Four industries face different pressures
1. Automotive parts
The shift from internal combustion engine (ICE) vehicles to electric vehicles (EVs) is reducing demand for traditional components.
The FTI’s analysis put the number of parts in an ICE vehicle at about 30,000, compared with 1,500–3,000 in an EV. It said the technological transition was beginning to affect employment in the parts industry.
2. Garments
Thai clothing manufacturers face competition from both rising imports and overseas producers with lower costs.
Ready-made clothing imports increased by 12.30% year on year in the first half of 2026, according to the FTI’s analysis.
The garment Manufacturing Production Index (MPI) fell by 2.18% year on year, while capacity utilisation stood at 49.06%.
The federation said the industry’s difficulties extended beyond purchasing power to production costs, technology, the speed of product development and branding.
3. Rubber products
The Middle East war has increased volatility in global oil prices, with upward pressure potentially weakening demand. Downstream factories were tending to delay orders while assessing developments.
Managing profit margins was also becoming more difficult as fertiliser, chemical and energy costs fluctuated. Those pressures fed into transport expenses and the chemicals used in rubber processing.
4. Plastics
The plastics industry faces direct exposure to Middle Eastern supply disruption because it relies on the region for 60–70% of its naphtha imports. Naphtha is a basic feedstock for plastics production.
Disrupted shipping routes have tightened supplies of plastic resins in both domestic and global markets.
Domestic producers reduced output by an average of 25–30% to manage limited raw materials. Total production costs increased by 30–50% during March–May 2026, forcing some small and medium-sized enterprises (SMEs) unable to absorb raw-material costs to close.
Section 75 provides for temporary suspension
Saengchai Teerakulvanich, chief strategy officer of the Federation of Thai SMEs, said some businesses had struggled for an extended period with limited liquidity, difficulties adapting their operations and volatile markets.
Temporary suspension under Section 75 allowed them to reduce operations while trying to survive the transition.
The provision applies when a necessary business interruption, arising from a cause other than force majeure, prevents an employer from operating normally. Saengchai cited raw-material shortages, economic problems and cancelled orders as reasons businesses might need to suspend work.
Under the amended law, employers must pay affected employees at least 75% of their normal working-day wages throughout the period in which they are not required to work. Employers must also notify employees and labour inspectors in writing at least three working days before the suspension. Labour Protection Act, Section 75
Saengchai warned that temporary measures might not be enough to prevent permanent closures.
“If there are no support measures, many businesses using Section 75 will ultimately decide to close. That is the outcome we do not want to see,” he said.
He called for government measures to help businesses restart, including:
Business recovery plans and access to SME advisers or mentors
Low-interest financing
Factoring arrangements to turn receivables into working capital more quickly
Measures to address payment-term problems
Debt restructuring and repayment schedules aligned with businesses’ ability to pay
Source: Bangkokbiznews