More than 99 per of an estimated 1.87 million business establishments in Thailand are small and medium-sized enterprises (SMEs).

Pongsak Chewcharat, president of the Small and Medium Enterprise Development Bank of Thailand (SME Bank), said SMEs were a critical part of the overall Thai economy.

"SMEs generate more than 80 per cent of the country's non-farm employment, 42 per cent of our gross domestic product and 38 per cent of manufactured exports," he said.

Since becoming the SME Bank's president late last year, Pongsak said, his mission has been to ensure that his bank does whatever it can to guarantee that Thai SMEs are successful. "Our mission doesn't stop after we fund an SME," he said.

Under Pongsak, the SME Bank is developing and executing a multitude of educational and advisory services to help build a sustainable SME environment.

"We are developing and implementing specific services that will help SMEs improve much-needed management skills," he said.

The SME Bank is also developing specific programmes that will teach SMEs how to formulate and implement business strategies in today's fast-changing business environment.

Pongsak said the SME Bank's primary public policy role had always been to promote and develop sustainable SMEs that enhanced the grass-roots economy's standard of living.

"At the same time, we want to implement policies that enhance Thailand's competitiveness and ensure sustainable economic growth," he said.

Pongsak said the challenge for any government was to employ appropriate measures cost-effectively in the stimulation of SME growth.

"We want to facilitate the development of SMEs and also just as importantly help them and the country enhance overall competitiveness."

He said similar challenges existed for research organisations, academic institutions, large companies and industry associations in their interactions with SMEs.

"Often, a flexible and responsible small-company culture is a mismatch for the complex bureaucracies of large companies and institutions. It's not easy to develop mutually beneficial relationships."

Pongsak said most people thought of successful Thai businesses as companies that had huge factories in industrial estates on the Eastern Seaboard and employed thousands of people.

"However, a typical successful Thai business is a small or medium-sized family-owned

one that has fewer than 200 employees."

In Thailand, small business enterprises usually have 50 or fewer staff and fixed assets of less than Bt50 million, while medium-sized enterprises, depending on the type of business, can range from 16-200 employees and have assets ranging from Bt30 million to Bt200 million.

He said Thailand was not the only country that relied on its SMEs to drive its economy. "Even Australia and Japan rely a great deal on their SMEs to deliver economic growth."

A recent study by the Australian Electrical and Electronics Manufacturers' Association showed that in typical economies SMEs constituted 99 per cent of businesses and employed more than two-thirds of the workforce.

"Japan has more than 4.69 million SMEs, constituting 99.7 per cent of all enterprises and accounting for 70 per cent of overall employment," he said.

Pongsak said Japan's small and medium-sized companies came in thousands of varieties, ranging from world-leading technology firms to neighbourhood candy stores.

"These small and medium-sized enterprises form the real foundation of the Japanese economy, and now new initiatives are being implemented to help the country's SMEs revitalise the economy," he said.

On the macro side, Pongsak said the SME Bank had restructured its business into 10 specific clusters: food, manufacturing, tourism, services, automotive, fashion, hi-tech/energy, wholesale/retail, packaging/logistics and franchise/One Tambon One Product ventures.

"One of our goals is to help companies in these clusters expand their markets bases."

Pongsak said that to ensure that the SME Bank's funds were optimally targeted it was continuously developing and implementing new programmes that supported the development of successful sectors.

"We're constantly tweaking our programmes, because SMEs tend to be fragile, due to their small scale, and can be seriously affected by economic globalisation, financial-system instability and other rapid economic-environment changes."

Part two in the series will be: "SME paradigm shift - building a Thai entrepreneurial society".