(introduction...)

The survey of selected Thai urban-based MSEs is part of the SPPD project undertaken by the ILO in Thailand as described above. Its objective is to build a framework, based upon which the validity and relevance can be determined for applying accumulated experiences and “best practice” methods in providing Business Development Services (BDS) from the international arena to the Thai MSEs. The survey is thus designed to check or find out information on particular issues, rather than being completely and comprehensively descriptive in nature. It is described as follows.

2.1 Survey methodology

The survey was made by conducting face-to-face interviews with MSE entrepreneurs using a pre-designed questionnaire. The questionnaire (as shown in Appendix A) was designed as a series of questions divided into 9 groups. They are concerned about:

· general information;
· enterprise start-up;
· technology aspects;
· marketing aspects;
· financial aspects;
· legal aspects;
· services received and desired;
· business associations; and
· business prospects and entrepreneurship.

The questionnaire is intended to be predominantly qualitative in nature. Although some of the answers can be tabulated in numerical form, the resulting statistics are not used as the main factor in reaching the conclusions of the survey since it is not designed to be a “scientific” survey. As such, the survey summary is drawn from the qualitative information and impressions gathered from the interviews, as well as the analysis of the tabulated data.

2.2 The survey sample

The microenterprise in this survey is defined as having less than 5 persons, and small enterprise as 5 or more and less than 50 persons working in a normal situation. The enterprises included are in the manufacturing, trade and services sectors. The survey was conducted by interviewing a total of 104 enterprises. It includes 69 microenterprises and 35 small enterprises in Bangkok and Phetchaburi, of which 55 micro and 22 small enterprises are from Bangkok, and 14 micro and 13 small enterprises are from Phetchaburi, as shown in more detail in Table 1. The names of the enterprises surveyed are as shown in the list in Appendix II.

In Bangkok it was found that Department of Public Welfare (DPW) of the Ministry of Labour and Social Welfare (MOLSW), under the Thai Help Thai programme, has supported unemployed people to set up microenterprises. The support was mainly financial to enable the target group to start up a business to earn income. In particular, the Thai Help Thai programme gives a grant of 2,000 Baht per person to be working as a group in a micro business. As of April 1999, 57 microenterprises have been set up under the programme in Bangkok. Of these 17 enterprises in 14 districts of Bangkok were randomly chosen to be interviewed in the survey.

Table 1. The MSE survey sample

	Microenterprises					Small Enterprises	Total Enterprises
	Supported Enterprises				Independent Enterprises
	DPW	UCDO	DIP	Subtotal
Bangkok Area:
Manufacturing	17	6	-	23	4	18	45
Service	-	-	-	-	17	1	18
Trade	-	-	-	-	11	3	14
Subtotal	17	6	-	23	32	22	77
Phetchaburi Province:
Manufacturing	1	-	6	7	2	11	20
Service	-	-	-	-	2	2	4
Trade	-	-	-	-	3	-	3
Subtotal	1	-	6	7	7	13	27
Total Enterprises	18	6	6	30	39	35	104

In addition it was also found that the Urban Community Development Organization (UCDO), a foundation under the National Housing Authority, in cooperation with the Bangkok Metropolitan Administration (BMA), has given financial and other support to people in Bangkok to start up microenterprises in their own communities. At the time of the survey, several microenterprises (around 80 groups) have been set up with this form of support. Many of these have just started, while a few have been inactive. From those that were active, 6 enterprises in 4 districts were also randomly chosen for interview as part of this survey. These enterprises, together with those supported by DPW, are referred to in the analysis as “supported microenterprises” in this survey. Incidentally, all of the enterprises in this group are in the manufacturing sector.

Apart from those supported enterprises, Bangkok has numerous independent individually-owned microenterprises. To narrow down the work of the survey, the districts of Yannawa, Sathorn, and Bangkholeam (formerly Yannawa and Klong Toey districts) were chosen as the main areas. Interviews were then conducted with microenterprises randomly found on the streets in these districts. The survey carried out 31 interviews from this group, and 1 interview with a trading microenterprise in Bang-Na district. Of these, 4 enterprises are in manufacturing, 11 in services, and 17 in trading businesses. These enterprises are referred to as “independent microenterprises” in the survey.

As for the small enterprises, since the manufacturing sector is seen as a higher potential creator of jobs, the Phasicharoen district outside of the inner Bangkok area was chosen for the survey, as it has a proliferation of many different types of enterprises. In this district, using the same method applied to the independent microenterprises, small enterprises were selected randomly for interview from the streets of the district. A total of 22 small enterprises in this group were interviewed. They include 18 enterprises in manufacturing, 1 in services and 3 in trading.

In Phetchaburi it was found that the work of the Department of Public Welfare (DPW) under the Thai Help Thai programme had just been started in earnest. One microenterprise which was interviewed had been successfully set up by the programme, while several others were in the process of being formed. At the same time, no enterprise under the support of UCDO has been found. However, there are 7 enterprises receiving financial support from the Provincial Industrial Office under the Department of Industrial Promotion’s (DIP) revolving fund scheme. All of these 7 microenterprises were interviewed and reported on, together with one in the DPW’s programme, as “supported microenterprises”.

Phetchaburi is a small province 120 kilometres south-west of Bangkok. It has a population of 453,391 people, and 2,528 registered enterprises, of which 669 are manufacturing enterprises. Thus the interviews with “independent microenterprises” in Phetchaburi were carried out with randomly chosen enterprises found on the streets of the city of Phetchaburi. A total of 7 interviews were drawn from this group, involving 2 manufacturing enterprises, 2 in services, and 3 trading businesses. Apart from that, 13 interviews were carried out with small enterprises in Phetchaburi. This was done in collaboration with the Phetchaburi Provincial Industrial Office (PIO) by choosing randomly from the list of 66 enterprises provided by the PIO. Of the 13 enterprises interviewed, 11 are in manufacturing and 2 are in services.

2.3 Results of the Bangkok survey

As described above, the Bangkok survey includes 23 supported microenterprises, 32 independent enterprises, and 22 small enterprises. The results of the survey, as formatted according to the design of the questionnaire, are given below, and the corresponding tables can be found in the annex to this report.

2.3.1 General information

The general information on the enterprises interviewed is shown in Tables 2, 3, 4, 5 and 6 in the annex to this Working Paper. Table 2 outlines entrepreneurs’ gender, age, and educational background. The survey shows that most of the supported microenterprises, assisted through both DPW and UCDO, are owned and operated by women. Their age ranges from 25 to 60, with a slight majority in the 30-40 age range. Their education is mainly at elementary level, with a few having high school education. One entrepreneur in this group has a university degree.

In comparing the supported microenterprises to independent microenterprises, the profile shifts slightly. Although females still dominate the group, there is a higher portion of male entrepreneurs in the independent microenterprises group, while the age profile is similarly concentrated around the 30-40 and 40-50 ranges. However, the educational profile shows a much higher number with a higher level of education in independent microenterprises than supported microenterprises. From the independent microenterprises, the educational level is spread quite evenly from elementary to high school to university levels.

In the small enterprises category, the age and education profiles are quite similar to those of the independent microenterprises. However the gender profile changes significantly. Unlike in the supported microenterprises and independent microenterprises, male entrepreneurs in this group clearly outnumber the females as can be seen in Table 2.

Table 3 shows the type of business carried out by the enterprises interviewed. Incidentally, all of the supported microenterprises are in manufacturing and concentrated in food and garment products, while the independent microenterprises and small enterprises are more diverse both in terms of sector and product type.

The number of workers employed in the enterprises interviewed is shown in Table 4. By the definition used in the survey, microenterprises (MEs) would have 5-10 or even less workers, while the small enterprises have between 10-50 workers. Most of the enterprises fit this definition, with only 3 exceptional cases. They are:

i) Three of the supported microenterprises have more than 20 workers. These are community enterprises with around 30 and 50 members. Although their businesses are conducted on a group basis, the manufacturing of products is done by the members individually, and the proceeds are returned to the members according to their output. Moreover, their operations are “micro” in nature when compared with the small enterprises. Therefore they are treated as microenterprises.

ii) One of the independent microenterprises (in the service sector) has 11 workers, which is at the threshold of the definition. It is a silk-screen printing shop which is enjoying good business and on the brink of expanding to become a small enterprise. However, at present its operation is still seen as “micro” in nature.

iii) There are 2 small enterprises with 4 workers, and 11 small enterprises with 10 or less workers. These enterprises reported that they normally employed more than 10 workers, but in recent times they had been operating with fewer workers. They had laid off some of their regular workers because the economic crisis had affected business. Even so, because of the size of the establishments and the way business was conducted, they are treated as small enterprises in this survey.

Table 5 shows the value of assets of the enterprises interviewed, as well as the ownership of the business premises. As expected, the profile of the value of assets of supported microenterprises is rather lower than for independent microenterprises, and that of small enterprises is even higher. It is also noted that the profiles of asset value of UCDO-supported microenterprises is slightly higher that those of their DPW - supported equivalents, and indeed it is quite close to the profile of the independent microenterprises. Table 5 also shows that while most of the microenterprises are operating from rented premises, most small enterprises own their business premises. This may explain the higher profile of asset value in the small enterprises, and may suggest that they are even more mature enterprises.

In the case of supported microenterprises, besides working at home, their business transactions take place either in a community hall, on community ground, or in temples which they neither rent nor own. It can be said that their business premises are not yet really established. Thus these are not reported in the Table 5.

Finally, commercial registration of enterprises is shown in Table 6. It was found that most of the supported microenterprises do not have commercial registration, while about half of the independent microenterprises and the majority of small enterprises are registered. The main reason why enterprises register is to acquire a legal identity. One UCDO-supported enterprise (the brassware manufacturer) was an exception - it was told to register for pollution control purposes, and an independent microenterprise (a barber shop) was a controlled occupation and had to be registered. Of those who registered, most reported that the procedure was simple and easy, while a few reported the procedure to be moderately difficult, or complicated (Table 6).

2.3.2 Enterprise start-up

All of the enterprises interviewed started their businesses with their own business ideas. The reasons these entrepreneurs gave for starting up their businesses can be summarized as:

i) To have a business of his/her own: Usually, these entrepreneurs had previously been working as an employee in an enterprise. They had learned and developed skills from their earlier employment. Although they may not have aimed for self-employment when they started their career, when they spotted the opportunity they were ready - both financially and adequately skilled - and they resigned and set up a business of their own. The businesses that they set up are usually the same or related to that of their former employer.

ii) To create a career for themselves. Entrepreneurs of this type seek no other career than self-employment. In several cases this way of thinking has been influenced by a tradition of self-employment among their family or society. Thus, right after completing their formal education - although they could have sought employment elsewhere - they sought an opportunity to set up a business of their own. This category of entrepreneur usually has little or no training prior to the start-up, and learned about the business on the job.

iii) To earn their living. These entrepreneurs started up their businesses because they had no other employment choices. They may have been laid-off or have been forced to resign from their former employment, or are not adequately trained (such was the case with several housewives) to gain employment elsewhere. Thus, in order to earn their living they have no alternative to self-employment.

As would be expected, the survey found that most of the entrepreneurs in the third category (above) are from the supported microenterprises. In the independent microenterprises and small enterprises, the responses were a mixture of all three, with the first category having the highest proportion, while the second and third types had smaller shares respectively.

As shown in Table 7, in starting up a business most microenterprises made use of their own money - except for the supported microenterprises which started up with the assistance of loans from the government (DPW, UCDO), or from cooperatives. Most microenterprises reported that they have had no access to commercial bank loans due to their lack of assets which can be used as collateral. Only one UCDO-supported enterprise and one independent microenterprise started up their business with loans from banks. It should be noted that the survey found that most supported microenterprises, especially those assisted by DPW, would not have been able to begin in business if the government support had not been made available to them.

On the other hand, Table 7 shows that most small enterprises started up with loans from banks. Less than one-third started their business relying solely on their own capital. Care should be taken in interpreting this information as this only means that capitalization of these enterprises involved loans from banks when they started or became small enterprises. In fact most of these enterprises did not start up their business as small enterprises. They usually started as microenterprises, and expanded to become small enterprises. However, at the microenterprise stage, they, too, had no access to bank loans. The start-up capital (as reported in Table 7) is the capitalization when they reached the “small enterprise” classification, by which time they would have accumulated considerable assets to be used as collateral.

Table 7 also shows the number of years that the interviewed enterprises have been in business. It can be seen that since the government’s special support programmes have just been started, most supported microenterprises are less than 1 or 2 years old. And while the age of independent enterprises is quite evenly distributed, most small enterprises have been established for between 5 to 10 years. This supports the observation above that small enterprises are generally more mature firms than the microenterprises.

Table 8 demonstrates the difficulties experienced in starting-up, as reported by the entrepreneurs. It suggests that funding is the greatest difficulty for both micro and small enterprises. Next in order of priority, microenterprises seem to experience more difficulties in finding premises for their business than the small enterprises. This seems to conform to the observation above that most microenterprises have to operate from rented premises, while small enterprises own their own business premises. Unlike the microenterprises in which the operations are mainly done by the entrepreneurs themselves, the small enterprises had more difficulties in finding skilled workers for the start-up of their business as seen in Table 8.

2.3.3 Operational aspects

Table 9 shows the responses of Bangkok-based MSEs when questioned about the operational aspects of their business. As may be expected, since most enterprises are not engaged in businesses that require a high level of operational technology, they seem satisfied with their present technology. Most claim that their quality is satisfactory to their customers. Of the enterprises that expressed areas of dissatisfaction, the main concern is with their equipment which is old and inadequate. The next problems are inadequate premises, lack of information about technology, and poor raw materials, respectively. The problems of premises and raw materials mainly involve the microenterprises, while the small enterprises are more concerned with the lack of information about technology.

On the issue of workers’ skills, most of the microenterprises expressed their satisfaction on this point, while more than half of the small enterprises felt that their workers’ skills are inadequate, as shown in Table 9. However, many micro-entrepreneurs wished to further develop their workers’ skills. Thus, when asked about the possible improvements in their operations, skills development comes first for both micro and small enterprises. Next are improvements to equipment, premises, raw materials, technology, and product design respectively. In addition, the survey has noticed that when technology was discussed, most entrepreneurs were concerned only with that technology affecting their principal operations. They are either not aware of or not interested in technology as it relates to their supporting activities, such as materials handling, information technology, etc. which could also have helped them to improve their efficiency.

2.3.4 Marketing aspects

The monthly sales income of the enterprises interviewed is shown in Table 10. As many enterprises feel that their sales figures are sensitive information, they refrained from giving detailed answers. This, together with the fact that proper accounting is not widely practised in many MSEs, may contribute to making the replies as reported in the table not very reliable. Most figures - especially those of the small enterprises - seem to have an over-emphasis towards a lower sales value. However, as many enterprises reported that their businesses have been quite seriously affected by the financial and economic crisis, they may be quite accurate.

Table 11 shows the market for the enterprises interviewed, as well as their assessment of the adequacy of their income. It was found that most Bangkok-based MSEs market their products and services in nearby areas and/or within Bangkok. Only a few manage to achieve some sales outside Bangkok, and only three of the small enterprises export their products. Of these, it was reported that the export market was developed and handled by their customers, and not administered or managed by the small enterprises themselves. On the adequacy of sales income, quite a large proportion of the enterprises interviewed (almost half) said that the level of their sales income was not adequate. This inadequacy is more evident with the supported microenterprises, than with the independent micro and small enterprises (Table 11).

It was also noted from the survey that most enterprises surveyed are passive in relation to their marketing activities. Most enterprises do not have any market development or promotional activities. Their marketing activities generally rely on their customers approaching them with orders.

2.3.5 Financial aspects

Table 12 shows the sources of funds for the operation of the enterprises interviewed. It can be seen that supported microenterprises have no sources of external financing, other than the original funds received at their start-up. Similarly, the majority of the independent microenterprises do not use external financing for their operations either. However, a few managed to obtain financing from suppliers, friends and relatives, and cooperatives. Only 4 out of 55 microenterprises used bank loans. On the other hand, the majority of the small enterprises have been able to use bank loans to finance their operations. None use any other form of external financing. This may support earlier observations that small enterprises seem to be more “formal” and mature than microenterprises, and consequently have less difficulty obtaining support from the banks.

It was noticed in the survey that most enterprises interviewed do not use any proper accounting systems, except for a few enterprises in which a spouse or relative is well-trained in accounting. Many of the small enterprises seem to hire an outside accountant to make bookkeeping entries for them. This book-keeping is used only for registration and tax purposes, and most of the time is not very reliable. These records are seldom used in the financial or operational management of the enterprises. Other enterprises - especially microenterprises - may only have book-keeping records for their cash and at best their inventory transactions, or indeed maybe not at all. As a result, most of these enterprises pay tax on an estimated basis, rather than on an actual calculation of net income. From time to time, interviewees said, Revenue Department officials visit and observe the business of the enterprises, make estimates on the volume of business and net income, and dictate to the entrepreneurs the amount of tax that they have to comply with. The entrepreneurs interviewed generally have no idea whether their tax bill would have been higher or lower if they had kept proper accounting records and prepared objective net income statements.

2.3.6 Legal aspects

The results of the legal aspects of the Bangkok survey are shown in Table 13. Most of the entrepreneurs do not have a great deal of knowledge about the civil laws governing the legal aspects of their business. Among those enterprises that are registered, most did so only to avoid complications involving government officials, rather than independently wanting to receive benefits from being “legal”. Under these conditions relating to the legal requirements, five out of the 32 independent microenterprises interviewed felt that tax was too high. One DPW-supported microenterprise had problems with food and drugs regulations when it wished to get approval to distribute its food products in the wider market. One computer system analysis consulting microenterprise said that patent laws made its business more difficult because it had to pay a high price for software. Other than these, the enterprises interviewed stated that no law or regulation was seen as a constraint to their business. Likewise, most enterprises do not see any law or regulation that is helpful to their business, except for a few who feel that the value added tax (VAT) reduction announced recently seems to be helpful to their business (Table 13).

2.3.7 Business development services (BDS)

Table 14 shows the range of business development services (BDS)³ received by the enterprises interviewed. Of the supported microenterprises, those under the UCDO reported receiving marketing advice and assistance from the “support” organization, while those under the DPW also received marketing assistance by attending fairs organized by government agencies. Few reported receiving any information, while one from each group reported receiving training. However, almost half of each group said no assistance had been received in business development services. Among independent microenterprises and small enterprises, most reported that no services had been received at all. Two independent microenterprises reported receiving training from suppliers of equipment, and one small enterprise received training from the Federation of Thai Industry (FTI) - of which it is not even a member. One independent microenterprise (in silk screen printing) is a member of the Silk Screen Association, and it receives information from the association’s journal regularly. Other than that, a few enterprises received information and marketing assistance from customers, suppliers and friends.

³ This term is now widely used to cover all forms of support for enterprise development other than financial support. It includes training, marketing assistance, information, advice, etc.

Even if BDS are to be made available or more accessible, the survey found that more than half of the enterprises surveyed do not feel that that these services will be helpful (as shown in Table 14). The impression gathered from the interviews was that most enterprises are not using the BDS because they do not believe that these services will be effective for their particular enterprises, rather than because they do not need the services.⁴ Of those who do wish to use these services, it was found that marketing assistance is needed most, especially for the microenterprises. Other needs are for skills development, product development, supplier information, market information, technology information and premises, respectively. Some enterprises interviewed - especially those supported by the DPW, as well as a few independent microenterprises and small enterprises - expressed their desire for financial assistance (this is not categorized within “BDS”- see footnotes 3 and 4), as also shown in Table 14.

⁴ Editor’s Note: As has been seen in related Working Papers, the provision of BDS in Thailand is not well developed. Therefore, the lack of awareness of both the services and related benefits is to be expected.

2.3.8 Business associations

Apart from the supported microenterprises which have to be members of a cooperative or a women’s group to qualify for the support (Table 15), the survey found that most enterprises are presently not members of any association or organization. Incidentally, only one microenterprise (in silk screen printing) is a member of an association (the Silk Screening Association), and one small enterprise (the environment consultant) is a member of an association (the Association of Environment Consultants).

Likewise, most enterprises interviewed are indifferent to, or do not feel that associations would be useful to their businesses, while only 25 out of 77 enterprises feel that an association would be useful. Especially, there were no small enterprises that felt that an association would be useful at all. This attitude towards associations seems to be based upon their experiences and observations concerning the existing associations, which they see as either ineffective or irrelevant. All of the entrepreneurs agreed that an “ideal” association would be useful, if it were properly established and run. However, they did express doubts about such associations being possible in Thailand. Of the enterprises which feel that an association is useful, the supported microenterprises reported preferring a cooperative structure, while the independent microenterprises preferred associations of businesses within the same sector (Table 15).

2.3.9 Business prospects and entrepreneurship

Table 16 reports on the entrepreneurship commitment and business prospects of the enterprises interviewed. The entrepreneurial commitment is measured by asking whether the entrepreneur would abandon the business if a steady job with comparable income were available. It was found that almost half the DPW-supported microenterprises would abandon their businesses, while a small proportion of independent microenterprises and an even smaller proportion of the small enterprises would do so. Likewise, the profile is quite similar when asked whether they would advise others to become self-employed. Negative attitudes towards business were found to be based mainly on the poor performance of their businesses, and the uncertainties of sales due to the financial and economic crisis.

The business potential of the enterprises interviewed (Table 16) is based on an assessment made by the surveyor. “Questionable”, means that the business is not doing well and might fail in the near future if no radical change takes place. “Struggling” means those enterprises which are still viable but not yet stable, and this makes their future quite uncertain at this time. “Sustainable” means those businesses that are stable and quite secure. However, their potential to grow further than at present seems to be limited. Finally, “good potential” means those enterprises reporting good business performance and showing good potential to grow. From the survey, a high proportion of the enterprises are in the “sustainable” and “struggling” categories, with a smaller proportion in the “good potential” category, and a few of “questionable” status. Table 16 shows that the small enterprises are probably in a better state than the microenterprises. It should again be noted that such profiles are obviously affected by the financial and economic crisis since many of these enterprises have reported adverse effects.

2.4 Results of the Phetchaburi survey

The Phetchaburi survey includes 7 supported microenterprises, 7 independent enterprises, and 13 small enterprises. The results of the survey formatted according to the design of the questionnaire are shown below.

2.4.1 General information

The general information on the enterprises interviewed is shown in Tables 17, 18, 19, 20 and 21 in the annex to this Working Paper. Table 17 shows the information about the entrepreneurs regarding gender, age, and educational background. Similar to Bangkok, the survey shows that all of the supported microenterprises - both under DPW and DIP - are owned and operated by women. Their age range is between 30 to 60 with a majority in the 30-50 range. Their education is mainly at elementary and vocational level. When comparing the supported microenterprises to independent microenterprises, the profile shifts considerably. In the group of independent microenterprises there are almost as many female as male entrepreneurs. Their age profile is quite similar, concentrating at around the 30 to 40 and 40 to 50 ranges. However, the education profile shows a greater proportion at the higher level of education in independent microenterprises than supported microenterprises. It spreads quite evenly from elementary to high school to university levels, with the same concentration at high school and vocational levels.

In the small enterprises, the age and educational profiles are quite similar to those of independent microenterprises. However, the gender profile changes slightly. In this group, male entrepreneurs clearly outnumber the female, as can be seen in Table 17.

Table 18 shows the type of business of the enterprises interviewed. In the same manner as Bangkok, all of the supported microenterprises are in manufacturing and concentrated in food and garment products, while the independent microenterprises and small enterprises are more diverse both in terms of sector and product type.

The number of workers in enterprises interviewed is shown in Table 19. The definitions used in the survey, classify enterprises with less than 10 workers as microenterprises, while the small enterprises have between 10 and 50 workers. Most of the enterprises fit this definition, with exceptions in two areas. They are:

i) One of the supported microenterprises has more than 20 workers. This is a women’s group formed within a cooperative, with 28 members making woven hats and bags. Although the business - especially the marketing and procurement - is conducted as a group, the manufacturing of products is done by the members individually and proceeds are returned to the members according to their output. Moreover, their operations are “micro” in nature, when compared with small enterprises. Therefore they are treated as microenterprises.

ii) There are 4 small enterprises with 10 and less workers. These enterprises reported that they normally employed more than 10 workers, but in recent times they had been operating with fewer workers. They had laid off some of their regular workers because the economic crisis had affected business. Even so, because of the size of the establishments and the way business was conducted, they are treated as small enterprises in this survey.

Table 20 shows the value of assets of the enterprises interviewed, as well as the ownership of business premises. Similar to that reported in Bangkok, the profile of value of assets of supported microenterprises is rather lower than independent microenterprises, and that of small enterprises is even higher. It also shows that while most of the microenterprises are operating from rented premises, most small enterprises own their business premises. This may explain the higher profile of asset value in the small enterprises, and suggests that they are more mature enterprises. As for supported microenterprises, other than working from home, their business transactions take place either in a community hall, on a community ground, or at temples which they neither rent nor own. It can be said that their business premises are not yet established. Thus it is not reported in the Table 20.

The commercial registration of enterprises is shown in Table 21. It was found that most supported microenterprises do not have commercial registration, while about half of the independent micro and all of the small enterprises have registered. Most enterprises said they registered to become a legal entity. Of those who registered, most reported that the procedure was simple and easy, while a few reported moderate difficulties, and only one saw it as complicated.

2.4.2 Enterprise start-up

Similar to the Bangkok survey, all of the enterprises interviewed started their business with their own business idea. The reasons they gave for starting up their businesses were as follows:

· have a business of his/her own;
· create a career; and
· earn a living.

As might be expected, the survey found that most of the entrepreneurs who quoted the third reason were in the supported microenterprises category. However, rather than having been laid-off from jobs as in Bangkok, the supported micro-entrepreneurs in Phetchaburi are those who have no job or no other better means of earning a living. As the DPW has not yet contributed as much to these enterprises as is the case in Bangkok, the Provincial Industrial Office (PIO) has been supporting these enterprises under a DIP programme of which is targeted specifically at the provinces.

Among the independent micro enterprises and small enterprises, the reasons for start-up are spread between the three statements, with a slight emphasis on the second. Many independent micro-entrepreneurs interviewed in Phetchaburi seem to have been determined to become self-employed right from the start of their career. After finishing formal education, they went to work with other enterprises for a few years with the clear aim of learning, gaining experience, and in some cases, earning money in order to be able to establish their own enterprises. One entrepreneur reported that in order to acquire the necessary skills, he paid money to become an apprentice in an enterprise of his choice.

As shown in Table 22, when starting up in business, most microenterprises used their own money, except for the supported microenterprises which began with government loans (DPW, DIP). However, unlike the Bangkok survey, almost half of the independent microenterprises interviewed reported that they had access to commercial bank loans. The proportion of small enterprises using bank loans for start-up is about the same as for the independent microenterprises.

The Phetchaburi survey suggests that finance from commercial banks in the provinces is probably more accessible than in Bangkok. This may suggest that while microenterprises and even some small enterprises in Bangkok seems to be rather “informal” and insignificant, in Phetchaburi - and presumably similarly elsewhere in other provinces of Thailand - they are considered quite significant within the local society. The results seen from the survey seem to indicate that micro as well as small enterprises in the provinces are considered more prestigious and more creditworthy than their equivalents in Bangkok. On the other hand, since many entrepreneurs interviewed are natives of Phetchaburi, they may have inherited assets or have access to family assets which can be used as collateral for loans. This could explain their comparatively better access to bank loans. Thus, while business opportunities may be better in Bangkok due to the greater market size, the means for starting up a business in Phetchaburi (and presumably in other provinces) are more accessible as indicated by the survey.

Table 22 also shows the number of years that the enterprises interviewed have been in business. As the support programme offered by the DIP has been available for several years for needy entrepreneurs here, it was found that the supported microenterprises are older than those in Bangkok. And while the number of years in business of the independent microenterprises is quite well distributed, with a concentration around 3-5 years, most small enterprises have been established for more than 5 or 10 years. This supports the prior observation that small enterprises are generally more mature firms than the microenterprises.

Table 23 shows the difficulties experienced in starting up, as reported by the entrepreneurs. It suggests that funding is still the greatest difficulty for both micro and small enterprises. In addition, difficulties in finding skilled workers, especially for small enterprises, are reported to be as significant as the funding issue, and more serious than in the Bangkok survey. This suggests that skilled workers and presumably skills development are more scarce in the provinces than in Bangkok. At the same time, difficulties in finding premises in Phetchaburi are much less severe than in Bangkok as seen from the survey (in Table 23).

2.4.3 Operational aspects

Table 24 shows the responses of the Phetchaburi micro and small enterprises on the operational aspects of their business. Similar to the Bangkok survey, since most enterprises are not engaged in businesses that require a high degree of operational technology, most enterprises seem satisfied with their present technology. The majority also claim that the quality of their outputs satisfies their customers.

Among the enterprises that expressed dissatisfaction with operational aspects, old and inadequate equipment was the main concern. Only a few are concerned about the lack of information about technology, or poor raw materials, which mostly affect small manufacturing enterprises. Hence, when asked about the possible improvements in their operations, only equipment improvements are cited (Table 24).

On the issue of workers’ skills, most of the enterprises interviewed expressed their satisfaction, as shown in Table 24. Relating this to the reasons why skilled workers for small manufacturing enterprises are difficult to find, it was explained in the interviews that most newly recruited workers were unskilled. They had to be trained on the job. Thus as the enterprises mature, workers’ skills are developed to the satisfaction of the entrepreneurs.

In common with the Bangkok survey, it was noted that when technology was discussed, most entrepreneurs were concerned only with that of their principal operations. They are either not aware of, or not interested in technology for their supporting activities, such as materials handling, information technology, etc., which could have helped improve their efficiency.

2.4.4 Marketing aspects

The monthly sales income of enterprises interviewed is shown in Table 25. As occurred in Bangkok, many Phetchaburi enterprises feel that their sales figures are sensitive, and refrained from giving answers. This, together with the fact that proper accounting systems are not commonly found in many micro and small enterprises (MSEs), may make the replies as reported in the table not very reliable. Most figures, especially those of the small enterprises, seem to be a little skewed towards the lower sales values. However, many enterprises reported that their business have been quite seriously affected by the financial and economic crisis, and therefore they may not be too far from being accurate.

Table 26 shows the market for the enterprises interviewed, and their assessment of the adequacy of their income. It is found that most Phetchaburi MSEs market their products and services within Phetchaburi, in nearby provinces and/or in Bangkok. In addition, four enterprises interviewed reported that their products are exported. They include one DIP-supported microenterprise making woven hats and bags (and which has also been assisted under a Royal initiated project); one palmwood products manufacturing microenterprise which has been approached by customers from abroad; one noodle factory (small) which is more than 20 years old, and a plastic-chip shipping-tray factory which moved from Bangkok to invest in Phetchaburi to take advantage of the Board of Investment’s (BOI) Zone 3 promotion. Of these, it was reported that the export market was developed and handled by their customers and not managed by the enterprises themselves.

On the adequacy of sales income, although most enterprises said that they had been quite severely affected by the financial and economic crisis, their sales income was still reported to be adequate. Only one of the supported microenterprises, two independent microenterprises (one trading and one services), and one manufacturing small enterprise reported that their sales income is inadequate. In all of these cases, the inadequacy is seen as being caused directly by the financial and economic crisis, which has reduced their sales income by more than 50 per cent.

In the same manner as the Bangkok enterprises, it was also noted from the Phetchaburi survey that marketing activities in most of the enterprises surveyed are passive in nature. Most enterprises do not have any market development or promotional activities. Their marketing generally relies on customers approaching the enterprises to create sales.

2.4.5 Financial aspects

Table 27 shows the source of funds for the continuing operation of the enterprises interviewed. It can be seen that most supported microenterprises still have no external financing other than the original funds received at their start-up, except for two supported microenterprises which are members of cooperatives and have obtained loans from these cooperatives.

However, unlike in Bangkok, more than half of the independent microenterprises in Phetchaburi use bank loans to finance their operations. Moreover, the majority of the small enterprises also use the bank loans, while one manufacturing independent microenterprise borrowed from a cooperative. This supports earlier observations that finance is probably more accessible to enterprises in Phetchaburi - and presumably in the provinces - than in Bangkok.

It was also noticed in the survey that most enterprises interviewed do not use proper accounting procedures, except for a few enterprises in which spouses or relatives are well-trained in accounting. Many small enterprises use outside accountants to make book entries for them. These book-keeping records are used only for registration and tax purposes and most of the time are inaccurate. They are seldom used as information for the financial or operational management of the enterprises. Other enterprises, especially microenterprises, may have at best only cash and inventory records, or none at all. As a result most of these enterprises pay tax on an estimated basis, rather than on the statement of their net income. Interviewees said that from time to time Revenue Department officials would visit and observe the business of the enterprises, make estimates on the volume of business and net income, and calculate the amount of tax that they have to pay. Similar to the Bangkok survey, the entrepreneurs interviewed had no idea whether the tax would have been higher or lower if they had had proper accounting procedures and records.

2.4.6 Legal aspects

The results of questions about legal aspects of business from the Phetchaburi survey are shown in Table 28. As stated earlier, most of the entrepreneurs know very little if anything about the civil law governing the legal aspects of their business. Even when the enterprise is registered, most have done so only registered only to avoid complications from government officials, rather than to receive any benefits from being legal. In these circumstances, four of the enterprises felt that taxes were too high. Of the group of 11 small manufacturing enterprises interviewed, two thought that labour laws were counter-productive; one had problems with the land use laws which had delayed his factory registration for several months; one truck/trailer body assembler has had difficulties with ambiguous transportation regulations, and one door/window panel business has had difficulties with laws controlling the manufacture of wooden products. Other than these, the majority of the enterprises interviewed responded that no law or regulation was a constraint to their business.

Likewise, most enterprises do not identify any law or regulation that is helpful to their business, except for one small enterprise which reported that the value added tax (VAT) reduction announced recently seems to be helpful to business (Table 28).

2.4.7 Business development services (BDS)

Table 28 shows the business development services (BDS) support received by the enterprises interviewed. Supported microenterprises reported receiving training, marketing advice and assistance when they attended fairs organized by government agencies. Still, four out of six DIP-supported enterprises said they had not received any assistance other than financial assistance. Of the independent micro and small enterprises, most reported that no BDS services have been received at all. Two independent microenterprises reported receiving support in the form of training and information from suppliers of equipment. One small enterprise received training from the Federation of Thai Industry (FTI) - the entrepreneur is the president of the provincial chapter - and one received training from Thai Productivity Institute, of which it is a member. In addition, two other small enterprises received training from equipment suppliers. Altogether 18 out of 27 enterprises interviewed have never received any BDS support service or assistance.

If the BDS as well as financial assistance were available or more accessible, the survey found that most of the enterprises did not feel that that these services would be helpful (Table 29). Again, the impression gathered from the interviews is that the reason most enterprises do not use the BDS is that they do not believe that these services will be effective for their particular enterprises, rather than not needing the services themselves. For example, most enterprises - especially manufacturing ones - feel that workers’ skills can be more effectively developed internally on the job, rather than from outside.

Among those who expressed a wish to use the BDS services, marketing assistance was identified as the greatest need, especially for the supported microenterprises. Other needs are for product development and premises respectively. There was no mention skills development needs. No enterprises interviewed expressed a desire for financial assistance (Table 29).

2.4.8 Business associations

Similar to Bangkok, with the exception of a few supported microenterprises which are obliged to be members of cooperatives or women’s groups, the survey found that most enterprises are not presently members of any association or organization. However, a higher number of Phetchaburi enterprises are members of the provincial chamber of commerce and provincial chapter of the Federation of Thai Industry (Table 30).

Again, most enterprises interviewed are indifferent to, or do not feel that an association would be useful to their business, while only 5 out of 27 enterprises feel that an association would be useful. In particular, no supported microenterprises feel that an association is useful at all. This attitude towards associations seems to be based upon their experiences and observations of the existing associations, which they feel to be ineffective or irrelevant. All of the entrepreneurs agreed that an “ideal” association would be useful if it were properly established and run. However, most of them doubted whether such an association is possible in Thailand. Among the enterprises which feel that an association can be useful, a sectoral association of the same businesses was the preferred format (Table 30).

2.4.9 Business prospects and entrepreneurship

Table 31 reports on the entrepreneurship commitment and business prospects of the enterprises interviewed. Similar to the Bangkok survey, the commitment is measured by asking whether the entrepreneur would abandon the business if a steady job with comparable income were available. Only one supported microenterprise and one independent microenterprise reported that they would abandon their business, while no small enterprises would wish to do so. Likewise, the profile is quite similar when asked whether they would advise others to become self-employed. Although showing similar trends towards self-employment, these responses show a significantly stronger and more positive attitude than in Bangkok.

The business potential of the enterprises interviewed (as reported in Table 31) is an assessment made by the surveyor in the same fashion as in the Bangkok survey. The “questionable” response means that the business is not doing well and might fail in the near future if no radical improvement takes place. “Struggling” applies to those enterprises which are still viable but not yet stable, making their future quite uncertain at this time. “Sustainable” means those businesses that are stable and quite secure. However, their potential to grow further than at present seems limited. Finally, “good potential” means those enterprises with good business performance and which show good growth potential. A large proportion of the surveyed enterprises are in the “sustainable” and “struggling” categories, with a good proportion in “good potential”, and a few of “questionable” status. Table 31 shows no significant differences among each group of enterprises, and also no significant difference when compared with the Bangkok survey. It should again be noted that such profiles are affected by the financial and economic crisis in Thailand, since many of these enterprises have reported adverse effects.