The Nation February 15, 2012 1:00 am
Despite the fast-approaching regional single market under the Asean Economic Community (AEC), more than half of Thai small and medium-sized enterprises have still not prepared themselves for the challenges of trade liberalisation.
This puts many of them at risk of being forced out of business in the not-too-distant future, according to the University of the Thai Chamber of Commerce.
A report by the UTCC’s Centre for International Trade Studies, released yesterday, showed that 57.2 per cent of SMEs across 11 sectors did not understand the benefits of regional integration.
Although the AEC “acknowledgement rate” among SMEs was higher than last year’s level, there was less of an improvement than considered desirable at this relatively late stage. Last year, 78.7 per cent of SME survey respondents did not understand the AEC.
“If the government or involved organisations do nothing to increase awareness of the AEC, many Thai enterprises will lose market share, forcing them to close down or be taken over by foreign enterprises,” said Aat Pisanwanich, director of the centre.
Enterprises have only two years and 10 months left to prepare for AEC integration in 2015. All involved parties must seriously educate people and enterprises to be more aware and develop themselves for market liberalisation, he said.
The study showed that among the 11 sectors surveyed, only three are ready for competition under the AEC: finance, tourism and “other services”.
Farming, industry, construction, telecommunication, retail and wholesale, education, healthcare and spas, and logistics are not ready for the competitive environment in a seamless regional market.
Issues that SMEs know the least about are investment liberalisation, service liberalisation, non-tariff barriers, rules of origins and single standards for Asean products, the UTCC found.
The major obstacles among enterprises not ready for the AEC are a lack of readiness on financial support, low development of human resources at both the management level and low-level officers, low development of information and other technology, high production and labour costs, low support from government agencies, and a low level of logistics development.
Moreover, 76.4 per cent of farming respondents know nothing about the coming regional integration, which presents a high risk that the Thai agricultural sector will lose market share within Asean.
Aat said the government and all other concerned bodies must urgently increase enterprises’ knowledge of integration.
Before the implementation of the AEC, most Thai enterprises must know more about the implications of integration so that they can develop their businesses for the seamless market.
Otherwise, SME businesses could collapse because they are unable to compete with their Asean counterparts, he added.
To boost awareness, more efficient public relations through the media and education should be adopted, while the government, in cooperation with the private sector, must organise more seminars and workshops to educate enterprises.
Provincial government agencies also need to increase their role in providing knowledge to local SMEs.
A single agency to promote enterprises’ awareness of integration and development should be set up, so that there is a centre focused fully on the AEC, Aat said.
While many agencies are currently involved with Asean liberalisation, these organisations have not cooperated or integrated sufficiently to help developing enterprises throughout the supply chain, he added.