Another 40,000 SMEs expected to emerge this year

ECONOMY / SMALL BUSINESS

Another 40,000 SMEs expected to emerge this year

YUTHANA PRAIWAN

An estimated 40,000 new small and medium-sized enterprises will emerge in the domestic market this year, given consistent growth in the economy, the Office of Small and Medium Enterprises Promotion (Osmep) has forecast.

The estimate is based on expected growth in GDP this year of between 4.5% and 5.0%, said Jhitraporn Techacharn, the Osmep director-general.

The GDP growth forecast is slightly higher than in 2007, when an estimated 40,000 SME operators started business, mainly in services and manufacturing.

Mrs Jhitraporn also forecast that business activity in the SME sector would rise by between 4% and 4.5%, similar to last year estimate of 4.1%. SMEs account for about 39% of the country's GDP.

While the emergence of new businesses is a good sign for the economy as more players should encourage cash inflows and improve sentiment, Osmep is concerned about the health of existing operators in the market.

''The most important thing is how many existing businesses will survive and have a chance to grow, that is our major objective,'' Mrs Jhitraporn said.

Osmep's fiscal budget of 1.8 billion baht goes mainly to support existing businesses through more than 100 productivity improvement, production technology and innovation programmes.

Osmep last year had agreements with state agencies, universities and the Federation of Thai Industries (FTI) to help firms improve their competitiveness. It also has set up a venture capital fund worth 500 million baht to use for joint investments to help operators that require equity to expand their businesses.

The fund targets businesses including alternative fuel, auto parts, fashion, food and herbal products firms.

Some high-potential SMEs will be encouraged to raise funds through listing on the Market for Alternative Investment (MAI) with the support of Osmep.

The office also works with banks in screening SMEs that could qualify for low-cost loans at 3% annual interest, mainly to upgrade machinery. Last year the office received 226 applications for a total of 3.27 billion baht, but only 14 were approved for 147 million baht.