NationThailand-June 15
Thailand’s labor market—particularly among small and medium-sized enterprises (SMEs)—continues to face mounting risks from both domestic and international factors, notably the impact of a new wave of global trade wars. These pressures are disrupting sales and production continuity. At the same time, Thailand’s production sector has yet to make significant progress in innovation, leaving it unable to meet evolving customer demands across various levels. This has contributed to declining sales, reduced production output, and falling employment levels, resulting in widespread business closures over the past year and into early 2025. Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council (NESDC), stressed that one critical issue in the labor market is the need for innovation and technological adoption to ensure the survival of SMEs. According to the World Bank’s Thailand Economic Monitor – February 2025, Thai businesses adopt innovation in their operations at a lower rate than regional peers. Only 11.9% of Thai firms incorporate innovation into their production processes, compared to 40.9% in the Philippines, 37.9% in Vietnam, and 37.3% in Malaysia.
The report also highlights Thailand’s relatively low investment in research and development, which poses a structural barrier to business competitiveness.
This innovation gap may have contributed significantly to the wave of business closures in 2024, during which nearly 24,000 SMEs deregistered, and over 1,234 factories—mostly small and medium-sized—shut down. These closures affected more than 35,000 workers, with the majority of the closed factories being in the manufacturing sector, where competitiveness remains a serious concern.
In response, the NESDC recommends expanding access to financing for Thai SMEs, enabling them to adopt innovation and technology to improve production processes, reduce costs, and maintain competitiveness in an increasingly volatile market. Currently, SMEs employ over 12.9 million people across Thailand. Strengthening their competitive edge would not only stabilize employment but also boost incomes for millions of workers. The World Bank’s latest survey on innovation activity among ASEAN businesses reveals that the Philippines and Vietnam lead the region in terms of innovation engagement, significantly outpacing Thailand, Indonesia, and Malaysia. The findings, published in the Thailand Economic Monitor – February 2025, rank the five countries based on the prevalence of innovation in production processes, the introduction of new products and services, foreign technology adoption, and research and development (R&D) expenditure. Read more at:
https://www.nationthailand.com/blogs/business/economy/40051268
