The Thai economy is in a very odd place right now. On one hand, shows strong growth potential, with a consistent 3 per cent expansion rate. Very appealing by international standards. On the other, evidence points to troubled wealth distribution and issues internally.
The main cause of this economic discomfort seems to stem from the large corporations and businesses. The majority of the wealth and growth seems to congregate in these large businesses; all while the government has driven up debt levels.
Business giants in Thailand are almost guaranteed success in this current landscape. A good example can be seen in the rapid expansion of convenience stores in the country over the past few decades. As more of these big name convenience stores appeared, local, family owned convenience stores began to fade away.
Although the Thai economy is undoubtedly suffering impacts from the global slowdown, policies under Prime Minister Prayut Chan-o-cha’s government over the past five years have created mixed results that favour large corporations over smaller players. The success of these conglomerates often come at the expense of SMEs, which are key to creating more diversity in the Thai economy.
A 2018 report by Credit Suisse ranked Thailand as the world’s most unequal country, with the richest 1 per cent of the population possessing more 66.9 per cent of the country’s wealth. Just two year before, Thailand was the third most unequal, ahead of Russia and India. The drop to worst spot only reinforces the impression that the wealthy have gained the most from Thailand’s modest growth.
Indicators on SME loans released by Siam Commercial Bank, show a strong decline in 2019 compared to 2016. Not only did SME lending contract 1.2 per cent year on year in 2019, compared to a 3.6 per cent expansion in 2016, but the rate of non-performing loans among SMEs nearly doubled in that same period of time.
Heavily contrasting this is the prospects of Thailand’s business elites. Forbes Thailand’s 50 Richest List has shown that the wealth of the Thailand’s top business operators have been on the rise over the same period.
The Thai government’s propensity to promote and prolong monopolistic rents for large businesses needs to be curbed to allow economic wealth to be distributed more broadly. Local SMEs need to be nurtured through fiscal and financial policies that puts emphasis on long-term competitiveness beyond cost advantages. Other objectives such as productivity and creativity should also be goals for SME development programmes.