Import tax breaks for large manufacturers 'could damage SMEs'

Large numbers of SMEs, operating in industrial parks and elsewhere, have been affected by the worst flooding in decades, said Prasert Thammanoonkul, president of the Alliance for Supporting Industries Association.

"New orders have disappeared for at least the past month," he said.

That said, some firms could relocate their machinery and tools to provinces such as Nakhon Ratchasima or Chon Buri and resume production, while others will hire friends and partners to produce parts for them, he added.

However, multinationals in the automotive and electronics industries are not confident about the ability of local SMEs to supply parts to them.

As a result, large manufacturers have been granted import-duty exemption by the Finance Ministry to bring in parts and machinery until things are back to normal. There is no set deadline for the relief measure.

"The government should set a specific time frame for such imports, as the measure could hurt local SMEs," said Prasert.

The association chief said that he did not yet know how many SMEs had been affected by the floods, due to incomplete information. However, most SMEs under the alliance operate outside the flood-affected industrial estates.

The association has about 20,000 members with annual sales of Bt300 billion and employing some 300,000 workers. Some of these SMEs had simply suspended production as they were unsure whether they would be submerged by the flood waters, he said.

Viroj Sirithanasarnt, president of the Thai Tool and Die Industry Association, said technical assistance would be organised in Bangkok's Kluaynamthai subdistrict to provide mould and tool-fixing.

Unlike large firms, SMEs have no capacity to fix their machinery, so the associations will work with several universities and foreign specialists to assist them.

Chainarong Limpkittisin, managing director of Reed Tradex, said machine-tool manufacturers in Japan had been flooded with new orders from Japanese firms based in Thailand. Reports suggest that 3,400 out of 16,000 machines owned by Japanese firms here are under water.

Due to the large number of new orders, Japan-based manufacturers are finding it difficult to deliver new machinery to customers operating in Thailand, he said, adding that delays in the delivery of such equipment would also hit production here.

The large number of new orders does, however, suggest that Japanese firms are still committed to further investment in Thailand despite the devastating floods, said Chainarong.

He added that Reed Tradex plans to hold the "Metalex 2011" exhibition from December 2124 at Bitec in Bang Na.

The machinetool exhibition this year has the theme of "manufacturing revival: fast track to normal production" and will attract manufacturers from around the world to show off their new wares.

A group of specialists will provide an advisory service for fixing tools damaged by the floods, he said. Outsourcing and financial management services will also be available at the show.

Meanwhile, Kittiphat Panitaporn, director of the Industrial Promotion Department's Region 9, said the agency has a budget of Bt500 million aimed at providing financial and technical assistance to 5,000 SMEs and 1,200 community-based OTOP (One Tambon One Product) enterprises affected by the flooding.