Thailand’s small to medium business numbers among world’s lowest

In recent years the number of medium-sized enterprises in Thailand has shrunk to 10,000, down from 18,000 just a few years ago, according to data released by the Office of Small and Medium Enterprises Promotion (Osmep).

Part of the reason for the 45 percent contraction is that many medium-sized businesses have merged with each other or have been acquired by large companies.
In general across the world, medium-sized businesses constitute between five and 10 percent of a country’s small and medium enterprises (SMEs), but in Thailand this figure has now contracted to less than one percent, one of the lowest in the world.

According to Osmep, Thailand had 2.78 million businesses and a working population of 14.66 million people. Around 98.5 percent of the businesses are SMEs which employ 80 percent of the workforce.

Osmep noted that many small businesses don’t develop into medium-sized operations and more than half of the medium-sized companies are multi-national corporations.

Of the SMEs, the majority (44 percent) were engaged in trading, 38 percent in the service sector and 18 percent in manufacturing.

The National Economic and Social Development Board’s data shows that SMEs contributed to 37 percent of Thailand’s 11.38 trillion baht of GDP in 2012.
Osmep has also suggested there needs to be a revision of the way a small to medium enterprise is classified. Currently, a small business is classified as one that employs a maximum of 50 workers and has a fixed asset value of no more than 50 million baht.

A medium–sized operation is one with a maximum of 200 employees and fixed assets to the value of no more than 200 million baht.

Neither of the above figures takes into account the revenue stream of the company when assessing its small or medium size.

As a spokesperson for Osmep said, “If a medium-sized company cuts its headcount to below 50 because it has purchased machinery to replace labour, it is considered a small company despite an enormous amount of revenue.”

Nopporn Ruangwanit, who runs Thammasat University’s business and accounting degree programme, claimed many SMEs lacked the proper knowledge to be able to expand their business.
Thammasat University and Osmep have joined together to launch the SMEs Advance Project whereby 200 executives will be trained further in business management. Part of the course will include visits to Vietnam and Myanmar to study business management.

One point raised by Osmep is that Thai business operators spend 85 percent of their time in the office compared to only 15 percent of similar executives in Singapore and Malaysia. In the latter countries, executives spend much of their time building the connections they need to expand their businesses.