'Innovation' key in boosting SME competitiveness

Economy July 26, 2014 00:00

By Sucheera Pinijparakarn
The Na

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Sector lags behind in GDP contribution

Innovation will help drive the competitiveness of Thai small and medium-sized enterprises in the Asean arena, says the Office of Small and Medium Enterprises Promotion.
Osmep deputy director Wimonkarn Kosumas said SMEs contributed only 37 per cent of Thai gross domestic product even though they make up 99 per cent of the country’s businesses. In a high-income economy, SMEs represent 45-50 per cent of GDP, so if Thailand is to upgrade itself to that level, SMEs must play a crucial role in helping the country achieve that goal, she said.
Several countries are promoting innovation as a necessary part of doing business, she said. But according to the Asean SME Policy Index, Thailand is lagging behind Singapore and Malaysia in terms of innovation, while Vietnam, although still behind Thailand, is giving innovation more importance as it strives to improve its competitiveness. Wimonkarn said Thailand’s government, private and banking sectors should all be pushing for innovation among SMEs.
Osmep has signed memoranda of understanding with 10 organisations to encourage SMEs to become more innovative in their products and services.
Boontuck Wungcharoen, chairman of  Thai Bankers’ Association, said that to boost competitiveness, enterprises should not just focus on cost reduction but should also look towards innovation to add value to their businesses.
The Asean Economic Community next year will pose both opportunities and risks to businesses. Those that are innovative will be better equipped to take advantage of the opportunities.
To support innovative development, funding is important, and the banking sector is ready to support SMEs in this endeavour, he said.
Only 700,000 of the country’s 2.7 million SMEs access bank loans.
“We have given more importance to helping the competitiveness of SMEs, and the association is pushing the Business Security Act by accommodating SMEs that use their inventories as collateral for bank loans,” he said.
Thai Chamber of Commerce chairman Isara Vongkusolkij said the country was facing a labour shortage, so manufacturers that rely on labour should think about high-value-added products to diversify risk.