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Posted on : Monday, 16th March 2020

A Synopsis of SMEs in Southeast Asia: Thailand

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All economies rely on four economic engines to drive them forward: investment, exports, consumption, and government spending. [1] SMEs have something to do with homegrown domestic investments and exports. Thailand’s SME is so far third after Malaysia and Singapore in Southeast Asia. It has a large sector of homegrown small or medium enterprises. And these SMEs are the biggest contributors to its GDP. [2] The business success comes at the expense of small- and medium-sized enterprises (SMEs) which are key to creating a more dynamic and diversified Thai economy. [3]

Thailand offers great investment potential as a leading automotive production base in the region ASEAN – a fast developing region for automotive manufacturing. Over a period of 50 years, the country has developed from an assembler of auto components into a top automotive manufacturing and export hub. [4]

Within the industrial sector, manufacturing is the most productive, contributing 34.5% of the GDP. The two major categories of goods manufactured in Thailand are automotive and electronics. [5] Thailand produces roughly two million vehicles every year, including international brands, like Ford, Volkswagen, Mercedes, and BMW. Thailand also produces and exports automotive parts.

The electronics manufacturing industry is the largest percentage of exported goods, which sums up 15% of its total export. Within this category, computers and integrated circuits are the two most widely exported goods. Thailand is also famous for its production of hard disk drives. Plastic and rubber industries take third place in Thailand’s total manufacturing. This is followed by food industry exports, mainly processed fish and raw sugar.

Another significant part of Thailand's economy is the services sector, which contributes nearly half of the total national GDP, including finance, health, tourism and hospitality, retail, communications, and banking. [6] These services provide jobs for a major portion of the formal labor force, and are crucial to the future economic growth in Thailand.

The government has introduced “Thailand 4.0” scheme with the objective to promote, encourage and support both public and private sector; including MSMEs and entrepreneurs, to adopt, upgrade and use innovation and technology in many aspects to enhance capacity and efficiency. [7]

Jenny Huang, a business consulting expert wrote, “Vietnam has been flooded with the early movers. As a result, their factories are at capacity, their costs are rising, and they are less willing to compete for new business (i.e. – give our clients good deals). Taiwan and South Korea are great for certain products, but too expensive for most. For many products, Thailand just works.”[8]

Catherine Zhang gives three reasons Thailand is the most suitable destination for manufacturing businesses in Southeast Asia community when compared to the giant China. In China,

1. Labor costs and production costs have increased

2. The threshold is getting higher

3. Market competition has become increasingly fierce

Yes. Thailand is not just a newbie for the SME community in the region. It has a good experience and existing mechanism of supporting the community. It is a rising star in the region. It will still be contributing the economic growth not only for the country itself, but for the whole Southeast Asia.

[1] bangkokpost

[2] worldatlas

[3] bangkokpost

[4] aseanbriefing

[5] worldatlas

[6] worldatlas


[8] chinalawblog