SME confidence shoots up in Q1

Business confidence among small and medium-sized enterprises (SMEs) hit a oneyear high in the first quarter, buoyed by higher income from the export and services sectors and easing concerns about cost management, says TMB Analytics.

The TMB-SME Sentiment Index found that confidence among SME business operators rose to 40.2 during the first three months, up from 35.5 in last year’s fourth quarter, said TMB Analytics, a research unit of TMB Bank.

The think tank conducted a survey of 1,268 SMEs nationwide.

Benjarong Suwankiri, head of strategy and transformation at TMB Bank, said confidence has improved as income rises and concerns ease about production cost.

Income confidence among SMEs reached a five-year high in the first quarter of 49.2 and recorded improvement in all regions, particularly in the East and in Greater Bangkok, supported by higher purchasing power in the trade, services and manufacturing sectors, Mr Benjarong said.

A rise in farm income, a pickup in goods and services exports, and increasing employment in the manufacturing sector also contributed to income confidence.

“The major factor for improving income confidence is new orders from SME’s existing customers, benefits from the government’s economic stimulus measures, and seasonal tourism,” Mr Benjarong said.

Confidence in cost management stood at 31.1 as SME operators fretted less about production cost, he said, but they remained anxious about labour costs rising this month.

“SME business recovery has been considered a laggard relative to the country’s GDP,” he said. “SME loans, which had been flat over many years, are expected to pick up in the third and the fourth quarters this year.”

TMB Analytics forecasts Thailand’s GDP growth at 4% in 2018, with SME loans projected to expand by 4-5%, which is above the industry average.

SME sentiment for the next three months, however, fell to 49.7 from 51.9 registered in the final quarter as confidence in income and production cost ebbed.

Despite the tepid growth momentum among SME businesses bottoming out, these businesses must implement new technologies to adapt to the digital ecosystem and rapid changes in consumer behaviour, Mr Benjarong said.