NationThailand-Aug 10
Thailand’s small and medium-sized enterprises have emerged as one of the most vulnerable parts of the economy, as financial and business indicators point to rising bad debt, prolonged credit contraction, weaker profitability and an increasing number of factory closures. The widening gap between SMEs and large companies is also becoming more pronounced. While smaller businesses are struggling to obtain financing and withstand rising costs, large companies continue to expand borrowing and investment. Bank of Thailand Governor Vitai Ratanakorn previously described non-performing loans, or NPLs, as one of the clearest signs of weakness in the Thai economy.
The overall NPL ratio rose from 2.85% to 2.97% in May 2026 and could continue increasing if economic growth remains weak, he said. The most concerning issue is the sharp difference in loan quality among businesses of different sizes. The NPL ratio among SMEs stood at 9.5%, compared with only 1.5% for large corporate borrowers. The disparity reflects both economic inequality and the declining competitiveness of smaller businesses. SMEs have less power to absorb rising costs. Large companies generally have greater bargaining power and are better equipped to adjust to higher costs, while SMEs face more constraints and are more severely affected by weak economic conditions. As SMEs are a major source of employment in Thailand, a continued contraction in lending to the sector could deepen the country’s K-shaped economic divide. Businesses that fall into non-performing debt and cannot obtain new credit may be forced to reduce employment or close. The effects would then spread to household incomes, consumer spending and domestic economic activity. Payong Srivanich, president of Krung Thai Bank Public Company Limited, said the condition of Thai SMEs was among the most serious economic concerns because the sector faced deep structural challenges. Addressing the problem should therefore be treated as a national priority requiring urgent cooperation from every sector, he said, particularly because SMEs provide a substantial share of employment in the economy. Read more at:
