Thailand SMEs Struggle to Survive as Innovation Becomes Essential

• Thai SMEs face rising pressure from local challenges and global trade tensions, leading to declining sales, lower output and rising business closures.
• Thailand lags behind ASEAN peers in innovation, with only 11.9 percent of Thai businesses adopting innovation, compared to over 37 percent in Vietnam, Malaysia and the Philippines.
• NESDC pushes for improved SME financing to support technology adoption, boost productivity, reduce costs and ensure long-term competitiveness.

Labour market in Thailand, especially in small and medium-size enterprises (SMEs) is facing more pressure both on domestic and in terms of trade tensions.

Such elements have led to the disruption of sales and production activities, which has seen a fall in output, reduced levels of employment and in the early part of 2025, the increase in businesses running out of business. The change of approach that must be applied by Thai SMEs in order to be favored by the dynamism has been highlighted by Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council (NESDC), who has characterized such a imperativeness as the necessity of turning towards innovation and technology as a means of survival in the new environment.

The Thailand Economic monitor February 2025 issued by the World Bank indicates that the Thai businesses are far behind regional counterparts in terms of adoption of innovation. In Thailand, the level of innovation penetration in the production process is lower at 11.9 percent against 40.9 percent in the Philippines, 37.9 percent in Vietnam, and 37.3 per cent in Malaysia.

This disparity is also widened by the fact that Thailand invests in low research and development (R&D), which has made businesses uncompetitive and has led to closures of a number of SMEs and factories last year (close to 24,000 and over 1,200 respectively) and subsequent loss of jobs affecting more than 35,000 employees most particularly related to the manufacturing sector.

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In the report by World Bank, it will be identified that countries such as the Philippines and Vietnam in the ASEAN region are the most innovative in the region and Thailand is almost at the furthest end in the measure of innovation. Improving access of finance to SMEs by NESDC aims to assist in the implementation of new technologies, and process advancement to improve productivity, cut the cost and make Thailand competitive. The focus on innovation has now become critical in stabilization of employment as well as long-term sustainability of Thai SMEs in a fast changing regional, as well as in global economy.