How Thailand’s aging society and changing world affect businesses and SMEs

The highly fluctuating conditions of the modern world have significantly affected the environment, climate, as well as the global economy. Amid this challenging situation, businesses and small and medium enterprises (SMEs) must also be on alert for the increasing senior population, a formidable time bomb that could create a widespread economic impact.

Speaking at the Krungsri-MUFG ESG Symposium 2024 on the topic, “Transition in Action”, Social Development and Human Security Minister Varawut Silpa-archa underscored the fact that Thailand is becoming an ageing society, which he dubbed “a giant time bomb” that could become problematic in the next 10 years.

The symposium was held in Bangkok on May 29 by Bank of Ayudhya Plc, in collaboration with Mitsubishi UFJ Financial Group (MUFG), Japan's largest financial group.

“In 2022, there were only 500,000 newborns in Thailand because the younger generation is reluctant to have children, leading to a more isolated family structure,” said Varawut.

He said the average age of the elderly in Thailand is 76 for females and 74 for males. The current demographic trend will lead to a decrease in the population from 66 million to 58 million, and eventually fall to 38 million.

This will significantly slow down the country’s economic growth, he warned.

Varawut said three working people in Thailand are paying taxes to support one elderly person, and predicted that the ratio would keep on getting lower in the future.

“Currently there are about 13 million elders in Thailand. They require a supporting budget of around 6 billion baht per year, which comes from only 4.5 million taxpayers,” he said.

Varawut said his ministry has been tackling the demographic problems faced by Thailand with focus on increasing the quality of newborns in terms of education, social and financial support.

He underscored the ministry’s five-point strategy, which was formed under the principle of environmental, social, and governance (ESG) as well as the government’s model of bio-circular-green economy. The strategy focuses on the following aspects:

1. Empower the working-age population in building and taking care of families, preparing them to be high-quality seniors in the future. Enhance opportunities and awareness in skill development and capability building for this group, ensuring that they can manage their finances effectively.

2. Improve the quality and productivity of children and youth. Reform the education system with focus on building a high-quality workforce. Enhance the quality of vocational education alongside general subjects to fulfill the real demands of the labor market. 

3. Harness the potential of the elderly to transform the demographic crisis into an opportunity. Address the problems faced by seniors including economic instability, lack of technological skills, chronic illnesses, and generational gap. Raise social awareness that the elderly are life experts with valuable experience. 

4. Increase value and opportunities among the disabled. Foster positive attitudes towards living with disabilities, and maximize access to appropriate education and career opportunities for the disabled under flexible working environments.

5. Develop a suitable ecosystem to enhance family stability. Encourage behaviors that promote the preservation and restoration of nature, reduce carbon footprints, and support a green economy.

“As we approach an aging society, all citizens and organizations must transition toward sustainability to ensure that we all can move forward together efficiently,” said Varawut.

During the forum titled “Practical Sustainability”, Khemupsorn Sirisukha, an environmentalist at Siriupsorn Ltd, said: “The world is currently facing extreme fluctuations, resulting in a condition called ‘global boiling’ that affects food security, public health, viral diseases, and air pollution. Rising temperatures from increased greenhouse gas emissions are altering jet streams and wind speeds, leading to more severe air turbulence. Other impacts of climate change include intense storms disrupting air travel, shifting wind patterns affecting flight routes, rising temperatures affecting takeoff conditions, and rising sea levels threatening coastal airports.”

The environmentalist added that climate change also affects bee habitats, reducing pollination and decreasing agricultural yields, which has broad impacts on human communities.

“Thailand is experiencing these effects through flooding, forest fires, and increased loss of biodiversity from overfishing and invasive species,” she said. “Pollution issues include PM2.5 fine dust, food waste, plastic waste, and eutrophication, which are significant environmental threats.” 

Khemupsorn pointed out that practical sustainability required mutual understanding, planning, and execution of plans by all related parties as most of the environmental problems are interconnected.

“Currently the sustainability efforts are volunteer-based, but in the future they will become mandatory for all. Failure to prepare and adjust to this trend will eventually lead to loss of competitiveness,” she warned.

Speaking on the topic, “Tracing Carbon Footprint to Low Carbon Businesses”, Rongphet Bunchuaidee, deputy director of Thailand Greenhouse Gas Management Organisation, elaborated that the government had been facilitating SMEs in transitioning towards sustainability in the same manner that global companies are aiming for net zero emission in their operations.

He said the Office of SMEs Promotion had been facilitating SMEs looking to transition towards green industries in evaluating and obtaining business development services under a co-payment plan, in which operators are required to cover 50 to 80 percent of the expenses.

Speaking on the topic “How Businesses Contribute to a Sustainable Society”, ML Dispanadda Diskul, chief executive officer of the Mae Fah Luang Foundation under Royal Patronage, said the foundation had been recruiting local farmers and former deforesters as rangers to protect the forests, creating additional income for communities during the off-season.

“Mae Fah Luang Foundation is committed to enabling local people to manage and improve their communities in the long term,” he said. “We try to understand their income structure and help them find marketable products that utilise available resources to the fullest.”

“It’s also important to listen to what the people want,” he added. 

By utilizing the ESG principles, entrepreneurs can efficiently improve their business administration, increase social engagement and maximize their sustainability efforts, Dispanadda said.