As we are approaching the end of 2020, trying to survive during the COVID-19 pandemic that affects the global economy, there is some gradual recovery but still not all can be revived. Today, M Report has an in-depth discussion with Mr. Surapong Tangtaratorn, Managing Director of Factory Max Co., Ltd., one of the leaders in technology and industrial machinery and solutions from various quality brands around the world.

The global economy will fully recover when we can travel across the world again.

Factory Max was affected just like any other company this year.  By the end of this year, the income is expected to drop by 30% from last year and it will take another 2 years to return to making the same revenue as before the pandemic.

The global economy affected by the pandemic is expected to gradually recover, in which the aviation industry is the main factor. As long as traveling across the globe is hindered by things like high travel costs and quarantine requirements, it would be difficult for businesses to recover. This will continue until reliable, effective and accessible vaccines or medicine become available.

Although all businesses try to operate within limitations, working long distance is not as efficient as normal work. If Thailand does not open the country to businessmen and foreign tourists, the resurgence of business in the country would be difficult and people would feel even more frustrated. It is, therefore, the government's duty to find solutions, such as shortening the quarantine period or finding a way to reduce travel costs. If these can be done, the Thai economy can make a great comeback.

3 Survival Strategies: Sustain SMEs - Low Interest Loans - Build Valuable Innovation

For Thailand to get through this economic crisis, there are three urgent issues that need to be addressed. First, finding ways to keep SME entrepreneurs afloat where liquidity problems are the main issue. Hence, there must be accessible financial assistance. Japan and Germany, for example, have issued compensation measures for private workers to take time off. Although Thailand is not currently in the lockdown, there is still a lot to be done in other areas to boost liquidity extending time of cash on hand to stay with small business entrepreneurs, such as increasing the lease period for machinery or lowering loan interest rates.

Next, financial support. Currently, loan interest rates are as high as before the COVID-19 pandemic. Financial institutions should understand the situation and lower interest rates across the board to be in line with the economic situation and to get businesses sustained through this crisis, especially those with a good track record. It is because if the private sector cannot survive, it could incur bad debts and if there is a large amount of bad debts in the system, the financial institutions could also fall apart.

Lastly, preparing new products from valuable innovation to be in line with the new normal or changes of people's daily behaviors as well as the technology advancements, especially online technology.

Be Flexible, Invest and Advance in New Opportunity

Through this crisis, many businesses find a solution by cutting costs and staff, which is the easiest way. On the other hand, we have to admit that it is like cutting out a muscle. When the economy recovers, getting muscles strong again in time will be a problem that can cause the organization to miss a great opportunity. We can see that businesses that sustain for a long time are often a strong organization that can weather even the drought. In today's technology-driven world where things change dramatically, this is a great opportunity to invest in innovation and new solutions, along with strengthening these muscles into valuable resources for the organization and being ready to advance. When the economy recovers, the business will then have products that are ready to meet the market demands. 

In the new normal society where people value health more, things like cleanliness, overcrowding reduction, automation system, monitorable production line, and smart factory have gotten more attention than ever before. In the past, even though these matters have been discussed a lot, many businesses are not ready for them. Making the most of the period when the market has not yet fully recovered in these 2 years is a good idea. In many countries such as Japan, China, Italy, Germany, products for the new normal era are being prepared. Factory Max has learned from these countries and began to invest in many products.

Software is a very promising new industry as more and more people will use it as a helper in the future. In addition, Thailand has potential in the medical device industry, which is a high-value market, as well as in the food and pharmaceutical industries since Thailand is rich in biodiversity resources. If there are research organizations working together to develop products, these industries will grow very well.

The environmental industry is also promising. When people value health more, they will also think of environmental protection. For example, the problem of burning farm fields in Thailand due to the high price of lawn mowers can be solved by developing lower-cost lawn mowers so they are affordable for farmers.

In addition, the defense industry is large and has a high value. Each year, the Ministry of Defense spends hundreds of billion baht for products from foreign countries. If the industrial sector is supported for some time, it is believed that we can manufacture the same products.

Knowledge must be gained from the foreign investments. 

Without any adjustments, Thailand will not be able to compete with Vietnam in the future. Over the past 20 years, the Thai economy and industry have grown with foreign investments. However, today’s Vietnam has the advantages in that the domestic market that is 30% larger than that of Thailand still has great consuming demands. With the growth in infrastructure and logistics and having a deep water port, Vietnam can develop itself to be an important hub. In addition, wages in Vietnam are lower than those in Thailand. From a foreign perspective, Vietnam is therefore more attractive to invest than Thailand, same as other countries such as Myanmar, Cambodia, Laos and the Philippines that are all better investment destinations than Thailand.

Therefore, the development of innovation and knowledge in Thailand is important. China is a clear example. In the past decades, China began to open the country for foreigners to invest and started to manufacture “Made in China” products that focus on cheap, low quality, and even replicated products. This allows China to accumulate knowledge, experience, and develop people and networks around the world. Now, the quality of Chinese brand products has been recognized worldwide. This shows that if Thailand starts to develop its own products and innovations, it will be able to do the same one day. Government policies and support will play an important and necessary role because Thailand will no longer be a destination for foreign investments.

As for the tourism industry that is another important income in Thailand, we have to figure out how to create sustainable growth of this income. If we can protect and conserve the rich natural resources and high biodiversity in the country sustainably while we can develop the industrial sector, then we will have two pillars of steady incomes for the country.