Supan Mongkolsuthee, president of the Federation of Thai Industries, said yesterday that the drop reflected concerns over slowdowns in regional demand and purchasing power, and investors’ caution in expanding their operations.

February’s TISI survey on 1,201 operators in 44 industries found that consumer products for daily life continued to see consistent demand, as manifested by fattening order books and sales in the food, sugar, palm-oil, cosmetics and chemical industries.

The three-month sentiment index stayed at 100.1, slightly down from 100.8 in January, as businesses remained worried about risks to the economy, which could affect operations over the next three months.

The main ones were tightening liquidity of small and medium-sized enterprises, likely long and severe droughts, foreign-exchange volatility and political conflicts in other countries.

Businesses see public investment and public consumption as the |key mechanisms to drive the |Thai economy amid a slowdown in private consumption in the second quarter.

Public spending is expected to lead to more private consumption and investment, while the government’s financial measures could help businesses gain access to sources of working capital.

Last month, businesses showed more concern over the global economic situation, foreign exchange and lending rates, while expressing less concern over the domestic political situation and global crude-oil prices.

The businesses urged the government to expedite its investment in infrastructure projects as scheduled and expand exports into new markets as a way to lessen the country’s dependence on export destinations that have economic issues.

Product innovation for higher value-added, plus support for the digital economy and e-commerce, should also be promoted.

Last month, the sub-indices for all sizes of industries witnessed drops. Small industries edged down from 78.0 to 77.1, medium industries from 86.8 to 84.5 and large industries from 94.3 to 92.7. Scores under 100 indicate low confidence.

Surapong Paisitpattanapong, spokesman for the FTI’s Automotive Industry Club, said vehicle production slipped 7.1 per cent year on year to 166,412 units in February, but rose 12.7 per cent from the previous month.

Of total auto production in February, 62.9 per cent was for exports. The number of units produced for export fell 5.6 per cent year on year to 104,679.

Among vehicles made for export in February, the number of passenger cars inched down 6.8 per cent year on year to 37,816 units and 1-tonne pickup trucks declined 4.9 per cent to 66,863 units.

In February, 37.1 per cent of all autos produced were for domestic sales. There were 61,733 of them, down 9.5 per cent from the same month of last year.

Of domestic sales of locally made vehicles in February, passenger cars amounted to 22,743 units, down 28.2 per cent year on year, and 1-tonne pickups accounted for 37,074 units, up 9.2 per cent.

In February, 206,468 motorcycles were made, down 14.4 per cent from the same month of last year.

February’s exports of autos, engines, auto parts and spare parts rose 11.6 per cent year on year to Bt76.40 billion, but exports of motorcycles, parts and spare parts slumped 8.7 per cent to Bt5.48 billion.

About 350 businesses from Thailand, Japan, China, Cambodia and Myanmar yesterday participated in a business-matching function organised by Kasikornbank.

They hope the activity will help them open new markets.

It was the first time for Khaolaor Laboratories, a Thai herbal-product manufacturer, which wanted to meet importers and distributors, its managing director Watcharapong Pongboriboon said.

The company met Japanese buyers that might help the company resume exporting to the Japanese market.

It wants foreign markets to increase from 15 per cent of sales now to 20 per cent as before.

Asean is the future of his company. Asean harmonisation is bringing the 10 countries together to use the same regulations, which means that products under licence will benefit from sales to those markets.

Khaolaor products have been certified by the Food and Drug Administration, which adds value to them and makes them more attractive to buyers, he said.

Sangsul Pitthayanukul, chief executive officer of Siam Health Group, a supplier of skincare products, said business matching helped his company save costs because in the first step in going abroad, he had to spend his own money to introduce products during overseas roadshows.

A hospital operator from Japan became seriously interested in Siam Health Group’s products after joining the event.

The company will make an appointment with the new contacts and show them its products before starting actual trading.

The key to success of Siam Health Group is not only having innovative products but also innovative marketing and processes, which are essential for reinforcing its competitiveness in global markets.

The company is focusing on the European market. It recently contracted an original equipment manufacturer (OEM) in Germany to use the company’s formulas. Having a manufacturing base in Germany makes it easier for the company to sell skincare and healthcare products in European markets.

In five to 10 years, the international market should account for 80 per cent of sales, quadruple today’s share, Sangsul said.

Jiraphan Lertwassana, sales and marketing manager for NSL Foods, a Thai OEM of high-quality bakery products, said the company could open new markets from joining the business-matching party.

It will supply bakery products to Vietnam, which is a new market for the company.

Vietnamese appreciate high-quality baked goods but there is not much variety, so the company sees a chance to grow in this market, whose economy is expanding quickly along with the number of middle-income consumers.

Besides hosting the business-matching activity, KBank has signed memoranda of understanding with the chambers of commerce and trade associations from all 10 member states of the AseanEconomic Community plus its three major trade and investment partners (China, Japan and South Korea) to boost regional business opportunities.

Banthoon Lamsam, chairman and CEO of KBank, said that in the global market, there were many sellers but few buyers because purchasing power is weak from overspending in the past several years.

Business matching is an event that helps both sellers and buyers to meet. Before trading, they should get to know each other.

Investment, which should be a key engine of the Thai economy, has witnessed many limited conditions such as concern for the environment and fear of foreign investors taking advantage of this country. That made the infrastructure projects progress slower than expected, Banthoon said.

The Thai economic slowdown is a result of the conflicts of humans, he claimed. The drought is also an example of the failure of water management of humans, besides the practice of not complying with regulations.

Financial institutions have sufficient power to support businesses, but borrowers – especially those in the middle to low segments – have little ability to get loans.

If banks get too aggressive, risks will come to haunt them, he said.

The upper segment including mega-projects has the ability to borrow, but national projects have problems with environmental issues, and some stimulus measures that aimed to spur cash flows in the economy have proceeded sluggishly because of regulations, the banker said. Therefore, the Thai economic recovery is fragile and sensitive.

If the economic situation in the remaining quarters of this year remains the same as in the first quarter, the country will face very challenging tasks to resolve. The export sector will witness a drop for another year, he said.

“Exim Bank now is strong enough financially to expand overseas to support Thai companies expanding abroad … especially in Asean countries after the Asean Economic Community became effective this year,” he said after meeting with the finance minister and the bank’s board.

At the meeting, Somkid informed Exim Bank’s board of the government’s policy that it needed the bank to come up with a three-year regional business strategy. The strategy will cover the bank’s business expansion overseas, as well as loan policy for Thai exporters and companies that invest abroad.

Somkid said some Thai companies were trying to invest in emerging countries where Thai commercial banks do not yet have a footprint. It is in places like that where Exim Bank should be setting up branches. Moreover, even in countries where Thai commercial banks are already operating, such as the CLMV (Cambodia, Laos, Myanmar and Vietnam) sub-region, Exim could be offering a low-interest alternative to Thai businesses there.

Finance Minister Apisak Tantivorawong added that it was government policy that the specialised financial institutions have strong management and cover the areas they were designed to support. The state-run SFIs are Exim Bank, the Small and Medium Enterprise Development Bank of Thailand(SME Bank), Government Housing Bank, Government Savings Bank, and the Bank for Agriculture and Agricultural Cooperatives.

After the meeting yesterday, the Exim Bank will draw up a three-year business plan to propose to the Finance Ministry within two or three weeks. By that time, the bank will have appointed a new president, expected within two weeks.

At the end of 2015, Exim Bank announced net profit of Bt1.52 billion and a total credit outstanding of Bt73.54 billion. Business turnover derived from the bank’s financing activities amounted to Bt136.63 billion, while that from export credit insurance and investment insurance accounted for Bt64.38 billion.

This year, Exim Bank targets new lending worth more than Bt19 billion, up by 4-5 per cent from last year.

Meanwhile yesterday, SME Bank announced its business strategy for the year. It also reported net profit of Bt341 million for the first two months of 2016.

“When we show strong net profit we can expand our investment to meet our investment target of up to Bt2 billion next year,” the bank’s chairwoman Salinee Wangtal said.

The bank reduced its non-performing loans from Bt23.45 billion, or 27.25 per cent of total loans in January to Bt23.27 billion, or 26.07 per cent, by the end of February. The bank |targets reducing NPLs to Bt22 billion by the end of this month as it follows the business plan it proposed to the State Enterprise Policy Committee, she said.

Group captain Jirapon Kuaduang, the director of the Centre, said the need stemmed from the growth in the aviation sector.

He said the airline sector needed 400-500 pilots per year, but universities and aviation schools could supply only 200-300 pilots per year. Meanwhile, the schools trained 300-400 aviation engineers, about 100 lower than the demand. Currently, there are 2,500-3,000 pilots and 8,000-9,000 engineers in the markets.

The Centre trains 1,800 aviation personnel per year including 100-120 pilots. It also offers a full range of training, diploma, bachelor and masters degrees for locals and foreigners.

Channarong Pornrungroj, director of The Office for National Education Standards and Quality Assessment (ONESQA), said 26 universities and aviation schools are offering aviation curricula. Among them, the Civic Aviation Training Centre, Eastern Asia University and Rangsit University are certified at good levels.

He said two other schools – Nakhon Panom University and Rajamangala University of Technology Tawan-ok Bang Phra Campus – have also opened. The other schools are certified as good and best levels.

He said aviation student numbers had increased dramatically over the last three years – up from 5,000 in 2013 to 9,000 in 2014 and 15,000 in 2015.

Isara Vongkusolkit, chairman of the TCC and the Board of Trade, plans to propose to the committee, which is chaired by Prime Minister Prayut Chan-o-cha, the plan to appoint a special working committee to conduct a feasibility study on increasing the supply of highly skilled foreign workers.

This would help the country with technology transfers necessary to support target growth industries, as well as boost Thailand’s productivity and overall competitiveness.

This would increase investors’ confidence in the target industries, which are necessary to drive the country’s economy in the future, the chamber believes. It says it is necessary to restructure manufacturing to keep up with today’s rapid technological advancements to ensure efficiency and productivity. This is necessary to help push Thailand towards high per-capita income.

Certain regulations to accommodate skilled foreign workers can be completed in three to four months, Isara thinks, while other laws may take more time.

Highly skilled labour accounts for only 5 per cent of the country’s manpower, which the chamber believes is inadequate to support the country’s future economic growth and development. Thailand would need to have at least 10 per cent skilled labour to ensure continuing economic growth and prosperity. The TCC and Board of Trade believe that highly skilled foreign workers will help draw investment to high-technology businesses, which would raise the country’s productivity and competitiveness.

Thailand’s productivity index stands at only US$2.55 (Bt89.50) per worker compared with twice that figure for Malaysia and fivefold higher for Malaysia’s agricultural sector.

The TCC thinks Thailand has to become more productive to improve its agricultural and industrial manufacturing efficiency, which is needed to drive the economy.

It says the government must try to help Thailand achieve at least 5-per-cent annual economic growth for the country to shift to a higher income category after the 13th National Economic and Social Development Plan (2026).