The closure of more than 660 factories by small and medium-sized enterprises (SMEs) in the first half of 2024 has raised alarms among economists and business leaders.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) has called for government support after 667 SME production facilities shut down, marking an 86.3% year-on-year increase and averaging 111 closures a month.
Payong Srivanich, chairman of the Thai Bankers’ Association and the JSCCIB, on Thursday expressed concern over the decline in the local production sector despite data showing a 122.7% rise in factory openings in the first half, with 1,009 new facilities. However, most of the new plants are foreign-owned ventures promoted by the Board of Investment (BOI).
The average capital for the closed factories was 27.12 million baht, highlighting the impact on SMEs and indicating a concerning trend in the loss of smaller businesses.
Mr Payong said the JSCCIB is drafting proposals for government initiatives to support industries, including promoting “Made in Thailand” products and investing in key sectors.
The group is also advocating for more support for the electric vehicle (EV) auto parts industry, industrial waste management and human resources development to reinforce the Industry 4.0 model.
Government analysts reported that investment as a percentage of gross domestic product (GDP) has fallen below 25%, down from nearly 30%, due to increased savings from a budget surplus and rising foreign capital outflows affecting production infrastructure.
The JSCCIB agreed with these findings and urged investment incentives to enhance competitiveness, including significant tax breaks to attract investment to secondary cities, focus on local content and promote research in emerging industries.
Members also emphasised the need for infrastructure investment to accommodate megatrends, support a low-carbon society and improve business conditions.
At their latest meeting on Wednesday, JSCCIB members underscored the urgent need to speed up government spending, particularly in construction, to boost employment, cash flow and overall economic purchasing power.
According to the business group, the Thai economy is expected to grow by between 2.2% and 2.7% this year, unchanged from a previous forecast.
The group maintained its forecast for Thai exports to rise by 0.8% to 1.5% this year, after falling 1% last year.
The country’s economy expanded 1.9% last year, lagging regional peers as it faces high household debt and borrowing costs as well as weak exports.
Bank of Thailand (BoT) governor Sethaput Suthiwartnarueput told a business seminar on Thursday that providing credit access for smaller businesses is important for the country’s economic growth.
The central bank is seeking to reduce credit risks for smaller firms to help them obtain loans from banks, he added.