Small and medium-sized enterprises (SMEs) are facing a double whammy from high operating costs and tight financial liquidity as well as elevated Sino-US trade tension, says Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce (UTCC).
The quarterly survey on SMEs found indices declined across the board in the first quarter, in tandem with economic growth, which expanded a mere 2.8% during the three months through March, the slowest pace in 17 quarters.
In the first quarter, the SME Competitiveness Index fell by 0.3 points from the preceding quarter to 48.7, with the trend expected to continue into the second quarter, he said.
The SME Competency Index, one of three sub-indices of the SME Competitiveness Index, edged down 0.5 points from the previous quarter to 49.9 in the first, while the SME Situation Index dropped 0.3 points to 43.7, and the SME Sustainability Index inched down 0.2 points from the previous quarter to 52.5.
A threshold of 50 separates improvement from deterioration.
The UTCC and the Small and Medium Enterprise Development Bank of Thailand (SME Bank) jointly surveyed 1,200 SMEs across the country.
"The survey outcome is in line with the slower pace of first-quarter GDP growth. The situation for SMEs would have declined if there had not been a general election, which helped boost consumption during the period," said Mr Thanavath.
In comparison, the index's survey of non-SME Bank's customers fell 0.5 points from the previous quarter to 42.1 in the first quarter, while that of the bank's customers dipped 0.4 points to 55.5.
Asked what kind of assistance they want from the government, survey respondents said they want tax reduction and a revamped structure, easier access to financial sources, a lower interest rate and a scheme to raise their competitiveness both locally and in overseas markets.
Mr Thanavath said the global economic slowdown and the trade spat between the US and China could take a toll on SME operators.
For example, foreign tourists could spend less if they are uncertain about economic prospects.
The UTCC forecast economic growth of 3.5% this year, in a range of 3-3.2% for the first half and 3.8-4% for the latter, he said.