Report Thai SMEs Lag in Innovation, Facing Economic Challenges Amidst Global Trade Pressures

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A recent World Bank report highlights a concerning lag in innovation and research and development (R&D) among Thai businesses compared to their ASEAN peers. This shortfall poses significant challenges for the competitiveness and growth of small and medium-sized enterprises (SMEs) in Thailand.

 

Thailand's labour market, particularly within SMEs, is under increasing risk due to both domestic and international factors. One major influence is the latest wave of global trade wars, which are disrupting sales and production continuity across sectors. Despite these growing pressures, Thailand's production sector has struggled to make significant advancements in innovation, impacting its ability to meet the changing demands of consumers at various levels.

 

As a result, Thai businesses have faced declining sales, reduced production output, and falling employment levels, leading to widespread closures over the past year and into early 2025. Nearly 24,000 SMEs deregistered in 2024, with over 1,234 mostly small and medium-sized factories shuttering, affecting more than 35,000 workers.

 

Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council (NESDC), emphasised the critical need for innovation and technological adoption to ensure the survival of SMEs. The World Bank's Thailand Economic Monitor – February 2025 reveals that only 11.9% of Thai firms incorporate innovation into their operations—a stark contrast to the Philippines (40.9%), Vietnam (37.9%), and Malaysia (37.3%).

 

Thailand’s low investment in R&D remains a structural barrier to enhancing business competitiveness. This innovation gap has been a significant factor in the wave of business closures, hitting the manufacturing sector particularly hard.

 

To address these challenges, the NESDC recommends expanding SME access to financing, enabling these businesses to adopt innovation and technology. Such measures could improve production processes, reduce costs, and maintain competitiveness in an increasingly volatile market. Enhancing the innovative capacity of SMEs is crucial not just for stabilising employment for over 12.9 million people currently working in these enterprises, but also for boosting incomes nationwide.

 

The World Bank survey underscores that the Philippines and Vietnam lead ASEAN in innovation engagement, significantly outpacing Thailand, Indonesia, and Malaysia. The findings, detailed in the Thailand Economic Monitor, rank these countries based on innovation in production processes, the introduction of new products and services, foreign technology adoption, and R&D expenditure.

 

Thailand's ability to close this innovation gap will be pivotal in ensuring the resilience and competitiveness of its economy in the face of global challenges.

 

  Adapted by ASEAN Now from The Nation 2025-06-16

 

 

[daveAustin]

Unsurprising. Love them to bits but they are not great on design and innovation here—Asia in general—and, oil & gas aside, the workforce tends to be inefficient.