Thailand’s major strengths of 4 decades ago have been eroded by high costs, outdated rules and regulations and failure to update infrastructure
Addressing the challenges facing small and medium enterprises (SMEs) today, Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), noted that over the past 40 years, Thailand's strengths have been first, a large workforce, second, cheap labour, third, low-cost land, and fourth, a strategic location as a regional investment hub.
“Today, we face challenges, as only one of these strengths remains—our central position as a regional connection point," Kriengkrai remarked.
He further explained that Thailand’s industrial structure remains heavily reliant on labour-intensive Original Equipment Manufacturing (OEM), with electricity costs nearly double those of regional competitors. This results in challenges related to production costs, wages, raw materials, and logistics.
Historically, Thailand has focused on land-based infrastructure, but to maximize efficiency, a combination of land, rail, water, and air logistics is needed.
Additionally, Thailand's legal framework is outdated, with nearly 100,000 regulations—among the most in the world.
“The FTI's key policy is to enhance competitiveness by reforming both traditional and future industries. These sectors will drive sustainable economic growth, balancing profits with environmental care. It's promising that more than 30 Print Circuit Board manufacturers have sought investment promotion from the BOI, with 100 factories expected to follow, each investing at least 10 billion baht," Kriengkrai said.
He also pointed out that the ongoing geopolitical conflicts have reshaped global trade, with the US and Europe imposing tariffs on Chinese goods. This has caused an oversupply of Chinese products, leading to a surge in exports to ASEAN, where China is now the top trading partner, surpassing the US.
“The influx of cheap goods has severely impacted Thai SMEs. In 2023, 22 industrial sectors saw significant increases in imports, and without adequate measures, this could rise to 30 sectors, posing a major challenge," he warned.
Kriengkrai emphasised that while Thailand may not need to impose tariff barriers, strict measures to enforce product quality standards, crack down on illegal imports, and prevent false declarations are necessary to slow the influx of goods. All relevant agencies must work together to address these issues.
