By Wichit Chaitrong

THAILAND - SMEs need to expand to other Asean countries and prepare for competition from Asean firms that are expected to locate here, Finance Minister Kittiratt Na-Ranong said yesterday. Thai SMEs are competitive in 16 industries, according to a study.

Thai businesses could set up in other countries and get equal treatment as local firms, Kittiratt said in a keynote speech at the "Innovation: A New Era of AEC" forum. Thais could hold up to 70 per cent of those firms, he said.

There are only two years and a half remaining before Asean becomes the Asean Economic Community (AEC).

Some firms want to go to Indonesia to take advantage of its large market. Some see Vietnam as a high potential investment destination due to its proximity and land connection. Others want to do business in Singapore to cash in on the high purchasing power of consumers there.

Thai firms would not be alone when they invest in Asean as Thai diplomats and trade officials would help them to get fair treatment from the host countries.

As the government next year will cut the corporate income tax to 20 per cent from 23 per cent this year, Thai firms will enjoy lower costs and greater competitiveness. The corporate tax rate in Malaysia is 25 per cent. However, other countries may also cut their tax rate. Singapore has the lowest rate at 17 per cent.

The government welcomes foreign investors to buy stakes in local banks but will not give out any more banking licences. Asean has a special agreement for the financial industry.

To lower logistics costs, the government plans to invest Bt2 trillion in railways, roads, seaports, airports and other infrastructure projects.

The investment bill is expected to be submitted for debate to Parliament this year or early next year.

Fiscal discipline will be followed, as the government will cut the budget deficit to Bt300 billion next fiscal year from Bt400 billion this fiscal year.

According to Krung Thai Bank's research note, Thai SMEs are competitive in agriculture products, auto parts, electric appliances and electronics, computers and parts, rubber products, food, construction materials, consumer goods, restaurants and hotels, hospital services, spas and massage centres, tourism, education in some niche markets, construction services and advertising.

Wasinburee Supanichvoraparch, a designer in the ceramic industry, however, expressed concern about the low productivity of Thai workers compared with Vietnam and China.

Choak Bulakul, CEO of Farm Chokchai, said he was not afraid of competition as his farm could now export breeder cows to Asean members.