The Rise Of Community And Micro Enterprises In Thailand’s Deep South – Analysis

By Asae Sayaka* and Murray Hunter

When one undertakes a sojourn around the Thai Deep South, one of the first observations will be the recent explosion of small business throughout the region. The three Southern border provinces, Pattani, Yala, and Narathiwat have for decades exhibited the lowest number of SMEs in the country, reflecting the lag in development in relation to the rest of the country. 

Back in 2005, less than 1.5 percent of total registered businesses in the nation were domiciled within the Southern border provinces. Yet even with a rise in violent incidents across the Deep South over the last year, a host of new community and micro enterprise start-ups have not been deterred. The number of MSMEs has risen from 30,000 in 2005 to 80,184 in the southern border provinces today. While many communities in Thailand have suffered severely during the Covid crisis, many communities within the Deep South have thrived through a mass of entrepreneurial start-ups. 

Population within the Southern Border Provinces is officially 2.07 million people, based upon a decade old census. However, the actual current population is much higher today, with a very young population. This has changed generational perspectives across the region, where the yearning to undertake business both as a means of survival and career path has been growing. Even some graduates from the local universities prefer to start-up micro businesses than pursue any career path related to their studies outside the southern provinces. 

There is a general awareness among the young, that their futures are their own responsibilities. Here one can see the Islamic teachings of enterprise as being a noble profession is being pursued. 

This positive attitude towards entrepreneurship in the deep south is showing to be an important cultural attribute in a region that has a poverty rate 4.3 times higher than the national average of 8.8 percent. According to the World Bank in 2019, Pattani and Narathiwat have poverty rates of 34.2 and 34.17 percent respectively.

Economic opportunities have been traditionally perceived as limited 

Economists have always perceived economic opportunities within the Deep South as being very limited. Major economic sectors of the region are the commodity rubber, market gardening, fruit cultivation, and fishing. However, many of these activities are dominated by large corporations with most local communities carrying out lower value-added tasks, restricted to selling to middlemen and markets. Hence there has been very little market space perceived to be available for local entrepreneurs to enter these industries, especially with high capital entry costs. 

Thus, for many decades central planners have seen the region to be limited in high value opportunities for community and micro-enterprises. As a consequence, entrepreneurship development strategies were neglected by authorities over the first two decades of this century. Entrepreneurial capacity building programs like One Tambun One Product (OTOP) from more than a decade ago was rolled into the region in a lukewarm manner and had a poor take-up at the time. The region didn’t get the full advantages of the government focus on community development over the last two decades, due to focus on resolving the insurgency issue. 

Bureaucracy at the time considered that citizens within the region, especially those with little or no capital were not perceived to have a good economic future. Planners saw the high rate of elderly household heads, poor Thai communication skills, low education rates, and slow structural transformation of the region as negative factors, with solutions not forthcoming.  

How did community and micro enterprise growth occur?

Over the last two years thousands of micro enterprises have started up across a number of sectors. Small holders utilizing very fertile land have entered market gardening, fruit production, boutique farming, homestays, agro-tourism farm projects, and goat herding, to name a few.

What is different from past decades is that many of new entrepreneurs have been able to select and target specific customer groupings, thus lowering the propensity of start-up failure. For example, durians produced in Yala are exported, sent to customers in other provinces through pre-arranged supply chains. Agro-tourism and homestays have emerged to cater for the growth of local tourists. Goat farming is servicing the growth of local restaurants within the region, and way-side restaurants are created based upon their own market-garden operations. 

In the cities, micro-entrepreneurs have established stalls and small restaurants contributing to a now bustling night-life in the provinces for locals. Many streets in Pattani, Narathiwat, and Yala are clustered with night cafes servicing local clientele, particularly the youth with innovated fusion dishes. This is also occurring in the service industry where miscellaneous businesses are being established. 

There are now 74,216 registered sole proprietorships in the deep south operating these businesses. This is almost 3 percent of the official population. 

Many Deep South rural communities are benefitting from NGOs that are facilitating community start-ups for example UNDP funded project through the Yunus Foundation in Thailand is running a project “Empowering Young Women Entrepreneurs for Delivering Inter-Community Food Security, Peace, and Prosperity in Thailand’s Southern Border Provinces. This is aimed to empower young women entrepreneurs, particularly in communities directly or indirectly impacted by Covid-19, to improve food security in the region by building on common understanding of shared values, interests, and mutual dependence between Buddhist and Muslim communities in the Southern Border Provinces.

Currently, there are 2,470 of local registered with the Community Enterprise Promotion Division, Department of Agricultural Extension, Ministry of Agriculture and Cooperatives spread over the three southern border provinces: Pattani (995), Yala (379) and Narathiwat (553). It found that there are several organizations; government, private sector and NGOs are working within this region developing and improvising local entrepreneurs. Activities include community outreach, and trainings. 

Opportunities aplenty for future growth 

The growth of community and micro enterprises within the Deep South is contributing to the creation of a sustainable economy to endure the Covid crisis. This is creating sustainable incomes based on adding-value within local communities. This assists in eradicating poverty at the village level. The development of culturally compatible activities is soaking up idleness and unemployment in villages, which is a major problem. This is also assisting in tackling drug abuse in rural areas as youth are being empowered with activities to look forward to on a daily basis. 

Communities with the assistance of NGOs are acquiring business skills and building business networks to sustain their businesses. This is being coupled with the local knowledge inherited from previous generations. Local primary products are being transformed into value-added products, especially fisheries, livestock, and handmade cultural-based products. 

This is also enhancing local food security for communities, a major asset in the fight against the recent resurgence of inflation across Thailand. The surge in enterprise start-ups is creating a better sustainable standard of living for many living within the region. 

The most valuable asset of the deep south is its position along the border with Malaysia. Although the international border has been closed for almost 20 months, the deep south and Northern Malaysia have long been culturally, socially, and economically connected, sharing a very similar language. With the number of new and diversified MSMEs now operating within the deep south, where many are innovative start-ups with uniquely valued products, trade is set to expand exponentially, once the border re-opens. Likewise, entrepreneurs within the deep south have developed many ‘Halal certified’ resorts and boutique hotels, utilizing some of the most beautiful scenery in Thailand and unique southern Thai Muslim cuisine as drawcards. These enterprises are set to benefit from renewed Malay tourism coming from the south.

Coupled to tourism, there is a vast potential for the Deep South communities’ opportunities in other areas. These include recreation, entertainment, cultural and traditional art sectors. Tourism will be one of the main drivers of socio-economic development in this region.

Tourism development is an important pillar for reducing poverty, hunger, and gender inequalities. Sustainable development of tourism will alleviate environmental degradation that has been seen in the popular tourist precincts of Krabi and Phuket’s outlying islands. 

Activities such as culinary tourism, forest tourism, historical tourism, spiritual tourism, and outdoor activities like canoeing are growing within the deep south. Big bikes from the south now make Betong and Narathiwat choice destinations, while cyclists are discovering the mountains of the deep south are just as challenging as those famous locations as Doi Inthanon in Chiang Mai. 

Potentially the deep south could become the fastest growing tourism region in Thailand. With the Thai-Malaysian border opening up for the first time since March 2020, it may take tourism six months to build up any sizable momentum. However, the opening of a new airport in Betong, Yala, a growing local tourism destination since March 2020, and plans to build a new train service to Kuala Lumpur would be a game changer. Southern Thailand’s Muslim culture has also been attractive to Indonesian, South Asian, and Arab visitors. 

Tourism will significantly contribute to the development of MSMEs in rural areas along to their counterparts in the major cities. Community-Based Tourism (CBT) is one of the fastest-growing sectors in the tourism industry of Thailand and of the three southern border provinces. 

This has all happened in spite of the Covid crisis

The road to future MSME development 

However, there is still a long way to go to bring entrepreneurship within the deep south to match the rest of the nation. local entrepreneurs still face several problems and challenges such as marketing, product quality, and financial assistance. MSMEs weaknesses include, too many agencies and laws involved in the food chain which leads to complicated management, lack of unity, and lack of integration in implementation, minimal access and use of technology to manage their own produce, agricultural products such as rice and fruit. In addition, much produce is produced in unsuitable areas resulting in high production costs, lack of mechanisms for sharing information and exchanging knowledge among stakeholders, both within the public and private sectors, investment in Research Technology development and innovation in agriculture and food is still very low, both from within the public and private sector. 

There still needs to be a lot of focused and targeted assistance to assist local entrepreneurs find and exploit quality business opportunity in the region. Entrepreneurs also need assistance in overcoming structural barriers such as inadequate access to financing and lack of business management skills. This can be achieved through strategic partnerships by the government, private sector, NGOs with commercial and development banks, SME Office, and other relevant agencies.

Despite various initiatives implemented by the related government agencies, there is still more that needs to be done by the state bureaucracies to achieve higher and sustainable economic growth. The government needs to:

1. Encourage the use of advance technology and innovation in improvising better product quality and expand market. This can be done by jointly facilitating collaboration of industry leaders, researchers, the business community, and other non-profit organisation;
2. The government through its agencies should coordinate local entrepreneurs to tap into quality halal products for export markets for the consumption of Muslim communities around the world;
3. Induce collaboration among relevant agencies to review the procedures for standard and halal certification of local products;
4. Government should continue support and participation from the relevant government ministries, agencies, and universities to ensure continuous development techniques and technology through training, advisory services, and financial assistance. 
5. The younger generation needs to be encouraged to venture to become young entrepreneurs as a career. They need to be made aware of the various training and courses offered on entrepreneurship development to equip them with the necessary skills and knowledge with the technology, marketing, and branding.
6. Strengthening support and platform for start-up particularly in utilising digital platforms for small scale businesses to penetrate domestic and international markets. Among the support that can be offered include financing and monitoring, so that it will achieve the desired outcome.
7. Initiate smart partnerships between private sector, government, and local entrepreneurs to develop and nurture small and medium sized initiatives.
8. Create a unique brand to promote local products from the region to national and international markets, and
9. Create a culture of continuous learning for small scale entrepreneurs e.g. conduct regular forums, and discussion.

*Asae Sayaka is a native of Yala. He is a coordinator of Yunus Thailand for the southern border provinces of Thailand and has more than 20 years experience, which spans across all phases of community development.