The SMEs Competitiveness Index fell by 0.8 points to 45.1 in the second quarter of this year, as businesses urge the government to help reduce costs and improve liquidity, according to a survey by the Institute of Trade Strategies at the University of the Thai Chamber of Commerce (UTCC).
The index is based on the SMEs Situation Index, SMEs Competency Index and SMEs Sustainability Index, all of which were below 50, indicating a worse situation for operators than in the first quarter.
The survey was conducted from July 13-26 and included 641 samples including micro, small and medium-sized enterprises (SMEs) in the manufacturing, trade and service sectors nationwide.
Most respondents reported worsening conditions in the second quarter, such as lower income, reduced order volumes and rising operating costs.
Thai SMEs face mounting cost pressures that are squeezing profit margins, while employment has shown little improvement, noted the UTCC.
Regarding business liquidity, 42% of SMEs said it deteriorated in the second quarter. When combined with rising debt burdens, this suggests business conditions in the second quarter did not improve, according to the survey.
Most respondents expect business conditions to remain largely unchanged over the next six months.
"Without further government stimulus, entrepreneurs expect business conditions to remain stagnant," said Wachira Koontaweethep, dean of UTCC's Faculty of Economics.
Business competency was evaluated on product and service quality, technology and innovation, brand-building and awareness, access to finance, debt repayment capacity and the ability to differentiate products and services.
The survey found that SMEs continue to struggle with differentiation, such as the ability to create distinctive products, while service declined. The result is that many products and services are undistinguishable in Thailand's economy.
Businesses expect competency to remain unchanged or improve slightly over the next six months, noted the survey.
SME sustainability assessed the ability to maintain profitability, diversify revenue sources and adapt during times of crisis. Profitability declined from the first quarter and most respondents expect it to weaken further over the next six months, according to the institute.
Thanavath Phonvichai, president of the UTCC, said SMEs believe the "Thai Chuay Thai Plus" co-payment scheme helped to increase sales and income, encouraging repeat customers.
The scheme supported liquidity and daily cash flow, although it has not significantly improved profitability.
"SMEs view the scheme as worthwhile because it strengthened consumer purchasing power," he said.
SMEs not participating in the programme called for broader eligibility criteria to allow more businesses to benefit, noted the UTCC.
The assistance SMEs most want from the government is support to reduce operating costs, including utility bills, transport expenses and cooking gas prices, according to the survey.
Entrepreneurs also called for greater financial and liquidity support, such as more flexible lending conditions, low-interest loans, higher credit limits and extended repayment periods.
