ABSTRACT
Despite their flexibility, Registered small and medium-sized enterprises (SMEs) can only absorb market fluctuations up to certain limits. However, the intensity of the East Asian financial crisis and its deep spillover effects on the real economy hit the SME sector in Thailand rather badly as it did the other affected economies of the region. Since July 1997 and at least until mid-1999, the crisis can be associated with a drastic reduction of overall production and capacity utilization. This has been primarily noticeable in the domestic market, but also, and more surprisingly, on the export front, at least for about half of the existing export-oriented SMEs. The sharp decline of domestic demand, both from individual and corporate consumers, has been the most immediately felt by producers, and SMEs in particular. The collapse of demand has been the main cause of financial difficulties for 85 to 90 per cent of all SMEs.
