The new wave of COVID-19, which began in late December 2020, has severely impacted vulnerable businesses. Although the government's localized control measures have helped mitigate the effects compared to the lockdown measures in April 2020, the decline in spending and tourism continues to affect over 1.3 million SMEs in the trade, service, and tourism sectors, employing more than 6.1 million people. Support measures for affected businesses, such as the "We Win" program, "Half-Half" scheme, and "Travel Together" initiative, have provided assistance to micro SMEs, particularly small retailers and workers outside the social security system. However, these measures do not fully cover SMEs that are legal entities and registered for tax, which number around 110,000 and employ over 2.5 million people.

            According to data from TMB Analytics, it is estimated that the impact of the COVID-19 outbreak in the first quarter of this year will result in a revenue loss of over 27 billion baht for SMEs in the trade, service, and tourism sectors nationwide, affecting 1.3 million operators employing a total of over 6.1 million people.

          When analyzing by area of control measures, it was found that in the maximum control areas, revenues are expected to decrease by approximately 22 billion baht, affecting around 570,000 SMEs and employing over 3.4 million people. In contrast, the areas under surveillance and control are expected to see decreases of 2.7 and 2.2 billion baht, respectively, with over 200,000 and 570,000 businesses affected.

          The business structure reveals that in the maximum control areas, SMEs that are legal entities in the trade, service, and tourism sectors play a crucial role in employment, accounting for 1.8 million jobs or 55% of SME employment in those areas. In the surveillance and control areas, legal entity businesses only account for 20-27% of employment.

 

 

Clothing retail, general stores, hotels, and restaurants are among the SMEs hardest hit during the new wave of COVID-19.

            The outbreak in the first quarter of the year is estimated to have caused a revenue loss of over 5 billion baht for clothing retail businesses. Following that, general stores saw a revenue drop of 4.7 billion baht due to the large number of operators and their widespread presence across the country. For hotels and restaurants, revenue decreased by 3.8 and 2.7 billion baht, respectively.

            A deeper dive into SMEs that are legal entities reveals that general retail stores were the most affected, with 46,000 operators and 330,000 jobs lost. Following them, clothing retail businesses had 11,000 operators employing 64,000 people, while restaurants and hotels had 10,000 and 7,000 businesses, respectively, employing a total of over 290,000 people.

 

Tourism SMEs in Chonburi province are the most affected.

            The severity of the impact is concentrated in provinces under maximum control, particularly large provinces that heavily rely on tourism and services. Chonburi is expected to be the most affected province, with an estimated revenue loss of 6.2 billion baht and 246,000 jobs lost, as it is a tourist city where the tourism sector accounts for 48% of the total trade and tourism value.

            Following Chonburi is Bangkok, with a revenue loss of 5 billion baht. Although it is a larger province than Chonburi, its tourism sector accounts for only 37.6%. Other affected provinces include Samut Prakan, Prachuap Khiri Khan, and Surat Thani, with impacts of 1.38, 1.13, and 1.08 billion baht, respectively.

 

 

The new wave of COVID-19 has resulted in an opportunity cost of 160 billion baht for Thailand.

            According to data from Krung Thai Bank Research Center, Thailand's economy is expected to emerge from recession in 2021, growing by 2.5%. Although it has recovered from the recession of 2020, where the economy contracted by 6.5%, uncertainty remains high as the tourism sector has been heavily impacted. If the current measures can control the situation within 2-3 months, the number of domestic tourists this year is expected to be 109.6 million visits, lower than the previous estimate of 131.8 million visits but still higher than last year’s 91.2 million visits. The government's second round of COVID-19 relief measures will help mitigate the impact.

            The new outbreak has caused an opportunity cost of no less than 160 billion baht due to the delayed recovery of the Thai economy amidst uncertainty, along with other factors that pressure the economy, such as a shortage of shipping containers for exports, the strengthening of the baht, and the ongoing drought from last year. However, the economy in the second half of the year is expected to benefit from the COVID-19 vaccine, which will help restore confidence in controlling the global outbreak.

 

Businesses must prepare to face the changing context of global Megatrends.

            During the COVID-19 pandemic, businesses must be ready to tackle new challenges ahead. The new global context emphasizes sustainability and environmental issues, leading major world powers to place greater importance on these matters, which may be used as a pretext for trade barriers. For instance, the trend of a major economic transformation, or The Great Reset, focuses on creating a balance between the economy, society, and the environment under the framework of sustainability based on greener, smarter, and fairer development.

            Additionally, businesses should monitor international cooperation that may become a turning point for a new round of trade, such as policies under the new U.S. leadership, China's 5-year strategic plan focusing on self-reliance in technology, and the RCEP agreement, which is the largest free trade area in the world.

            Therefore, Thai businesses must prepare by operating on the basis of environmental and social friendliness, as well as developing competitive potential through serious research and innovation. New environmental factors may also positively impact Thai trade, such as the U.S. leadership's policies that will align more with international regulations, which studies indicate will clearly benefit Thai exports. Additionally, the RCEP agreement will enhance exports due to increased tax benefits and the positive effects of trade among negotiating partners.