Provinces still lagging, says BBL

SMEs

Small and medium-sized enterprises (SMEs) upcountry will have to do more next year to cope with stronger competition and higher costs, particularly from the higher daily minimum wage, says Bangkok Bank (BBL).

Executive chairman Kosit Panpiemras said provincial SMEs have been improving their business operations only marginally.

Among the challenges of provincial operations is limited access to information compared with operators based in Bangkok and other large cities.

Mr Kosit said provincial operators must make improvements in areas ranging from products, productivity, competitiveness and know-how to market access in preparations for a tougher situation.

He said the daily minimum wage increase to 300 baht nationwide from Jan 1 is a key risk for provincial SMEs but not for businesses based in Bangkok or industrial estates.

SMEs located in the capital have already adjusted themselves and improved operations satisfactorily.

Some have expanded abroad, especially to other Asean markets, and offshore expansion remains in a positive trend.

"However, not all provincial SMEs can afford to do this," Mr Kosit noted.

Most of BBL's SME customers have adjusted themselves, but the bank must still monitor them.

Generally, local SME business has higher potential to grow next year, supported by the country's strong economic momentum.

Separately, Suvarn Thansathit, a senior executive vice-president, said labour-intensive SME industries will face higher costs from the increased minimum wage next year.

The weaker ones will be squeezed out, but their number is small, he said.

"Some weak SMEs that cannot adjust themselves to the changing environment may close down gradually. As well, higher wages will erode their ability to repay debts," said Mr Suvarn.

However, time is still on their side, and BBL is ready to support them including with debt refinancing, which proved an effective survival tool after last year's floods, he added.

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About the author

Writer: Somruedi Banchongduang
Position: Business Reporter






Article source: http://www.thethailandlinks.com/2012/12/15/provinces-still-lagging-says-bbl/