Thailand's Troubled SMEs Can Keep Afloat Eight Months At Most

[george]

Thailand's troubled SMEs can keep afloat eight months at most

BANGKOK: -- Operators of cash-strapped small- and medium-sized enterprises (SMEs) say they can keep their businesses afloat for about eight months at most as they are unable to tap lending sources, according to Thanawat Palavichai, director of the University of the Thai Chamber of Commerce (UTCC) Economic and Business Forecast Centre.

Quoting a survey conducted by the university on 800 random business operators March 26-31, Mr. Thanawat said three out of four -- 74.9 per cent -- of businesses are now facing severe cash flow problems and 60 per cent are having difficulty on accessing lending sources.

Some 93 per cent of entrepreneurs are concerned about declining sales and believe their businesses can survive for only about eight months, according to the survey, which indicated that most are clearly pessimistic about the economic future.

Most businesses are using their accumulated profits or cash reserves for ordinary operating expenses at present and if there is not marked improvement within the coming eight months and if operators cannot boost their cash flow, most businesses will have to lay off about 10 per cent of their overall employees.

Some 700,000 workers will become jobless, making it possible that 1.5 million employees will be laid off by the year end, according to the survey.

Private business operators want state owned banks, including the Small and Medium Enterprise Development Bank of Thailand, the Bank for Agriculture and Agricultural Cooperatives (BAAC), and the Export-Import Bank of Thailand (EXIM) to extend loans to needy business players.

The University of the Thai Chamber of Commerce predicts that Bank of Thailand (BoT) Monetary Policy Committee is expected to lower its policy interest rate by 50 basis points when it meets on Wednesday (April 8) to stimulate the domestic economy and to help lessen worry on interest payments by businesses.

The same survey also found that three out of four business players were uncertain regarding increasing investment (74 per cent) and on increasing market share (73 per cent). Only 11 per cent said they would increase both investment and their market share in early 2010.

The survey found that the most worrisome factor for businessmen is political unrest in Thailand, scoring 7.25 points followed by global economic meltdown 7.05 points.

The Thai government’s economic stimulus programmes landed in positive zone in the survey, but nonetheless scored only 5.83 points on a scale of one to ten.

-- TNA 2009-04-02