Current SME Situation and SME promotion in ThailandBy the Office of SMEs Promotion30 March 2011

Definition of Thai SMEsEconomic Significance of Thai SMEsOSMEP as Focal Agency on SME PromotionVision, Roles & Responsibilities of OSMEPPlan, Strategies & Tools for SME PromotionRefocusing of SME Promotion Policy

Sector 1. Definition of SMEs in Thailand

- Majority of the Economy- Key Job Creators- Contributors of GDP- Contributors of Export Value

2. Economic Significance of Thai SMEs

Number ofEnterpriseEmployment (Person)GDP(Million Bt.)Export Value(Million Bt.)2,896,106 (99.8%)9,701,354 (78.2%)3,417,860 (42.73%)2,900,75912,405,597 7,998,1515,199,9124,653 (0.2%)2,704,243 (21.8%)4,156,704 (51.97%)1,589,199 (30.56%)TotalEconomic Significance of SMEs 20091) GDP in the figure was only the non-agricultural sector, accounting for 88.4% of the overall and 5.3% of which represented other types of enterprises unable to identify their size. 2) GDP of agricultural sector was 1,052.564 mln. bt or 11.6% of overall GDP.3) Export value of 3.58% was from export transactions unable to identify the exporter size.3,424,579 (65.86%)

Structure of Gross Domestic Product 2009 Source: The Office of the National Economic and Social Development BoardComplied by: The Office of Small and Medium Enterprises Promotion (OSMEP)

Foreign Trade Value of SMEs 2007-2009 Source : Thai Customs DepartmentCompiled : The Office of Small and Medium Enterprises Promotion (OSMEP)

Trade in Baht 2007 2008 2009SME EXPORT1,575,971.601,691,144.901,589,199.87SME IMPORT1,452,734.401,771,502.00 1,377,740.25 SME BALANCE123,237.20-80,357.10211,459.62SME TRADE3,028,706.003,462,646.902,966,940.12SME EXPORT GROWTH (%)8.47%7.36%- 6.03%SME IMPORT GROWTH (%)-16.4%21.9%- 22.24%

In order to promote the growth of the SMEs, the Office of Small and Medium Enterprises Promotion (OSMEP) was established by the endorsement of the SME Promotion Act 2000 (Publicized in the Royal Gazette on February 17, 2000) as focal point on SME promotion 3. OSMEP as Thailands Focal Agency on SME Promotion

The National Board of SME Promotion OSMEPMr. Yuthasak Supasorn

The Executive Board of OSMEPMr. Witoon SimachokedeeDr. Trairong Suwankiri

4. Vision & Mission of

SME Promotion

VISION on SME Promotion

To be leaderin policy formulationon SME promotionand to serve as center in coordinating working systems in order to forgeoverall SME promotionwithin 2012

Dr. Yuthasak Supasorn OSMEP Director-General

MISSION

Recommending SME promotion policy and formulating SMEs promotion master plan and action plan for the overall, sectoral and area approaches and recommending the amendment of SME related laws and regulations Forging, supporting, operating and coordinating the cooperation in the public and private sectors, domestically and internationally, as well as, monitoring and evaluating the operation results to ensure the efficiencyDeveloping the National Center of SME Database and Early Warning Information which is comprehensive, accurate and up to date and conducting study, analysis, research and situation report for the use of policy formulation on SME promotion and servicesDeveloping SME promotion systems and conducting pilot projects, integration projects and ad hoc projects to jointly promote SME with other relevant agenciesUtilizing SME Promotion Fund which is efficiently managed as a tool of SME promotion

Mission (Cont.)

Formulating SME Master and Action Plan and SME related laws and regulations Taking charge of SME promotional activities that have yet to be implemented by other officesEstablishing international network and serving as SME advocacy in both local and international arenaProviding support facilities for SME such as financial support, innovation and technology support, mentoring, incubation, etc.Managing and monitoring special SME promotional projects under the governments policies i.e. OTOP

5. Plan, Strategies and Toolsfor SME Promotion

2nd SME Promotion Master Plan (2007-2011)

Vision: SMEs to Grow with Sustainability & StrengthIntellectual Infrastructure Network& AllianceProductivityCompetitivenessStrategy 1: Create new entrepreneur and develop the capability of existing entrepreneursStrategy 3: Increase the efficiency and reduce impediment in trading sectorsStrategy 4: Promote the Capability on Value Creation in Services Strategy 5: Promote SMEs in Regional and Local AreasStrategy 2: Upgrade Manufacturing SMEsStrategy 6 : Create business environment and enabling factors

* Initiatives on SME Promotion, 2003 - 20102009200320042005OTOP Project200620072008Italian Service Desk-Master Plan on the Promotion of OTOP- -National SME Information Center-ASEAN SME Partnership Roadmap SME Flying Geese SME Capacity BuildingSME ConsortiumVenture Capital FundCapacity Building Fund-SME Incubation Center-iSME Development Center2010 SME Development and Incubation in Creative Economy Concept SME Identity Study Project

III. OSMEPs SMEs Promotion Infrastructure

Skills & Competency buildingEnablingFinancingMarket Accessibility

Incubation MentorshipConsultancy Business coaching & Training SMEs University iSMEs Machine Fund Venture Capital Funds Business Matching

*

OSMEPs Tools for SME PromotionSkills & Competency buildingCapacity BuildingFinancingSupportMarket Accessibility Incubation MentorshipConsultancy Business Coaching & Training SME University iSMEs Machine FundInternation-alization Fund Intellectual Property Fund Consultancy Fund Venture Capital Fund Business Matching

5. Refocusing of SME Promotion Policy

New Growth Strategic for SME PromotionStrengthen up SMEs to Sustainability Efficiency & Productivity Adding Value in Products & Services Capital Access Opportunity Enabling Factors Favorable to Entrepreneurs Business Conduct Manufacturing Development to International & National Standards

Grassroots IncomeGeneration & Econ. CapabilityPromote Economic Linkages Start-ups & New Enterprises SMEs Capability & Locality Core Competency OTOP Upgrading to SMEs Networking Development SMEs in Creative Economy

New Marketing Channels Knowledge Build-up Opportunity from FTAs and AEC

New Growth Strategic for SME PromotionStrengthen up SMEs to SustainabilityGrassroots IncomeGeneration & Econ. CapabilityPromote Economic LinkagesTarget Industry

Food and Beverage Textile Furniture & Wood Products Chemical Products Hotel & Related Businesses Cultural Tourism Retail Wholesale Businesses

Target Industry

Social Enterprise Creative & Design Business New Media Business Entertainment Business Focusing on Local & Regional SMEs

Target Industry

Food and Beverage Textile Handicraft Gem & Jewelry Agricultural Machinery Plastics Products Furniture Creative & Design Business

3rd SME Promotion Master Plan

GREEN GROWTHAndCREATIVE ECONOMY

Are to be highlighted in

the 3rd SME Promotion Master Plan

In order to drive the growth of SMEs

with STRENGTH and SUSTAINABILITY

Budget Approval for SME Promotion in 2011 in 3 Categories

Fundamental Mission of OSMEP370mln. bt

SME Promotion Action Plan212mln. bt

Administration of SME Promotion Fund 180mln. bt

Total762mln. bt

SME Promotion Budget in 2011

Highlighted Projects of SME Promotion Action Plan, 2010-2012

Highlighted Projects forSustainable SME Development ASEAN SME Regional Gateway ASEAN SME Service Provider ASEAN SME Service Portal ASEAN SME Logistic Platform Cross-Border SME Clusters toward Global Supply Chains

Highlighted Projects of SME Promotion Action Plan, 2010-2012

Highlighted Projects forSustainable SME Development Cross-Border SME Clusters toward Global Supply Chains Cosmetic, with Cosmetic Valley of France Yacht Building, with Italy Handicraft Development, with AHPADA Medical Devices

Focal Point Agency Integrated Budget SME Networking SME Database International partnership

Key Success Factors in Thailand

Dr. Wimonkan KosumasDeputy Director GeneralThe Office of SMEs PromotionTel. 66 2278 8800 ext.240Fax. 66 2273 8850wimonkan@sme.go.thThank you

*When referring about SMEs in Thai manufacturing, the definition is set that there are not more than 50 persons employed by the small enterprises and not more than 200 by the medium ones. Or else, there is not more than 1.4 million US dollar in fixed asset value of the small enterprises and not more than 5.6 million US dollar in fixed asset value of the medium ones.Structure of Thai SMEs Year 2006The number of SMEs encompasses micro enterprises and OTOP which amount to 2.25 million and account for 99% of the total enterprises. From this figure, micro enterprises (enterprise with less than 4 employees) account for 80% and concentrated in the trading sector for 33.6%.In 2006, the share of SMEs in GDP accounts for 39% which can be divided accordingly as service sector 32.4%, trading sector 29.7% and manufacturing sector 29.7% SMEs play a major role in generating employment by accounting for 75% of the total employment and concentrated predominantly in the manufacturing sector for 38% (food & beverage and apparel) followed by service sector for 27% The value of export by SMEs accounts for only 29%. However, SMEs plays an indirect role as supplier, sub-contractor and supply chain of major producer and exporter. The main export markets for primary products include ASEAN, USA, EU and Japan respectively.*2003: Project for Promoting Community and Local Products (OTOP Products) was set to promote job creation, generate incomes and nourish local wisdom in order to promote sustainable living and self-reliance among grassroots communities.

2004: The Venture Capital Fund of 5,000 million baht for investment in SMEs was operated since 2004 in order to enhance the competitiveness of Thai business.

2005: SMEs Incubation Centers was established under the strategy of building new entrepreneurs and developing the existing ones with the objective to promote entrepreneurs competitiveness. In addition, iSMEs Development Centers were established to promote product design and development to enhance SMEs international competitiveness.

2006: Due to the MOU signing on SMEs cooperation between OSMEP and Ministry of Productive Activities of Italy, the Italian SMEs Service Desk was established to provide consultation service for Thai and Italian entrepreneurs on rights, benefits, privileges, or obligations under the law of both countries as well as to find marketing channel and business matching opportunities for businessmen of both countries.

2007: OSMEP introduce Capacity Building Fund with the aim to provide financial support to upgrade SMEs facing trouble in their business operations and to help SMEs improve/further develop their business which include Internationalization, Intellectual Property, and Consultancy Fund.

2008: -OSMEP in cooperation with associated agencies formulated the Master Plan on the Promotion of OTOP Products (2008-2012) in order to be the integrative framework for agencies concerning with OTOP promotion and to ensure the consistency among all OTOP promotion works as well as ensure the linking and corresponding with all policies on the promotion of community-level producers- Establishment of National SMEs Information Center with the aim to serve entrepreneur usage for feasibility study, capability analysis as well as risk management. This center is available for SMEs entrepreneurs and the general public at OSMEPs website.

2009: Under the administration of Deputy Prime Minister Mr. Kobsak Sapavasu, OSMEP has implement 4 projects in order to reap the benefit of the vast business opportunity offered by AEC for Thai SMEs. The objective of each project are as follows:-ASEAN SME Partnership Roadmap: To develop ASEAN regional cooperative business model in which Thailand cooperates in different projects at both the bilateral and multilateral levels. SMEs Flying Geese: To reverse the crisis and improve capability for SMEs in the following sectors: printing, silk screen printing, hospitality, restaurant, spa, handicrafts, furniture, electronic, fashion (textile, clothing, leather goods, jewelry), and agricultural machinery.-SMEs Capacity Building: To build up SME capacity and create more market channels within the ASEAN market by developing a marketing mapping throughout the supply chain-SMEs Consortium: To promote partnership or alliance (SMEs Consortium) between the construction sector and its relevant industries in all tiers of the value chain, and especially between large enterprises and SMEs in order to facilitate market expansion into ASEAN

2010:-The objective of SMEs Identity Study Project is to understand the in-depth features of SMEs business status and structure to be materials for Thailands SMEs promotion and for the building up of the national SMEs database

*** SMEs SMEs 3 SMEs - FDI OEM GDP SMEs ( 31% 29% 2549) GDP SMEs GDP SMEs SMEs 5 SMEs SMEs SMEs SMEs SMEs *** SMEs SMEs 3 SMEs - FDI OEM GDP SMEs ( 31% 29% 2549) GDP SMEs GDP SMEs SMEs 5 SMEs SMEs SMEs SMEs SMEs *** SMEs SMEs 3 SMEs - FDI OEM GDP SMEs ( 31% 29% 2549) GDP SMEs GDP SMEs SMEs 5 SMEs SMEs SMEs SMEs SMEs