Small-size and low-tech firms have suffered the most from the COVID-19 crisis, according to research conducted by the United Nations Industrial Development Organization (UNIDO), part of the United Nations Country Team in Thailand.
The Impact Assessment of COVID-19 on the Thai Industrial Sector, highlights that small-size and low-tech firms have suffered due firstly to reduced orders and secondly to a shortage of inputs including raw materials due to the disruption of the 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 for a longer period, nearly half of the small size firms could be severely impacted.
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.
Deferment of tax payments, reductions of social contributions and operational costs, including rent and utility payments, and improved loan terms are amongst the supportive measures most preferred from the 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 invests 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.”
The findings in the assessment have been gathered from an online survey carried out in collaboration with the Ministry of Industry, the Industrial Estate Authority of Thailand and the Small and Medium Enterprise Institute under the Federation of Thai Industries, and UNIDO’s networks in Thailand.
Impact Assessment of COVID-19 on the Thai Industrial Sector, is part of a series of assessments of COVID-19 conducted by UN Thailand. Aassessments of the socio-economic impact of COVID-19, the pandemic’s bearing on the labour market will be launched in the later this month.