the challenge, plotting a path to relieve SMEs of their financial burdens and arm them with cutting-edge technology to fend off competition. As part of this lifeline, the Industry Ministry plans to dole out 1.9 billion baht in low-interest loans, aimed at rejuvenating SME competitiveness and easing liquidity woes.