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Thailand Tightens Definition Of SMEs Eligible For Special Protection From Unfair Credit Terms – Antitrust, EU Competition

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Thailand’s Trade Competition Commission has amended the
guidelines prohibiting large purchasers from setting unfair credit
terms for small and medium-sized enterprises (SMEs). The new
guidelines, which were published in the Government Gazette
on August 17, 2022, revise the definition of SMEs and clarify the
duties of concerned parties.

The original guidelines, which took effect in
December 2021, set a favorable maximum period for credit terms for
SMEs selling products or services to a third-party purchaser.
Prescribing longer credit terms than the mandatory period would
constitute an unfair trade practice in violation of the Trade
Competition Act B.E. 2560 (2017).

In defining what businesses are considered SMEs, the guidelines
set thresholds for the number of employees and amount of annual
turnover. The amended guidelines maintain these thresholds, but the
new guidelines require that both employee-number
and turnover thresholds be met in order for a business to be
considered an SME. In contrast, the original guidelines only
required either the employee-number threshold or the turnover
threshold to be met. This amendment will likely mean that fewer
business operators qualify as SMEs.

Accordingly, two types of businesses are defined as SMEs under
the guidelines:

  • Manufacturers of goods with up to 200 employees and an annual
    turnover of no more than THB 500 million (approximately USD 13.5
    million); or

  • Service providers or wholesale or retail businesses with up to
    100 employees and an annual turnover of no more than THB 300
    million (approximately USD 8.1 million).

To benefit from protection under the new guidelines against
unfair credit terms, SMEs must provide documents proving the number
of employees and the amount of annual turnover to trade partners
that purchase goods or services from them.

The new guidelines come into force on September 16, 2022.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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