Thai SMEs Must Go Green to Survive the Low-Carbon Economy

A new wave of trade rules is reshaping the global business landscape, no longer prioritizing price or quality alone, but focusing on carbon reduction. This shift is impacting supply chains worldwide, making environmental responsibility a prerequisite for market access rather than an option. For Thailand's Small and Medium-sized Enterprises (SMEs), keeping pace with these evolving trade and investment trends is crucial to avoid being left behind. Embracing a "green transition" is no longer a choice but a business imperative in the low-carbon economy. Thai SMEs need to understand the global shift and adapt their business practices. The transition offers benefits such as lower costs, increased efficiency, and improved access to future markets. However, many SMEs are currently preoccupied with basic survival, such as cash flow and immediate costs, viewing environmental concerns as secondary. A common misconception is that green transition requires massive investment. In reality, many effective green actions, like adopting energy-efficient machinery, installing solar panels, or switching to electric vehicles, are practical measures that also enhance operational efficiency. Challenges for SMEs include a lack of capacity for planning and implementing green initiatives, often leading to reliance on costly external expertise. Access to funding remains a significant barrier, despite the growing green finance market in Thailand. While government-backed schemes like the Bank of Thailand's "Financing the Transition" program and OSMEP's "SME Green Productivity" program exist, offering lower interest rates and longer repayment periods, their reach to SMEs is limited. A 2023 Bank of Thailand report revealed that green loans constitute only 1.4% of total outstanding loans, with most directed towards large corporations. SMEs often struggle to meet the criteria for green loans, which, in practice, are not significantly different from conventional loans. Banks require clear plans for green projects, but many SMEs lack robust data systems, hindering risk assessment and loan approval. To help Thailand achieve its Net Zero target by 2050, the government must play a pivotal role. It needs to convince SMEs that the transition is manageable and beneficial. Tax incentives, similar to those effectively used in the UK, can be a game-changer, offering benefits for green activities, technology adoption, and procurement processes. Furthermore, better coordination among government agencies is essential. Tools like the Green SME Index and Green Enterprise Index should be integrated with tangible support, including advisory services, technology access, and financing. Practical, user-friendly sustainability reporting tools are needed, rather than complex frameworks. Malaysia's "Greening Value Chain" program, which combines green finance with technical training and emissions tracking software, offers a useful model. The government should also set a clear direction by identifying target industries and focusing on low-risk green activities that demonstrably reduce business costs. These accessible entry points can build confidence and deliver tangible results. With clear policy direction and accessible state support, the green transition can transform from a burden into an opportunity for Thai SMEs, enabling them to cut costs, boost efficiency, and remain competitive in an environmentally conscious market. This will allow them to position themselves within emerging green supply chains, both domestically and internationally. The critical question will then shift from "Can they afford to change?" to "Can they afford not to?" Source: Thailand Business News