Exports at risk 'by bad planning'

Exports this year could dip by almost 14% if the political unrest continues until the second quarter, as 40% of companies do not have risk management plans in place for protests, a recent survey found.

Business operators, surveyed by the Office of Industrial Economics (OIE) last month, predicted exports would fall by 18.5% and 26% in the third and fourth quarters this year if unrest continues to those periods.

Most companies have business continuity plans (BCPs), but their production and sales have still been affected by political unrest, said OIE director-general Somchai Harnhirun.

Covering 300 companies, the survey found nearly 60% of companies that focused on domestic sales have BCPs in place, and 60% of exporters also have BCPs.

Of total businesses with BCPs, 42% plan to expand their markets to replace the loss in customers, 23% will lower or control costs to cope with the slowdown, and 22% will explain to customers the difficulties they faced.

Another 7.7% plan to seek alternative transportation routes, while 5.5% contacted concerned government agencies in advance to receive required documents.

But Andrew Durieux, director and principal consultant for BCP at Coverage Ltd, said expanding the customer base is not really part of BCP, but rather a normal business practice. And cost-cutting is used to manage an economic downturn, but does not provide help if business operations are damaged during a protest.

He is sceptical that many Thai companies have BCPs.

"In our experience, most plans we do see are IT back-up plans, or fire and evacuation plans," he said in a separate interview. "Most companies in Thailand do not exercise their plans, and many do very little training other than evacuation."

Cost and culture are the two biggest reasons Thai businesses are reluctant to adopt BCPs, while other reasons include the investment of time required, a lack of skilled people in Thailand that know how to develop a BCP, and a lack of effective law enforcement.

"Some 90% of our customers first contact us for plans for specific events, but only 30-40% keep that as their only request after we point out typically the event that happened last is not the same event that will happen next. Many make BCPs for events after they occur," said Mr Durieux, adding companies should develop a BCP that works for any and all disasters.

"Government agencies in Thailand, in our experience, do not have adequate BCPs that have been trained and tested, so companies may be better off relying on their own plans rather than government agencies in major events that affect government offices as well as private business operators," he said.

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