The Bank of Thailand says new business registrations still outnumber factory and business closures, with no adverse impact yet on the country's employment figures.
According to Piti Disyatat, assistant governor for the monetary policy group at the central bank and secretary of the Monetary Policy Committee, the central bank is not concerned about factory and business closures as the number is lower than new business registrations.
In addition, the registered capital of new businesses is higher than that of closed enterprises, while the number of people employed in the newly registered businesses has increased.
Mr Piti said the central bank monitors both closures and openings of factories and businesses, deeming the current environment to be positive.
"Factory closures are often attributed to relocations aimed at enhancing business efficiency, which is a normal practice in business operations," he said.
In May 2024, 171 new factories opened, up from 143 plants in the corresponding month of last year. Total investment in the new factories was 16.8 billion baht, up from 8.12 billion in May 2023. The number of workers employed by the factories increased to 9,836 in May 2024 from 3,936 in May 2023, according to the Department of Industrial Works.
According to data from the Business Development Department, 6,530 new businesses opened in April 2024, an 8.09% increase from 6,041 businesses in the corresponding month of 2023.
In April, total registered capital of new businesses tallied 27.3 billion baht, a 30.5% increase from 20.9 billion in April 2023. Meanwhile, business closures decreased by 13.5%, from 936 in April 2023 to 810 closures in April this year, according to the Business Development Department.
In a separate development, Mr Piti said the central bank acknowledges the importance of improving credit access, especially for small and medium-sized enterprises (SMEs), and supports targeted measures such as credit guarantee schemes.
These measures will help increase credit access for SMEs, which is essential for economic growth, he said.
Last week, the cabinet approved a low-interest loan programme worth 5 billion baht to support the government's "Ignite Thailand" vision and a credit guarantee fund valued at 50 billion baht through a new portfolio guarantee scheme to help SMEs access credit.
Mr Piti said the private sector's funding costs via commercial banks remain largely unchanged. Overall business loans have expanded, while household loans have grown at a slower pace, driven by hire-purchase and credit card loans, as credit quality has deteriorated.
New household loan expansion declined in the first quarter this year, mainly attributed to debt deleveraging by financial institutions in response to lower asset quality, according to central bank data. However, new SME loans grew with no debt deleveraging issues, although access to funding sources remains a key problem for SME loan growth, he said.