Small and medium-sized enterprises (SMEs) and entrepreneurship are fundamental drivers of economic growth and job creation. High rates of productive entrepreneurship and small business development stimulate productivity increases and greater exploitation of available resources in the economy. SMEs and entrepreneurship provide large numbers of people with jobs and incomes. Policy aims to facilitate these positive roles by addressing barriers in the way that markets, governments and institutions operate.

Over the past 15 years, Thailand has recovered rapidly from two major crises: the Asian financial crisis of 1997-98 and the global financial and economic crisis of 2007-09. The economy’s resilience has been associated with highly competitive goods and services markets, flexible labour markets and a vibrant entrepreneurial culture. In the intervening inter-crisis period, Thailand, a middle-income country, enjoyed robust economic growth, allowing real per capita GDP to reach nearly one-fourth the OECD average in 2008. Thanks to sound macroeconomic policies, integration into international goods and services markets accelerated, spurred by knowledge transfers from abroad. In a setting of rapidly expanding market opportunities, firm creation and economic growth were strong, leading to labour shortages and large-scale labour immigration. Overall, both the rate of unemployment (1.2% in 2010) and inflation (3.4% in 2010) stayed low, while the external position posted persistent surpluses.

This chapter presents an overview of the structure and characteristics of SME and entrepreneurship activity in Thailand, including data on numbers and sizes of SMEs and their contribution to total employment and GDP. The performance of the SME sector is examined in terms of job creation, productivity, enterprise dynamism, numbers of high-growth firms and the contribution to trade and investment. The numbers and characteristics of entrepreneurs are also examined as well as regional variations of SME activity across Thailand. The chapter concludes with an analysis of the fundamental structural and enterprise-level challenges faced by SMEs and entrepreneurs.

This chapter presents the institutional framework conditions and business environment factors influencing SME and entrepreneurship development in Thailand. It starts with an overview of the influence of macroeconomic trends and fiscal, monetary and structural policies. It then examines the range of opportunities for improving the climate in which Thailand’s businesses operate, including human development, tax and social security, product market conditions, sources of financing, labour market conditions and the rule of law and transparency. The chapter concludes with a discussion of barriers to growth as perceived by SMEs and entrepreneurs and an assessment of the innovative capacity of Thai SMEs and entrepreneurs.

This chapter describes and assesses SME and entrepreneurship policy and programmes in Thailand. Thailand’s strategic policy agenda for SMEs and entrepreneurship is presented at the outset. The policy formulation and delivery framework is then examined, including the roles of the various responsible government departments, agencies and related stakeholders and the challenges of co-ordinating policy across a wide range of organisations. Major SME and entrepreneurship projects and programmes are then reviewed, falling in the areas of education and training, information and knowledge, finance, market access and development, and technology and innovation. In order to clarify and assess the targeting and mix of programmes and projects, a policy and portfolio framework is presented and used to examine budget allocations across strategic priorities, categories of policy focus and stages of business development.

This chapter presents a summary of the SME and entrepreneurship policy context and challenges in Thailand and the relative success of Thai policy makers in achieving their stated goals. Looking forward, recommendations are provided on ways to increase policy success, focused on implementing an evaluation-based portfolio approach to managing policy across government, better promoting the creation and development of innovative, growth-oriented and international SMEs, encouraging more productive entrepreneurship for regional and social development. It concludes with a series of possible initiatives that may be appraised in Thailand with the aim of identifying appropriate measures to respond to the challenges. Descriptions of learning model approaches from other countries that may provide inspiration in implementing recommendations are provided in the Annex.