Lockdown Economy Thailand

The rapid spread of the COVID-19 pandemic across the world commenced at the start of 2020 and it has been impacting the global economy severely ever since. The decision of imposing complete or partial lockdowns has been taken by multiple nations repeatedly since then for the sake of public health. However, it has caused significant damage to the global economy and has triggered a severe drop in industrial, agricultural, and other operational activities in all the countries.

Under such circumstances, the small businesses of most nations have faced enormous challenges. In developing economies, including Thailand, they have been more vulnerable. The role of Micro, Small and Medium Enterprises (MSMEs) is significant in most economies. Around 50% of global employment is considered to be generated from MSMEs [3] and Thailand is no different. Forty percent (40%) of the adult population between 18 and 64 years in Thailand is involved in entrepreneurial activity [4].

The economic growth of Thailand had contracted by 6.1% in 2020 because of the pandemic [5]. The lockdown restrictions in the country caused many permanent and temporary closures of businesses, widespread layoffs leading to a massive rise in the unemployment rates. According to World Bank, 49% of small business owners in Thailand were at a high risk of permanent closure of their businesses in 2020 as a result of the lockdown-induced crisis [6].

However, some entrepreneurs believe that the pandemic has led to newer types of opportunities and areas of growth for them. Thai Entrepreneurs are well-known for their ingenuity in identifying and utilizing business opportunities. According to a study conducted by the Global Entrepreneurship Monitor, 25% of Thailand’s population claimed to know someone who started a business amid this crisis [7].

Eureka Global, based in Bangkok, Thailand, since 2006, is a good example of a female-run small business dealing with the challenges of the pandemic. The company organizes in-person workshops for businesses across the country to facilitate strategic thinking. However, the lockdown made the team Eureka Global rethink its operating model as all of its services were provided face-to-face in an office environment. Hence, the situation was definitely not favorable for them. 

Halted Business Operations

Most of the countries had made the decision of imposing lockdowns several times to prohibit mass gatherings and maintain social distancing strictly for mitigating the infection. Hence, with the announcement of lockdown, multiple projects at Eureka Global had to be postponed or shut down. Several programs were lined up during that phase as it was impossible to organize any in-person workshops.

Call to Action: Greater focus on the adoption of digitization across the MSME landscape

A significant number of industries in developing economies are yet to embrace full-fledged digitization in their daily business practices. The absence of suitable digital infrastructure did not allow many businesses to organize such activities during the lockdown. However, by taking small steps and utilizing virtual facilitation boards, Eureka Global was able to connect with their clients and other business leaders during that time.

How can the Government assist?

(i) Many of the professional practices can be operational to a greater extent through virtual services. However, the adoption of technology and expansion of digitization can be expensive for MSMEs. The government can play a role in covering a significant portion of these costs, especially in the initial period.

(ii) The government could strengthen the digital ecosystem across the country. Accessibility to high-speed Internet at cheaper rates will accelerate the growth of businesses.

(iii) Upskilling the workforce to know how to use the smart digitized system is another area of focus.

Placing employees first during an adversity

The pause in regular business operations amid the lockdown made it difficult for many organizations to manage the customer base and support their employees simultaneously. Cancellation and postponement of business deals led to reduced investments, which caused many MSMEs to lower the employee wages. 

Call to Action: Supporting employee well-being 

The Thai culture is known for its mindset of being a part of one large family. Eureka Global has always considered its team as the most important asset. After witnessing the decline in revenue streams, the owner focused on the team. Enquiring about employees' health status or any specific requirements during the pandemic, implementing upskilling and training into daily routines were parts of the employee support program at that time. 

How can the Government assist?

(i) Based on the size of the businesses, a share of wage can be subsidized to the SMEs by the government for a certain period of time.  

(ii) The government could ensure one or more employment benefit scheme(s) with greater coverage. It will help the organizations to sustain their employment and meet basic business needs.

Liquidity crunch

Both monetary and intrinsic earnings are important for progressive business growth. With limited access to finance, a smaller number of clients and business networks, and fewer credit options, it was difficult for MSMEs to absorb the strong economic shock caused by the pandemic.

Call to Action: Providing financial aid

(i) In 2020, the Bank of Thailand amended THB 500 billion (US$ 16.6 billion) soft loan scheme [8] to inject liquidity across the MSMEs which were affected by the impacts of COVID-19. This type of social protection scheme needs to be monitored by the government to oversee the appropriate distribution of the package among the ones who need the support.

(ii) In addition, the Bank of Thailand established a corporate bond market stabilization fund in 2020 to help firms roll over maturing bonds [9]. Providing other types of financial assistance to MSMEs from the government, such as lower interest rates, tax relief, cash handouts, interest-free loans, debt restructuring facilities, subsidies to carry on the business operations can definitely be helpful.

Maintaining health and safety during in-person activities 

In June 2020, after the easing of lockdown restrictions, Eureka Global restarted its activities. Meetings in person, organizing face-to-face workshops became possible again. In this phase, they became associated with various global brands of Thailand. In addition, Eureka Global also got an opportunity to organize a workshop for 80 people. Under such circumstances, it became a challenge to manage the offline activities in a safe way. Despite lower reported cases of COVID-19 at that time, taking the mandatory precautions was crucial. 

Call to action: Following mandatory precautionary measures 

As per the requirement, the Eureka Global team came up with a robust plan for the session. They divided participants into smaller groups and arranged a bigger room to allow social distance.

The team provided masks and face shields to everyone. Wearing the masks, maintenance of social distancing, using alcohol gel, and washing hands before and after each session were compulsory for all people in the workshop. The Eureka Global team regularly reminded participants to follow the protocols during the workshop.

How can the Government assist? 

(i) The Thai government aims to vaccinate 70% of its population by the end of 2021 [10]. The robust implementation of this plan can help the country achieve desirable economic recovery in 2022.

(ii) The population of Thailand should be encouraged to continue following all the mandatory protocols such as mask-wearing, physical distancing, and hand washing.

(iii) There should be an initiative from the government to educate the population on preventing COVID-19. Distribution of masks and sanitizers, providing suitable healthcare facilities to the suspected cases of COVID-19, etc. should be considered to be part of such a program.

Uncertainty about the "new normal"

The global population and business communities are currently on the verge of exploring the "new normal". In the post-lockdown environment, we are witnessing decreased demand and a lack of entrepreneurial confidence. According to the Global Entrepreneurship Monitor, 88% of the negatively impacted business owners in Thailand had confirmed the decline in demand in 2020 [11].

There is still a fear of COVID-19 and the possibility of a sudden lockdown, which brings more uncertainties into the "new normal". The previous way of working may not be accepted by the clients in the future and it is the right time to rethink the existing business practices.

Call to Action: Prioritising opportunities 

Despite facing many challenges, Eureka Global continued making active partnerships with existing and new clients virtually amid the lockdown. They tried to discover new consumer behavior and offered pro bono projects to continue being useful. They helped a group of their clients to develop a joint COVID-19 relief initiative.

In the post-lockdown phase, Eureka Global organized workshops for the entrepreneurs of Thailand who desired to rebuild their businesses. The group activities organized by Eureka Global helped their clients to unlock ideas, upgrade thought processes, and learn about the emerging situation.

How can the government assist? 

(i) The government can assist by supporting the MSMEs in adopting or developing upgraded business models to get accustomed to the new customer preferences.

(ii) The government can offer financial assistance to the businesses to adopt hybrid work models, structure virtual resource centers, etc.

(iii) The government can assist by creating job opportunities and helping the population to upskill.

CONCLUSION

The current scenario is uncertain and it is hard to say what forecasts will guide the Thailand economy. This unprecedented time can be used to learn from unexpected challenges and reimagine a better future.

The growth of micro, small and medium-sized firms will be greater by collaborating with other businesses. It will bring more opportunities and broaden ways to create impact. To strengthen the base of a digital economy, it is important to increase investment in the ICT (Information and Communications Technology) infrastructure. Lack of digital access makes many business operations vulnerable. Upgraded digital connectivity enables the delivery of value-adding services and helps MSMEs to maintain revenue streams.

Over the past year, it has been observed that most of the emerging and developing nations have been severely affected by the COVID-19 pandemic. The difficulties which were seen in the initial phase of the lockdown of 2020 started to slowly recover. Though the road ahead seems long and unclear, with the help of appropriate government measures and contniuous participation of small business owners, the situation  will improve.

Written by Dhitasree Guha Roy

Edited by Kate Wellard

Editor-in-Chief - Julia Skupchenko

REFERENCES

[1] - Think Tank AlterContacts, Lockdown Economy initiative, Lockdown in a Transformation Consultancy with Poom Narudee Kristhanin. Small Businesses and COVID-19. Available at https://www.youtube.com/watch?v=NUL-058ljUc

[2] - Tank AlterContacts, Lockdown Economy initiative, Lockdown Economy Thailand in a Transformation Consultancy with Poom Narudee Kristhanin. Available at https://www.youtube.com/watch?v=YbLEDVypGWg

[3] - Small and Medium Enterprises (SMEs) Finance. Available at https://www.worldbank.org/en/topic/smefinance

[4,11] - Global Entrepreneurship Monitor- Diagnosing COVID-19 Impacts on Entrepreneurship. Available at https://www.gemconsortium.org/file/open?fileId=50521

[5] - World Bank. Available at https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=TH

[6,8,9,10]- Thailand Economic Monitor July 2021. Available at https://documents1.worldbank.org/curated/en/260291626180534793/pdf/Thailand-Economic-Monitor-The-Road-to-Recovery.pdf

[7] - New Global Entrepreneurship Monitor Research. Available at https://www.gemconsortium.org/reports/latest-global-report