UOB bank
UOB Thailand has conducted the Business Outlook Study 2023: Thailand Report, revealing positive sentiments among SMEs and large corporations. The findings underscore the overall business sentiment in Thailand and provide key strategies that corporates can adopt to expedite future growth in the post-pandemic environment.
Mr Tan Choon Hin, President and CEO of UOB Thailand, said, "Our recent study draws insights from 530 senior executives from SMEs and large enterprises across 10 industries in Thailand[1] regarding their business sentiment and perspectives as the country recovers from the pandemic. It is encouraging to see that SMEs and large corporations hold a positive outlook for the country's economic recovery. They express a keen interest in expanding their operations abroad, embarking on digital transformation, and integrating sustainability practices as catalysts for new growth."
Businesses Exhibit Confidence in Performance
Seventy-six per cent, or three in four executives, have witnessed improvements in their business performances in 2023. Notably, the manufacturing and engineering sectors display a higher degree of optimism, with 85 per cent expressing positivity, followed by real estate and hospitality at 80 per cent, and consumer goods at 79 per cent. This positive sentiment aligns with the majority of respondents (74 per cent) who anticipate a favourable business outlook for 2023.
Regarding revenue growth, the majority of businesses expect consistent increases over the next three years. A remarkable 90 per cent, or nine in ten businesses, anticipate revenue growth in 2025. Key business priorities for 2023 include tapping into new customer bases (37 per cent), distinguishing themselves from competitors (35 per cent), reducing costs (32 per cent), exploring new revenue sources (30 per cent), and digitalising their business models (29 per cent).
High Inflation's Impact on Business Operations and Supply Chains
According to the survey, nine in ten businesses report ongoing challenges due to high inflation since 2022. Sixty-one per cent note that high inflation has led to increased operating costs, with over half experiencing a rise in raw material expenses (56 per cent) and a decline in profit margins (44 per cent).
Moreover, the study reveals that geopolitical conflicts, particularly the Russia-Ukraine disputes, have also disrupted supply chain management across various industry sectors. Over two in five businesses have encountered rising supply costs resulting from high inflation, difficulties in procuring supplies and requirement for just-in-case supplies
Nonetheless, a majority of businesses expect high inflation to subside within the next six months to two years. This positive outlook aligns with UOB's previous assessment that Thai inflation seems to have reached its peak and has been gradually decelerating since 2022, thanks to lower energy prices and improvements in global supply chain and distribution.
Expanding Overseas for Future Growth
The study indicates that nine out of ten respondents have identified overseas expansion as a priority over the next three years. Businesses are motivated to venture overseas in order to drive revenue growth, enhance profitability, and bolster their reputation. Larger enterprises, particularly those engaged in wholesale trade (96 per cent), exhibit a heightened interest in expanding overseas. These figures surpass the regional average (89 per cent) and the ASEAN average (83 per cent). Thai businesses have set their sights on Singapore, Vietnam, Malaysia, mainland China, and one in three are planning expansions beyond Asia.
However, businesses looking to expand overseas encounter challenges related to legal and regulatory compliance, tax support, and finding suitable partners to collaborate with.
Digitalisation and Sustainability Practices as Key Drivers of Growth
Digitalisation and sustainability have emerged as two significant global business trends in recent years, and Thailand is no exception. The study highlights that digitalising business operations and adopting sustainability practices contribute to improved company performance and reputation.
In Thailand, nine out of ten respondents (92 per cent) have adopted digitalisation in at least one department as of 2022, surpassing regional (87 per cent) and ASEAN (86 per cent) averages. The most significant impact of digitalisation has been observed in increasing customer outreach, followed by enhancing customer experience and boosting productivity.
The majority of businesses, particularly SMEs, are actively pursuing substantial digital transformations. Approximately 60 per cent of businesses are seeking support from banks to provide insights in their digital journey aiming to improve efficiency, and facilitate collaborations with the government and third-party referrals.
Regarding sustainability, 96 per cent of Thai businesses place great importance on implementing sustainable practices. Businesses emphasise that prioritising sustainability enhances their reputation, attracts and retains top talent, and appeals to investors.
However, while over nine in ten businesses claim to have committed to achieving net-zero emissions, only 51 per cent have successfully implemented sustainability practices. One in three businesses cite concerns about increased costs to customers and the potential impact on revenue and profits as the main barriers to adopting sustainable practices.
Mr Tan concluded, "The pandemic has accelerated the urgency for businesses to enhance their digital capabilities and reshape sustainability practices to remain resilient, adaptable, and profitable in this volatile environment. Businesses that are slow to embrace ESG and digital transformation may miss out on potential business opportunities."
[1]Consumer goods; manufacturing and engineering; tech, media and telecom; construction and infrastructure; wholesale trade; industrials oil and gas; business services, community and personal; real estate and hospitality; and professional services
UOB is a leading bank in Asia. Operating through its head office in Singapore and banking subsidiaries in China, Indonesia, Malaysia, Thailand and Vietnam, UOB has a global network of around 500 offices in 19 countries and territories in Asia Pacific, Europe and North America. Since its incorporation in 1935, UOB has grown organically and through a series of strategic acquisitions. Today, UOB is rated among the world’s top banks: Aa1 by Moody’s Investors Service and AA- by both S&P Global Ratings and Fitch Ratings.
For nearly nine decades, UOB has adopted a customer-centric approach to create long-term value by staying relevant through its enterprising spirit and doing right by its customers. UOB is focused on building the future of ASEAN – for the people and businesses within, and connecting with ASEAN.
The Bank connects businesses to opportunities in the region with its unparalleled regional footprint and leverages data and insights to innovate and create personalised banking experiences and solutions catering to each customer’s unique needs and evolving preferences. UOB is also committed to help businesses forge a sustainable future, by fostering social inclusiveness, creating positive environmental impact and pursuing economic progress. UOB believes in being a responsible financial services provider and is steadfast in its support of art, social development of children and education, doing right by its communities and stakeholders.
UOB Thailand is a fully-licensed commercial bank with its network of 149 branches, 352 ATMs nationwide (as at 31 December 2021). UOB Thailand is 99.66 per cent owned by Singapore-headquartered UOB, and is rated among the top banks in Thailand: AAA (tha) by Fitch Ratings.
24 July 2023
For More information, please contact
Brand Media and Communications
United Overseas Bank (Thai) Pcl.
Orawee Wiriyathananon
Email: orawee.wir@uob.co.th
Tel: (+66) 2343 4040
Orapim Thongbhakdi
Email: Orapim.tho@uob.co.th
Tel: (+66) 82 010 9588