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close this bookNeeds and Characteristics of a Sample of Micro and Small Enterprises in Thailand - Working Paper N5 - Micro and Small Enterprise Development and Poverty Alleviation in Thailand - Project ILO/UNDP: THA/99/003 (ILO-ISEP - ILO - UNDP, 1999, 102 p.)
close this folder3.0 Characteristics, problems and needs of Thai MSEs
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View the document3.1 Characteristics of Thai MSEs
View the document3.2 Problems and needs of Thai MSEs
View the document3.3 Possible solutions to problems

3.2 Problems and needs of Thai MSEs

From the results of the survey and the characteristics of Thai micro and small enterprises (MSEs) as described above, the problems and needs of the enterprises can be summarized as shown below.

3.2.1 The lack of or limited access to credit financing

This problem was found to affect most of the micro and small enterprises in the survey. Most of the supported and independent microenterprises which did not have substantial assets which could be used for collateral, did not have access to credit financing at all. In the case of most small enterprises, and a few microenterprises, although they have access to credit financing, the amount of funding is very much limited to the value of assets available as collateral. This has limited and sometimes denied these enterprises the opportunity to grow or expand to their real level of potential.

3.2.2 The lack of access to wider markets

As entrepreneurs in MSEs generally have to perform all of the management functions in the enterprise, they usually do not have time and/or resources to reach out or to develop access to the markets beyond their immediate location. Given the absence of business development services (BDS), they generally do not have knowledge or information about other markets. This has limited the ability of the MSEs to market their products to larger groups of customers and expand their business. This problem was found to be more serious in the microenterprises included in the survey, than in small enterprises.

3.2.3 The lack of capability for business planning

Most entrepreneurs have not been trained in business management. Most had started and operated their enterprise without proper business planning. As a result, many enterprises had encountered problems such as inadequate funding, inadequate marketing, inappropriate equipment and technology, inadequate access to skills and skilled workers, etc. These factors have combined to cause the MSEs many difficulties and contributed to their poor return on investment. Had the business been properly planned, many of these problems could have been avoided by these entrepreneurs.

3.2.4 The lack of or limited skills of workers

This problem was found more in the small enterprises surveys, as their operations rely on more and better skilled workers than is the case for the microenterprises. With the very limited skills development services that are available, especially in the provinces, most enterprises hire unskilled workers and then train them on the job. This has adversely affected their productivity and has been an added burden for these enterprises.

3.2.5 The lack of knowledge or information on technology

The equipment and technology employed by the enterprises surveyed are typically based upon the limited exposure and past experiences of the entrepreneurs themselves, as well as on information provided by suppliers, friends and relatives. These enterprises have hardly any agencies that they can contact to acquire relevant information. This has made their choices of equipment and technology, and their chances of upgrading for greater efficiency, very limited. Furthermore, the information received is frequently dependent on accepting a proposal from one particular supplier or another. This problem seems to be more serious in the province (Phetchaburi) than in Bangkok.

3.2.6 The lack of skills in financial management and simple accounting

As reported above, most enterprises do not have any proper internal book-keeping system to provide them with the financial information that is vital for effective management. This is because of the lack of or inadequate skills of the entrepreneurs in financial management and accounting, and because the enterprises cannot afford to hire a full-time accountant. It was found that this problem was as serious in the microenterprises as in the small enterprises. However, judging from the consequences arising from this problem, it is more urgent to address this issue in small enterprises than in microenterprises.

3.2.7 The lack of knowledge or information on other markets and on business opportunities

At present and in the absence of BDS, the MSEs have virtually no sources of information on other markets or opportunities outside their immediate surroundings. Most enterprises lack the knowledge or ideas needed to develop their products or services in order to capture wider markets. This has made market expansion too heavily dependent upon speculation, sometimes too costly for the enterprises, and thus limited the new market opportunities to grow or to expand their businesses.

3.2.8 The lack of knowledge or information on tax laws, and other commercial laws and regulations

As reported above, most micro and small enterprises (MSEs) operate with little or no knowledge of the laws governing their business practices. When conflicts arise or when they are required to do so by law, these enterprises - especially microenterprises - are usually dictated to by government officials who may not fully understand or appreciate their businesses. This has created difficulties and problems which could have been avoided if the enterprises had had a greater knowledge and understanding of the laws and regulations.