SMEs hardest-hit amid political uncertainty: FTI

Corporate April 22, 2014 00:00

By Erich Parpart
The Nation

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At least 100,000 in danger of closure if crisis drags on to end of this year

The Federation of Thai Industries (FTI) warned yesterday that at least 100,000 small and medium enterprises (SMEs) will be forced to shut down if the ongoing political turmoil continues till the end of this year. 
The FTI explained that the political crisis was putting an additional strain on the economy via the slowing down of consumption, investment and government spending, which is badly affecting SMEs and the service sector that depend heavily on domestic consumption and tourism. FTI chairman Supant Mongkolsuthree went on to say that many SMEs were hit by the problem of liquidity and if the political turmoil continued till the end of 2014, some would be forced to close down. 
“There are more than 2 million small businesses in the system and 5 per cent or around 100,000 of them will disappear if the current political uncertainty drags on till the end of the year,” Supant said. 
He added that the most worrisome were SMEs in the service sector, such as hotels, restaurants and retail shops that sell superfluous items, since people’s purchasing power has slowed down in the first quarter and political uncertainty has made people more cautious. 
However, he said, the closure of some SMEs would have a minimal impact on the labour market because most small businesses usually employ less than 10 people and the current unemployment rate is considerably low compared to other countries. 
Supant also pointed out that the Thai labour market was resilient, considering its recovery from the 2010 flood crisis and the fact that large industries were still hiring and that the export sector was still intact. 
“If some SMEs are actually forced to shut down, then it would only have a small impact on the labour market and would recover quickly after the political turmoil ends,” he said. 
Supant added that the FTI already has some short-term plans to help SMEs, such as setting up agencies to provide financial consultations, as well as negotiating with financial institutions to help small businesses ease cash-flow problems for another year. He also called on the authorities to bring an end to the political conflict via negotiations in order to improve the economic situation. 

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