Domestic consumption will drive the total value of small and medium-sized enterprises (SMEs) to grow 3.9-4.5 per cent to Bt4.3 trillion next year, estimates the Small and Medium Enterprises Promotion Office.

Director-general Jhitraporn Tachacharn said yesterday that the baht's appreciation will affect SME exports next year. However, domestic consumption will boost the market, thanks to a declining trend in interest rates that will enhance spending.

At present, 70 per cent of SMEs' business value comes from the domestic market, the remainder from exports. SMEs recorded an export value of Bt1.46 trillion this year, up 11.86 per cent from last year and comprising 30.9 per cent of Thailand's total export value.

The office estimates that the export value will increase to Bt1.62 trillion next year - up 11.02 per cent from this year.

"We believe that the export value will increase because Thailand's SMEs have tried to develop their products to complete with their rivals, although the baht's appreciation will have a negative impact for SME exporters next year," Jhitraporn said.

"Some SMEs may lose their business because their production price cannot compete with their rivals, but others have succeeded in developing innovative products to compete with other countries. As a result, we believe that our SMEs' export value will continue to grow next year," she said.

She added that autos and auto parts, steel, home electronics, pulp and paper, printing, ceramics and herbal products will continue to be rising stars next year. They have continued to record high margins compared with other industries.

Meanwhile, textiles, electronic parts, packaging, jewellery, food products, wood furniture, leather and rubber industries will face high competition from imported products from China, India and Vietnam. As a result, they have to develop their business to complete with these imports.

Jhitraporn said that in the next year her office will support SMEs to develop quality products and manage their energy and logistics costs to reduce production costs and thus boost their margins to compete with imported products. The office has also set up a budget of Bt1.5 billion for a joint-venture fund with SMEs who have the potential to expand their business next year.

Jhitraporn added that the industries targeted for the joint venture plan included energy, autos, logistics and home electronics.

SMEs numbered 2.2 million companies at the end of this year and generated income worth 30 per cent of gross domestic product.

Somluck Srimalee

The Nation