Survey: 40% of SMEs face high risk of closure

Asia's Tech News Daily

As many as 40% of small and medium-sized enterprises (SMEs) face a high risk of closure because of tight liquidity and higher operation costs, according to the latest study by the University of the Thai Chamber of Commerce (UTCC).

Based on the survey of SMEs’ status during Nov 12-17, Sauwanee Thairungroj, adviser to the UTCC council, said many SMEs are at high risk of closure because of the serious impact of the Covid-19 crisis. These SMEs face a severe liquidity crunch and cannot access funds, she said.

“A lack of liquidity is a serious problem for SMEs right now, while the economic situation remains very fragile,” said Ms Sauwanee. “If a new wave of Covid-19 occurs and lockdown measures are reinstated, the risk of business closure only increases.”

The survey found SMEs’ sales volume plunged by an average of 18.6% after the pandemic, while their operation costs rose and profits fell.

The SMEs proposed the government accelerate a soft loan assistance scheme without a collateral requirement, tax breaks on raw materials and capital goods imports, tourism stimulus measures, vaccination rollout and effective control of Covid-19 infections.

Thanavath Phonvichai, the UTCC president, said the government should prioritise efforts to address the tight liquidity problems of SMEs and support the loan scheme worth 200-300 billion baht.

“Many SMEs are facing tight cash flow, as they no longer have collateral available for loans,” he said. “More importantly, overall consumer purchasing power is yet to recover, while household debt remains relatively high.”

There are currently around 3 million SME operators, contributing 6 trillion baht to the country, or 40% of GDP.

According to Mr Thanavath, if 5% of SMEs cease business, the economic damage is estimated at 300 billion baht, affecting up to 2 million workers.

The National Economic and Social Development Council, which is the government planning unit, reported on Monday household debt amounted to 14.3 trillion baht in the second quarter, up 5% from 14.1 trillion the previous quarter. The figure represents 89.3% of GDP, down from 90.6% the previous quarter.

Although the non-performing loan (NPL) ratio of consumer loans was 2.92%, unchanged from the previous quarter, the NPL ratio of credit card loans accelerated for the second quarter in a row to 3.51%.

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