How COVID Impacts Small Businesses in Thailand

The King of Thailand has approved another round of stimulus measures worth 1.9 trillion Thai Baht (60 billion USD) to enforce spending. The cabinet approved the measures, and they will take effect immediately. As part of the stimulus package, the Bank of Thailand will also lend 500 billion Baht (15 billion USD) to small businesses to lessen the coronavirus crisis's impact.

Small businesses need this support urgently. After the global shutdown impacted the Thai economy, many companies are struggling to survive. Thailand has been predicted to lose up to 10 million jobs and at least 1.3 trillion Baht (40 billion USD) due to the crisis.

Many small businesses in Thailand depend on tourism  

Thailand's tourism sector has been hit hardest. Last year, around 39 million foreign tourists came to Thailand, earning more than 60 billion USD for the economy. More than 10 million of those visitors were Chinese. The tourism sector indirectly contributes around one-fifth of the country's GDP.

Small businesses, in particular, depend on tourism as their primary source of income. Restaurants, hotels, massage therapists, bars, and travel companies immediately felt the impact of the Chinese government quarantining the city of Wuhan in January. 

Already in February, small-scall entrepreneurs reported their income dropping by more than 50 percent. The informal association representing tour guides in Thailand said 25,000 guides were out of work in February. From then onward, the situation could only get worse. Travel restrictions in Europe and the USA meant almost no tourists came anymore.

The situation is especially precarious for those lower down the food chain. Many businesses have taken out bank loans to finance their operations, such as buying a van to bring tourists out on day trips. Those entrepreneurs now lost their income, and they also have to pay back their loans, despite having little savings.

Supply chain interruptions led to factory shut-downs

Thailand's manufacturing industries have taken a massive hit as well. As global supply chains got interrupted, Thai manufacturers had to close down factories, and unemployment exploded. In early April, more than 700,000 people claimed unemployment benefits – those are only recently laid off. 

From October to March, 992 businesses closed, compared to 511 during the same period between 2018 and 2019. As these are official numbers, they exclude the large number of informal companies that had to close down as well but are not recorded in any official register.

The situation is bad, it's getting worse, and it probably won't get much better soon. On the bright side, Thailand has an exceptional history of dealing with the economic crises, and the economy has always bounced back. 

The country has experienced a massive economic crash (1997), a tsunami (2004), coups (2006, 2014), the occupation of its main international airport by protesters (2008), and serious political violence (2010). Like before, Thailand will come back like a phoenix from the ashes and rebuild what has been destroyed by the pandemic. 

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