Small, low-tech firms suffer the most during COVID: UN Thailand
- Small-size and low-tech firms have suffered the most among businesses from the COVID-19 crisis, according to the research conducted by the United Nations Industrial Development Organization (UNIDO), a member of the UN in Thailand.
The impact assessment of COVID-19 on the Thai industrial sector, highlights that small-size and low-tech firms have suffered the most due to reduced orders and a resulting shortage of raw materials due to disruption of supply chain.
Reduced orders have led to a fall in revenue, which has compounded the shortage of cash flow, leaving small firms struggling. If containment measures are extended to a longer period, nearly half of the small size firms could be severely impacted. While concerned for employee well-being firms do not see laying off of employees as a primary coping measure. Cutting operational costs, accessing loans, and using technology are preferred options to deal with the immediate impact of the pandemic.
Deference of tax payments, reduction of social contributions and operational costs including rent and utility and improved loan terms are amongst the most preferred supportive measures from government.
“We believe that the most helpful recovery support is to immediately restart and stimulate demand for goods and services,” said Stein Hansen, Regional Director and Representative of UNIDO. “Moreover, we would like to recommend that the government invest in advanced technology, as the COVID-19 crisis is likely to result in the structural transformation of manufacturing, to a new normal. Whilst this new normal is still to be navigated, it appears most likely that it will be more digitized, more circular and more resilient.”
Gita Sabharwal, the UN Resident Coordinator in Thailand, added that “the small and medium-sized businesses are the backbone of the Thai economy. Therefore, we need new and innovative ways to provide support in response to COVID-19, as this will save jobs and secure livelihoods. These include proactive consultations and coaching, providing incentives for productivity-enhancing investments, promoting digital adoption, and climate friendly technology to ensure competitiveness of SME’s.”
These findings are gathered from an online survey in collaboration with the Ministry of Industry, Industrial Estate Authority of Thailand and Small and Medium Enterprise Institute under the Federation of Thai Industries and UNIDO’s networks in Thailand.
This is part of the series of the impact assessments of COVID-19, conducted by UN Thailand. Two further assessments of the socio-economic impact of COVID-19, as well as the bearing on the labour market, will be launched in the later this month.
Read the full report here