According to the Small and Medium Enterprises Promotion Office, the current export value of SMEs is about Bt1 trillion, or roughly a third of Thailand's overseas shipments. Of the total, about Bt260 billion is carried out directly by SMEs, while the remainder is accounted for by indirect exports shipped via large enterprises.

To achieve the 2006 target, the office has outlined a number of strategies in a five-year SME support plan, director general Vivat Vinichayakul said.

Specific strategies for export-oriented SMEs include penetrating new export markets and developing Thailand as the gateway to Indochina and southern China. Urgent measures also include tax-refund reform, and a reduction of custom procedures to cut costs.

In the longer term, the Government hopes to promote brand creation with the aim of adding value to Thai products and services on international markets. About half of the existing 1 million SMEs will be encouraged to apply for patent and copyright registrations by 2006.

As for SME debt, Vivat said his office is coordinating with the Thai Asset Management Corp (TAMC) to tackle the problem. The TAMC is currently dealing with 50-60,000 SME non-performing loans (NPLs) amounting to around Bt150 billion.

The five-year plan calls for the establishment of mechanisms, tools and incentives for resolving SME bad loans together with an acceleration of loan issuance for SMEs to boost their liquidity.

Supporting and promoting SMEs has become an important government strategy in its push for economic recovery. The sector employs 80 per cent of the country's total workforce, while its contribution to the gross domestic product (GDP) is roughly 40 per cent, or Bt2 trillion.

Speaking at a public hearing on SME promotion yesterday, representatives from the Thai Chamber of Commerce and the Federation of Thai Industries pointed out that financial assistance was the most vital and urgent support required by SMEs.

"The one channel of state-owned banks is not enough to provide adequate funding to SMEs. In total, they need Bt400 billion, and state-run banks can offer only 10 per cent of that," said Kunakorn Mekchaidee, director in charge of SMEs at the Thai Chamber of Commerce.

The government should promote the establishment of non-bank financial services, such as factoring and leasing services, he said.

Meanwhile, representatives from the National Economic and Social Development Board urged the government to pay special attention to medium-sized enterprises that have entered the competitive global market and need financial support to develop products with more advanced technology.

Also, they require government aid to establish marketing networks with international companies for product distribution, the board said.

Nareerat Wiriyapong