Small businesses told to cut production costs or perish | Bangkok Post: business

ENTREPRENEURS

Small businesses must cut production costs in order to cope with the effects of higher daily minimum wages, says the Small and Medium Enterprise Development Bank of Thailand.

Because small and medium-sized operators have narrow margins of 10% or less, and the daily minimum wage of 300 baht would increase costs by at least 6%, survival comes down to a 4% margin, says Soros Sakornvisava, the SME Bank president.

''Some SMEs' costs may increase by more than 6%, let's say 7-8%,'' Mr Soros said. ''If they can cut their costs at similar rates or pass the higher costs on to final price tags, they might be able to maintain a 10% net profit. On the contrary, if they cannot do that, they might even have losses in the worst case.''