The competitiveness of small and medium-sized enterprises (SMEs) remained weak in the second quarter, with prospects expected to weaken further in the third quarter due largely to the bearish economy, says a survey by the University of the Thai Chamber of Commerce (UTCC).
A vendor arranges sandals at his stall at Chatuchak Market in Bangkok. A UTCC survey shows small operators still suffer from weak competitiveness. APICHIT JINAKUL
“Although many agencies forecast the economy has bottomed out in the second quarter and is now on course to recover, we still find SMEs’ competitiveness will remain weak until the third quarter given their substantial sales drop, surging raw material costs and inventories, lower profits and the liquidity crunch,” said Thanavath Phonvichai, vice-president for research.
The UTCC yesterday reported its SME health index for the second quarter stood at 53.4 points, down from 57.2 in the previous quarter. Companies are measured on their liquidity management, asset management, debt management and profitability.
Mr Thanavath said several SMEs had opted to sell their assets or borrow from financial institutions to ease their liquidity constraints.
The SME competency index, which is based on product and service costs, pricing, product and service distinction, gross margin, funding accessibility and employee skills, fell in the second quarter to 52.7 points from 54.2.
However, Mr Thanavath said SMEs’ conditions were expected to improve in the fourth quarter, driven by the government’s accelerated budget disbursement and a 364.5-billion-baht stimulus package that includes a cash payment of up to 15,000 baht each for more than three million rice farmers.
Other stimulus measures include expediting payment of 129 billion baht from the fiscal-2015 investment budget across all ministries.
Another 147 billion baht will be spent on projects under the fiscal-2014 budget that are slated to be implemented in the last three months of the present calendar year.
Some 23 billion baht from the remaining Thai Khem Khaeng project will be spent on repair work under the Education and Public Health ministries as well as on irrigation projects.
The government will also accelerate spending of 24.9 billion baht left over from budgets stretching back to fiscal 2005.
“Most Thai SMEs have yet to compete in the international or regional arena without the government's support,” said Mr Thanavath.
“It’s a must that the government gives them a lending hand in the form of soft loans, interest rate cut, inventory management, business administration and how to cut raw material costs and gain better access to funding."