Jewellery, garments and Otop SMEs hit hard by prolonged protests

Economy February 05, 2014 00:00

By Watchara Pusayanawin
The Nati

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Small and medium-sized businesses in the gems/jewellery, garments and Otop (One Tambon, One Product) sectors are among the most affected by the ongoing anti-government protests.

The turmoil on the streets of the capital has depressed the influx of potential foreign buyers, with more than 10 per cent cancelling their visits to the “Bangkok Gems Fair” later this month, while garment sales at the Pratunam Platinum shopping district have fallen by over 80 per cent and sales of electrical appliances have dropped by 30 per cent, according to the latest survey on small and medium-sized enterprises (SMEs) released by the Industry Ministry’s Industrial Promotion Department.
Onchaga Sriboonreung, director-general of the agency, yesterday said the anti-government protests had hurt sales of many SMEs located in the city and the surrounding areas, due to weaker domestic demand, plus liquidity problems caused by delayed payments. 
Such problems faced by small SMEs will eventually expand to mid-sized and larger enterprises, as small SMEs serve as suppliers to larger businesses, said Onchaga. 
The survey covered 10 SME sectors, the hardest hit being the gems and jewellery sector, as a sharp fall in the number of foreign tourists and tour groups directly affected their business, especially during the November to February period, when sales are normally at their strongest. 
The “Bangkok Gems Fair”, which will be held late this month, plays a vital role in the export of Thai gems and jewellery, but more than 10 per cent of potential foreign buyers have cancelled their plans to visit Bangkok for the event – a development that could have a long-term impact on the sector.
Otop products have also been significantly affected, as up to 70 per cent of gift, souvenir, garment and foodstuff sales are generated in the final quarter of the year. 
The overall food sector, meanwhile, has been the victim of the psychological impact from the protests, leading to lower consumption and spending – in turn leading to inadequate liquidity. 
Processed agricultural products have been affected by higher prices of raw materials, factors of production and higher logistics/transportation costs during the “Bangkok shutdown”, which has prompted some foreign buyers to purchase goods from other countries. 
More than 80 per cent of garment sales have been affected, as the biggest clothing district of Pratunam Platinum is located near the main anti-government rally site. 
Investment in machinery and tools to expand production capacity is being postponed in view of the ongoing political impasse. Meanwhile, some garments exporters still have adequate stocks left.
Sales of electrical appliances and electronics have fallen by more than 30 per cent, as consumers have tightened up on their spending. Sales of air-conditioners have been particularly affected, as the unusually long cool season and the closure of several state offices by protesters have deferred much of the planned spending in this segment. 
Exports of leather goods, shoes and leather accessories have been little affected, except for lower sales at department stores located close to the anti-government rally sites and delivery problems from warehouses in certain areas of Bangkok.
SME auto-component makers have not been affected much, as most of the factories are located in the provinces. 
The department will send officials to help affected SMEs with such matters as reducing labour, production and operating costs, and boosting productivity with the existing labour force and factors of production.
It will assist in terms of human-resources development, finding new buyers and export markets in preparation for the Asean Economic Community, and exploring e-commerce business opportunities. 
In addition, the agency will seek cooperation from financial institutions to extend loans to affected SMEs said Onchaga.
As the fiscal year 2014 budget allocation would be affected if the caretaker government cannot form a new cabinet within the next six months, the agency is in the process of allocating funds to support SMEs, the director-general added.