Thailand SMEs must improve in six key areas ahead of AEC


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Regional integration into a single market under the Asean Economic Community (AEC) in 2015 offers a great chance for Thai small and medium-sized enterprises to tap the vast business opportunities presented by a market with a population of 600 million, a forum was told yesterday.

However, there are a number of challenges for SMEs, which should urgently improve their performance in six key areas to boost competitiveness for the AEC business environment, Commerce Minister Niwatthamrong Boonsongpaisan said at the opening of the “AEC and SMEs’ Challenges: Next Step” seminar. He was speaking under the topic “Living Together amid Differences in Geography, Economy, Stability, Society and Culture”. The seminar was organised by the Office of Small and Medium Sized Enterprises Promotion, the Industry Ministry and the Thai Chamber of Commerce.

The government is stressing the urgent need for both the public and private sectors, and especially SMEs, to prepare to operate effectively under the more competitive business environment that will be ushered in when the AEC becomes effective in 2015, he said.

Thailand’s readiness for the single market is currently at about 70 per cent, but this is expected to have risen by the time the AEC comes on stream, Niwatthamrong added.

There are about 2.6 million SMEs in Thailand, accounting for 90 per cent of all businesses in the country and 80 per cent of total employment.

With SMEs accounting for about 37 per cent of the Kingdom’s gross domestic product, as well as more than 30 per cent of its export value, the government must provide support to maintain the competitiveness of small businesses, both locally and in the much larger ASEAN market, he said.

As to the challenges for Thai SMEs under the AEC business environment, he identified these as:

  • the free trading of goods, under which the import tariffs for a wide number of items will be cut to zero, and free trade in 104 types of services that the Cabinet has to date approved, and which will be increased to 128 categories by 2015;
  • foreigners will be allowed to hold up to 70 per cent of Thai businesses (FINALLY!!! let’s hope for 100%)
  • free trade in the industrial and agricultural sectors
  • free movement of skilled labour in eight categories
  • free movement of capital among ASEAN countries

Niwatthamrong said the government intended to develop SMEs in five areas: human resources and labour quality; access to funding sources; production/technology capabilities; effective marketing; and a conducive business environment.

Thai SMEs must prepare themselves in six areas to reinforce their ability to compete effectively under the AEC business environment, he said.

Expansion strategy

  1. adopt active business expansion strategies
  2. raise productivity / reduce production costs
  3. improve the quality of goods or services through innovation, scientific research and development and cultural strengths to achieve value-added features
  4. engage in market research, explore potential new markets and preserve existing markets
  5. create business alliances, both locally and abroad
  6. seek partners for upstream, mid-stream and downstream stages of production.

SMEs should be able to grow their business and compete effectively under the AEC business environment if they are well prepared in these six critical areas, he stressed.

According to Isara Vongkusolkij, chairman of the Thai Chamber of Commerce, Thailand is relatively more prepared than other ASEAN nations for the AEC business environment.

However, the country should improve its import and export facilitation under the free-trade framework of the AEC, and Thai SMEs should be acquainted with the procedures to ensure smooth trading from 2015, he said.

 

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