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1 Dec 2023

Thai Economy

NCB’s data shows micro and super micro businesses remain a concern as they have yet to benefit from the economic recovery (Current Issue No.3445)


        According to KResearch’s analysis of commercial debt account data from the National Credit Bureau (NCB), the recovery of micro businesses (outstanding loan of 5-20 million Baht) and super micro businesses (outstanding loan not exceeding 5 million Baht) remains uneven, adversely affecting their debt repayment ability. As evidenced, the share of outstanding debt – both non-performing loans (NPLs) and delinquent loans with 61-90 days past due – in this segment is likely to increase.

        Nevertheless, most debt incurred by micro and super micro businesses consists of long-term loans, either commercial loans or general loans, and auto hire-purchase loans. This indicates that micro and super micro businesses cannot generate enough income and have sufficient cashflow for their debt repayment. Even as the support measures for debtors affected by the pandemic gradually wind down, offering assistance to borrowers through debt restructuring remains a challenge for financial institutions as their operations must be undertaken in accordance with the Bank of Thailand’s policy guidelines regarding debt restructuring.

        Micro and super micro businesses that rely on domestic demand remain vulnerable groups that have thus far been unable to resume normal debt servicing. This is particularly true for those in four industries, namely construction, transportation and storage, manufacturing, and wholesale and retail trade; repair of motor vehicles and motorcycles. However, micro and super micro businesses in the tourism industry, especially hotels and restaurants, have shown clearer signs of recovery, as they benefit from the gradual tourism rebound on a larger scale. Such circumstances indicate that the recovery remains uneven across sectors.

        Looking into NPLs, KResearch projects that non-performing loans to total loans (NPL ratio) in the commercial banking system will stand at around 2.62-2.65 percent at the end of 2023, down from 2.77 percent reported for the end of 2022. However, focus must remain on debt repayment capability among small and medium-sized enterprises (SMEs) as well as micro and super micro businesses.

Thai Economy