SMEs need ecosystems, not donors

POLICY FOCUS

- CHAKORN LOETNITHAT YOS VAJRAGUPTA TAN CHAIMADEE

In today's fast-changing economy, small and medium-sized enterprises (SMEs) matter more than in the past.

They create jobs, contribute to GDP value, and open up opportunities for innovation. Yet, while SMEs are often praised as the "backbone" of the Thai economy, praise alone will not help them thrive.

What they need is not just government handouts or temporary aid, but also a sustainable business ecosystem.

BEYOND SMALL SHOPS

SMEs are more than corner shops or family businesses. Official definitions include firms with annual sales of up to 500 million baht in the manufacturing sector and 300 million baht in the services sector. Some firms employ as many as 200 workers.

This diversity of business size not only makes them central to economic growth but also complicates policy decision-making. A one-size-fits-all approach is unlikely to work.

3 CHALLENGES

First, the sheer variety of SMEs, from micro firms to mid-sized exporters, creates challenges. Policy aimed at one end of the spectrum may fail at the other.

Second, SMEs differ across industries. A factory linked to global supply chains faces very different pressures from a local retailer. Exporters must meet environmental and quality standards right away or risk exclusion.

By contrast, the local retail market is restricted in its growth because domestic purchasing power is limited. With household spending weak and consumer demand often stagnant, small retailers face constant pressure on sales and margins, leaving little room for real expansion.