SME confidence slips in fourth quarter

SME confidence slips in fourth quarter

TMB survey reveals concerns over revenue

Confidence among small and medium-sized enterprises (SMEs) regarding business circumstances slipped in last year's fourth quarter, although expectations for this quarter have improved marginally.

The TMB SME Sentiment Index, which surveyed sentiment among 1,100 SMEs nationwide, fell to 37.1 points from the third quarter's reading of 38 on growing concerns over consumers' lower purchasing power and a decline in SME revenue.

The index still stayed below the 50-point threshold that separates pessimism from optimism.

Benjarong: Falling oil price a boon for firms

The SME Concern Index about the domestic economy and competitiveness increased to 55.5 points in the fourth quarter from 48.1 points in the third quarter, said Benjarong Suwankiri, head of TMB Analytics, a research unit of TMB Bank.

However, small business owners' worries over the political situation in the final three months of 2014 continued easing, as seen by the fact that the sub-index measuring political concerns fell to 12.7 points from 16.8 and 37.8 in the third and second quarters, respectively, following the May 22 military coup.

According to a breakdown by region, small business owners in the South continued to have the lowest confidence compared with those in other regions, with a score of 29 points in the final quarter.

That was a significant drop of 8.9% quarter-on-quarter due largely to tumbling prices of its major farm products including rubber, palm oil and shrimp. However, their expectations for the first quarter improved.

Small businesses in Bangkok and its vicinity had the highest confidence among regional peers in the fourth quarter with 39.5 points, up 1.4% from the previous quarter. Moreover, its three-month expectations continued increasing due to the sagging oil price.

"A significant decline in the global oil price has been a boon to SMEs in Greater Bangkok," Mr Benjarong said.

This area consumes the biggest portion of fuel, with petrol at 40% and diesel at 37% of the country's total use.

The positive factor of falling fuel prices will also gradually benefit other regions, Mr Benjarong said.

He forecasts the global oil price will reverse the upward trend in the second half of this year and rise to US$58 a barrel by year-end from $45-47 now.

SMEs need to improve their management skills to handle volatility in commodity prices and the foreign exchange market, Mr Benjarong said.

He predicts the Bank of Thailand will jack up the benchmark rate in the second half to follow in the footsteps of the US Federal Reserve's interest rate, which is expected to start normalising in the second half of the year.

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