1

Factors influencing business operator’s investment of SMEs

decision making in border trade area between Thailand and

Cambodia Sarom Tem and Vuttichat Soonthonsmai DBA.

Faculty of Management and Tourism, Burapha University, Thailand. 169 Long-Hard

Bangsean, Muang, Chonburi 20130, Thailand

E-mail: temsarom@yahoo.com, vutmba@yahoo.com

Abstract

According to the study, during 2007 – 2010, the trade surplus between Cambodia

and Thailand resulted in Sakaeo province of Thailand border trade structure changes by

which it became more of an exporter than an importer of goods and service. The higher trade

value created added value to business sector especially small and medium enterprises or

SMEs, which, in turn, promoted investment, tourism, and consumption, thus expanding the

economic and social systems for ASEAN Economics Community (AEC). The purposes of

the study were to examine the border trade structure and pattern in Sakaeo province, Thailand

and Banteay Meanchey province, Cambodia, to identify factors affecting to business

operator’s investment of SMEs decision making in border trade area between Sakaeo

province, Thailand and Banteay Meanchey province, Cambodia, and to study problems and

obstacles of investment border trade between the given areas between two countries. This

study employed both primary and secondary data.

Descriptive study was conducted through the questionnaire. Samples were 86

Thai small and medium enterprises (SMEs) operators who run the business in border trade

area between Sakaeo province Thailand and Banteay Meanchey province, Cambodia for

more than 5 years, purposively selected. Descriptive and Inferential statistics were performed

to describe business profile and test the established hypotheses with .05 level of significance,

respectively.

The study found that the operators still imports and exports goods with much

lower value, such as forestry product, lumber, log, wooden furniture, charcoal, local

agricultural products, weaving fabric, and long grain rice. Additionally, it clearly showed that

business opportunities and profit-oriented activities were the most influencing factors, while

the second most important factor was an opportunity to expand their business to Vietnam,

Laos as well as to other Asian countries and China. This result from the study show that they

saw that Aranyapathet in Sakaeo province, Thailand, which is an economic and society

gateway to Indochina, had the high potential to become an important border trade area as a

trading hub since many roads and transportation networks were extended to Vietnam.

According to the hypothesis testing results, it significantly showed that business operators

realized that Cambodia already promoted the Banteay Meanchey province to an international

checkpoint that enables business operators to obtain more convenient border crossing and

develop economic, business and tourism for both countries. Logistics system and political

issue were the big problems; however ongoing improvement and completion of roads in

Cambodia would facilitate a trading trip to Vietnam and Laos easier and safer. This will

create business and investment opportunities among Thailand, Cambodia, Vietnam and Laos

investment windows eventually.

Keywords - Business operator; Small and Medium-sized enterprises (SMEs); Decision

Making; Border trading and Border Trade Area.

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INTRODUCTION

Nowadays economy is borderless or globalization as information technology and

innovation was a response to changes in the economic system of free trade. The local

economy is even more relevant but in reality of the cross border economic is remain strong as

also each country is also a measure of trade sanctions with the law regime of monetary

policy, fiscal policies and tax system different from country to country . All these factors

have an impact on trade and investment between countries because of international trade

occurs under different institutional environments. The differences in many of these

institutions on case became a cause of conflict in international trade.

The internationally sustainable advantages are increasingly recognized to depend on

the possession of unique assets and enable them to avoid these conflict of interests..

Moreover, international financing market is more developed and human capital is more

internationally mobile. The result is that increasing numbers of business executives and

entrepreneurs have been exposed to international business.

Since entrepreneurs are usually the key actors in the recognition, exploration and

exploitation of new opportunities, an improved understanding of the circumstances

surrounding new venture foundation is necessary. Entrepreneurs are meeting our economic

needs through the creation of thousands of new businesses every year that recognized as

being among the most important determinants of a country’s economic development and

growth. The welfare is more and more related to capacity to exploit opportunities made

available by new information technology, telecommunication, biotechnology and/or life

sciences, efficient resource allocation and by new markets through the establishment of new

ventures. There is thus an increasing recognition of the importance of the positive correlation

between the creation of new firms and the annual growth of the GNP and employment levels.

Being members of the Association of Southeast Asian Nations (ASEAN) and the

Greater Mekong Sub-region (GMS) cooperation Framework, Thailand and Cambodia should

take advantages to create opportunities for broader and more comprehensive cooperation.

Leaders of both countries have been able to accomplish negotiation for cooperation in the

fields of agriculture-aquaculture, trade and investment, tourism, transport, energy, forestry,

mining, and hi-tech. Thailand and Cambodia share almost 800 kilometers of common border trade six

permanent border trade route between the two countries. The total border trade value of

Thailand and Cambodia is most than half of the total foreign trade value of the two countries,

and has increasing impressively. There are several provinces of Thailand connected with

Cambodia, namely, Ubonrachathani, Srisaket,Surin, Buriram,Sakaeo,Chantaburi and Trade.

Among these six border-trade posts of Thailand and Cambodia, Rongkrue Market at

Ban Klongluek,Arayaprathet District in Sakaeo Province is the most important market spot.

The Thai Commerce Ministry has proposed a plan to set up a special economic zone in

Sakaeo province to the Cabinet, to link Thai-Cambodia trade. This project is aimed to

develop and link trade and logistics system in the eastern region of Thailand with Eastern

neighbor. By the end of August 2010, the Deputy Commerce Minister has visited Cambodian

Trade Minister to discuss on the linkage of trade, investment and trade barrier reduction

between the two nations including the direction through the third country in ASEAN. Sakaeo

special economic zone will be set in similar form of Tak economic zone in the west of

Thailand which has been approved by the Cabinet. Location for the economic zone in Sa kaeo

has been scouted and three different sites with an area of 700, 1,000 and 10,000 rai will be

proposed for the selection (Siamdailynews.com, 2010).

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These two countries also have similar cultures, level of development, available

seaports and many other factors that generate better opportunities for penetration of Thai

SMEs entrepreneurs in Cambodian market. Border trade between Thailand and Cambodia

increased fromUS$2556.8 million in 2010, increased 54.18% compared to US $ 1658.3

million in 2009. Separated from Thailand export to Cambodia increased US$ 2342.1 million,

increased 48.17% and Thailand import from Cambodia value of US$214 million, increased

176.32% (Department of foreign Trade, Ministry of Commerce, Thailand, 2010).Based on

data from the office of Foreign Trade Promotion in Phnom Penh, from 2003 to 2006, major

investment project from Thailand in Cambodia were tourism (48% of total investment)

infrastructure (22%), industry(15%) and agriculture(15%).

Nowadays Cambodia is one of the most dynamic markets in the ASEAN region.

Cambodia has been one of Asia's fastest-growing economies in recent years. The country is a

good example of economy and political transition. Today, the trade and investment

regulations of Cambodia are fully compatible with international norms that are creating

attractive environment to attach foreign investment. The Royal Government of Cambodia

(RGC) has stated a commitment to private sector led growth and recognizes the importance

of SMEs for sustainable and equitable economic development. Although still at the very early

stages of implementation, the government has introduced a range of policies focused on

Small and Medium Enterprises (SMEs) development. Key to organizing SME development

strategies has been the forming of the SMEs Sub-committee in 2004.

Thus, factors that have significant influencing business operator’s investment of

Thai SMEs decision making in Border Trade Area between Thailand and Cambodia area

have not been explicitly addressed by any previous studies. Therefore, study about examine

the border trade structure and pattern in Sakaeo province, Thailand and Banteay Meanchey

province, Cambodia, factors influencing business operator’s investment of SMEs decision

making in border trade area between Sakaeo province, Thailand and Banteay Meanchey

province, Cambodia and problems and obstacles of investment border trade between the

given areas between two countries.

Thus, it is necessary to undertake a study of ―Factors Influencing Business

Operator’s Investment of Thai SMEs Decision Making in Border Trade Area between

Thailand and Cambodia.‖ in order to build a foundation for Thai SME enterprises,

government and academics discussion.

Research Objectives

The research consists of following objectives:

1. To examine the border trade structure and pattern in Sakaeo province, Thailand

and Banteay Meanchey province, Cambodia.

2. To identify factors influencing business operator’s investment of SMEs decision

making in border trade area between Sakaeo province, Thailand and Banteay Meanchey

province, Cambodia.

3. To study problems and obstacles of investment border trade between the given

areas between two countries.

The scope of study This study is targeted to Thai small and medium enterprises (SMEs) operators who

run the business in border trade area between Sakaeo province Thailand and Banteay

Meanchey province, Cambodia for more than 5 years, purposively selected.

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Hypotheses

Hypothesis 1: Managerial Business Factors (Current employee size) have significant effect

on business operator’s investment of SMEs decision making in term of government trade and

investment policy, Labor cost, Market size of business/industry, Market potential of

business/industry, border-trade cooperation .

Hypothesis 2: Managerial Business Factors (current annual business income) have significant

effect on business operator’s investment of SMEs decision making in term of government

trade and investment policy, Labor cost, Market size of business/industry, Market potential of

business/industry, border-trade cooperation.

Hypothesis 3: Managerial Business Factors (current business/industry) have significant effect

on business operator’s investment of SMEs decision making in term of government trade and

investment policy, Labor cost, Market size of business/industry, Market potential of

business/industry, border-trade cooperation.

Hypothesis 4: Characteristics of the business (type of business, period of time in business,

value of the goods, model of business communication, and currency in the business) ) have

significant effect on business operator’s investment of SMEs decision making in term of

government trade and investment policy.

Hypothesis 5: Characteristics of the business (type of business, period of time in business,

value of the goods, model of business communication, and currency in the business) ) have

significant effect on business operator’s investment of SMEs decision making in term of

labor cost.

Hypothesis 6: Characteristics of the business (type of business, period of time in business,

value of the goods, model of business communication, and currency in the business) ) have

significant effect on business operator’s investment of SMEs decision making in term of

market size of business/industry.

Hypothesis 7: Characteristics of the business (type of business, period of time in business,

value of the goods, model of business communication, and currency in the business) have

significant effect on business operator’s investment of SMEs decision making in term of

market potential of business/industry.

Hypothesis 8: Characteristics of the business (type of business, period of time in business,

value of the goods, model of business communication, and currency in the business) have

significant effect on business operator’s investment of SMEs decision making in term of

border-trade cooperation.

Conceptual Framework

Based on business operator’s investment of SMEs decision making in border trade

area between Thailand and Cambodia, the following are the framework of study.

Independent variables consist of managerial business factors (internal factors)

which are composed of current employee size, current annual company income, current

business/industry, and characteristics of the business including type of business, period of

time in business, value of the goods, model of business communication, currency in the

business.

The factors of investment decision making as dependent variables focus on 5 areas as

follows:

1. Government trade and investment policy

2. Labor cost

3. Market size of business/industry

4. Market potential of business/industry

5. Border-trade cooperation

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Independent variables Managerial business Factors

1. current employee size

2. current annual business income

3. current business/industry

Dependent variables Decision Marking Factors

Characteristics of the business

1. Type of business

2. Period of time in business

3. Value of the goods

4. Model of business communication

5. Currency in the business

REVIEW OF LITERATURE

ASEAN Strategic Action Plan for SME Development (2010 – 2015)

At the 14th ASEAN Summit, the AEC Council was tasked to develop an ASEAN

Action Plan to enhance SMEs’ competitiveness and resilience. An important policy focus in

the Action Plan -- underlined by the HLTF-EI, the AEM and ASEAN Leaders --, is the need

to foster private-sector engagement and partnership on SME issues. This is to serve as a

driving force in the implementation of SMEs development policies and programmes,

including those concerned with the accelerated integration of the 12 priority sectors, at the

national, sub-regional and/or regional levels. The Plan defines the mission, objectives,

guiding principles, current status, and future policies and programs for ASEAN SMEs

Development. The Plan aims to provide specific activities to be conducted in the short and

medium term, wider dissemination of information on regional activities to ASEAN SMEs,

and implementation of national and regional SMEs policies and programmes.

1. The Policy Environment

1.1 The ASEAN Community

The ASEAN Charter, which came into force on 15 December 2008, embodies the

collective intent and political will of the ASEAN Member States towards achieving the vision

of an ASEAN Community by 2020.

With the ASEAN Charter, the peoples, institutions and resources of ASEAN

Member States are expected to converge into the ASEAN Community with unified and

collective goals on key development issues. The realization of this community rests upon the

attainment of goals in the various sectors and areas of concern that comprise each of the three

pillar communities—ASEAN Political-Security Community, ASEAN Economic Community

and ASEAN Socio-Cultural Community. As a community, ASEAN aims bring about a whole

new dimension to decades of cooperation among its member countries with new

1. Government trade and investment policy

2. Labor cost

3. Market size of business/industry

4. Market potential of business/industry

5. Border-trade cooperation

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opportunities and amidst more diverse challenges in an increasingly complex global social

and economic environment.

At the 14th ASEAN Summit in February 2009, the ASEAN Leaders adopted the

APSC Blueprint, ASCC Blueprint and the Initiatives for ASEAN integration (IAI) Work Plan

2, 2009-2015. The Leaders further agreed that these Blueprints, together with the AEC

Blueprint, which was approved at the Twelfth ASEAN Summit in November 2007, shall

constitute the Roadmap for an ASEAN Community, 2009-2015 to promote a holistic

approach in achieving the ASEAN Community goals. The AEC Blueprint in particular

outlines the strategic areas of cooperation and integration to establish a single market and

production base, where there is free flow of goods, services, and investment and freer

movement of capital and skilled labor, a highly competitive economic region, a region of

equitable economic development, and a

region fully integrated into the global economy.

1.2 The ASEAN Policy Blueprint for SME Development (APBSD)

2004-2014

The ASEAN Economic Ministers (AEM) met during their Retreat in Siem Reap,

Cambodia, on 4-5 May 2009. The Ministers noted that the ASEAN Policy Blueprint for SME

Development 2004-2014 (APBSD) aims to facilitate the emergence of a SME sector which is

characteristically entrepreneurial, growth oriented, outward-looking, modern and innovative.

The APBSD is currently in its sixth year of implementation. In view of this, the AEM

agreed to undertake a stock-taking exercise and review the implementation of the APBSD

thus far in ASEAN.

2. Rationale for a Strategic Approach to the Development of SMEs in ASEAN

SMEs are the backbone of the ASEAN economies. They account for more than 96

per cent of all enterprises and for between 50 and 95 per cent of employment in many AMSs.

In addition, the contribution of SMEs to GDP is generally significant, about 30-53 per cent,

and the contribution of SMEs to exports is between 19-31 per cent. They are also the largest

source of domestic employment across all economic sectors and in both rural and urban

areas. The SME sector also provides opportunities for women and youth to participate in the

economic development of the country.

A strong, dynamic and efficient SMEs sector will ensure the sustainable, inclusive

and broad-based economic and social development. A vibrant SME sector is critical in

supporting closer regional integration through the establishment of the ASEAN Community,

particularly the ASEAN Economic Community (AEC). Thus, the encouragement and

promotion of competitive and innovative SMEs is necessary in contributing to greater

economic growth and social development towards more inclusive and broad-based

integration of the ASEAN region.

The SMEs sector in ASEAN, however, is confronted with a wide-range of

structural, financial and other challenges, among which are limited access to finance,

technologies and markets. There is also the question of entrepreneurial spirit and

management skills among ASEAN SMEs. These problems are compounded by the lack of

information, inadequate capacity for compliance with standards and certification, and the

absence of a more conducive business and policy environment.

In addition, there are the new trends of conducting business utilizing information

and communications technology (ICT) with on-line linkages across the value chain as well as

the outsourcing and networking strategies adopted by large enterprises and multinational

companies (MNCs) which lack participation by SMEs. All these require SMEs and and

sustain SME participation in supply networks and to sharpen SME competitiveness,

flexibility and hence business sustainability.

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SMEs are seen to be more agile and adaptable to changes in the business

environment, and the increasingly exacting market and consumer requirements. Concerted

actions and development programmes in partnership with donor agencies undertaken on a

regional basis through the ASEAN SME Working Group (ASMEWG) will be important in

enhancing the capacity of SMEs to ensure a more progressive SME sector towards the overall

economic growth and the realization of the ASEAN Community. Greater competition, rapid

technological advances, more demanding and constant changes in market and consumer

requirements mean that SMEs have to be innovative. and forward looking in order to manage

with success the challenges of the global regional and domestic markets. The formation of

SME-based clusters, and inter-firm networks and linkages within ASEAN will help leverage

collaboration and collective efficiency, including scale economies across the value chain,

thus creating further opportunities for business development and supply linkages for SMEs

and their entrepreneurs in the region.

There is additionally a need to create and promote a more conducive business and

policy environment for SMEs development where both Government and the private sector

assume synergistic and complementary roles. The Government acts as a facilitator, while

SMEs themselves are the engine of growth. Indeed, collaborative SMEs development

programs within a public-private partnership framework will ensure the continued economic

growth and social development in the region. These programs can be achieved through

structured and organized action plans and development initiatives, including though the

introduction of wide-ranging capacity building and fiscal and financial incentive programs,

with SMEs and their entrepreneurs as the main target beneficiaries (Source: ASEAN Policy

Blueprint For SME Development 2004-2014).

3. Mission Statement and Operational Principles

3.1 Mission and objective

By 2015, ASEAN SMEs shall be world-class enterprises, capable of integration into

the regional and global supply chains, able to take advantage of the benefits of ASEAN

economic community building, and operating in a policy environment that is conducive to

SME development, exports and innovation.

3.2 Guiding principles

In implementing the Strategic Plan, ASEAN shall be guided by the needs of its

stakeholders. The Plan shall promote SMEs development through improving access to

financing and technology, strengthening export capacity, utilization of ICT solutions,

enhanced capability to innovate and strengthened human resource development through

regional programmes.

The Plan shall also support mechanisms that promote access to information,

database development and dissemination of best practices.

3.3 Goals

To realize the vision and objective, ASEAN needs to achieve the following goals:

- Enhancing Internationalization of SMEs and SME Marketing

Capabilities

- Improving SME Access to Finance.

- Strengthening SME Human Resource Development and Capacity

Building

- Incubator and Local SMEs Development

- Establishing an SME Service Center/ASEAN SME Service Desk

- Setting up an ASEAN SMEs Regional Development Fund.

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4. Future policies and programs

Future policies and programs of the SMEWG should considered the specific needs and

objectives of ASEAN SMEs -- e.g., (a) SMEs entrepreneurship and human resource

development; (b) SMEs capacity building in management, marketing, networking and supply

chain formation, technology and financing; (c) level policy playing field for SMEs, including

information dissemination on, and inter-agency coordination to enable SMEs take advantage

of AFTA, AIA, PISs, AEC, etc.; (d) public-private sector partnership for SME development

and networking, etc.

5. Implementation, monitoring and updating of the Plan

Implementation of this Strategic Plan shall be guided by a medium-term Strategic

Schedule and annual work programs to be formulated upon its adoption. The Plan is meant to

be a dynamic document and may be updated when there are significant changes in data needs

or shifts in investment policy and program thrusts and priorities. Periodic monitoring shall be

done through the AEC Scorecard or similar mechanisms.

GMS Cross Border Transport Agreement (GMS-CBTA) The Agreement including its 20 Annexes and Protocols is now affected. RGC has

ratified and adopted 3 Protocols and 17 Annexes. To implement this agreement, RGC has

entered into bi-lateral MOU’s on Initial Implementation of GMS Cross Border Transport

Agreement with Thailand and Viet Nam. The progress to-date has included:

Between Cambodia and Thailand :

-Two MOU’s have been signed for Initial Implementing CBTA at Poi Pet-

Ararnyaprathet checkpoint.

- MOU on Initial Implementation of GMS Cross Border Transport Agreement at Poi

Pet-Ararnyaprathet border gate.

- MOU on the Exchange of Traffic Rights to Implement the GMS-CBTA at Poipet-

Ararnyaprathet border checks points.

- A quota of 40 units from each country in trans-border traffic has been agreed by

both parties. The identification of additional border posts is being considered and discuss.

Overview of SMEs in Thailand In economy, mostly of new employment is generated by small and medium sized

enterprises (SMEs) more than larger firms. Moreover, SMEs also create technology

innovation of new products and services, which contribute to the economic growth of the

country.

Small and medium-sized enterprises in Thailand (Thai SMEs) are fundamental

business units spread all over the country. Although before the year 1997 the government

recognized the importance of Thai SMEs development strategies and direction have not been

clearly identified. Therefore, since severe economic crisis (i.e., Om Yum Kung disease) in

1997, thousands of Thai SMEs have gone bankrupt and so dropped out of the Thai economy

each year; Thai Government has seriously reviewed and formulates direction for Thai SMEs

development. Ministry of Industry undertook the formulation of Thai SMEs Development. It

is hope that the developments of Thai SMEs especially industrial sector with play an

important role in economic will go towards the same direction.

1. Role and Important of SMEs in Thailand

Presently, Thailand business/industry sector composes of approximately 950,000

enterprises and more than 99.7 percent of them are small and medium-sized enterprises

(SMEs) (APEC Center for Technology Exchange and Training) which employing less than

200 personnel staffs and has less than 200 million bath of fixed asset (The office of small and

medium enterprises promotion, n.d.) It is expected that there is 40 percent of total enterprises

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are small and not registered firms. In Thailand industrial sector, half of workers and 60

percent of new employment, after economic crisis in 1997 are from Thai SMEs.

Approximately 30 percent of Thai enterprises rely on export market. And Thai large exporter

use local initial raw material and parts partly. So, Increasingly Thai SMEs exporter’s

subcontractors are key issues for the development of Thai export and for income generation.

Moreover, Thai SMEs, which scatters all over the country, are both buyers and producers

products and services needed for the remote area. Therefore, Thai SMEs are important for

income distribution and prosperity of the region.

2. SWOT Analyses of Thai SMEs

Thai SMEs: The Big Picture

1. The economic and political environment of today’s world represents numerous

challenges to Thai SMEs. Changes and delays in international trade practices as set cause one

of these by the World Trade Organization (WTO). This has brought about an increase in the

making of regional, bilateral trade agreements, facilitated through fast communications.

While free trade and investment grew widely over the past few years, so did protectionism,

mainly in various forms of non-tariff barriers.

2. In contrast from the past, businesses now emerge with a new competitive

approach in which economy-of-scale has been replaced by economy-of-speed. The new

approach uses the latest know-how, skills, mobility and technology instead of the old

parameters in production methods and capital. And fast connectivity has become more

important than a company’s hierarchy. Furthermore, designer lines, niche markets and

customer satisfaction have sidelined mass production to a large extent.

3. Businesses tend to go smaller, focusing on their core capabilities, while

expanding alliances and networking with their international contacts. This has opened new

export market opportunities for Thai SMEs, given that they can adapt quickly. Especially

businesses engaged in intellectual property have been able to take advantage of the emerging

niche markets for technology-oriented products.

Weakness and Threat faced by Thai SMEs 1. When competitiveness declines, it is usually caused by factors such as the

disappearance of cheap labor, abundant supply of similar product lines in the market place,

old-fashioned technology, insufficient R & D, and low standards of production. The

condition in which Thai SMEs find they under such circumstances is that of a vice or

nutcracker in which they are squeezed out of the market. This dilemma has been identified as

one of Thailand’s biggest challenges.

2. Lack of good entrepreneurship: Most Thai SMEs are family-run one-man

operation. This tends to coincide with an acute lack in professionalism, accountability,

transparency and equity.

3. State management in the promotion of small and medium enterprises: There

have been numerous shortcomings, including a marked lack in coordinated assistance, little

or no promotion planning, insufficient or ineffective monitoring as well as a dearth of

evaluations of the system as a whole.

Strong Points (Strength) and Opportunities for Thai SMEs. In principle, Thai SMEs are well equipped to adapt to changes in the business

environment. They are also in a position - at the local level - to take advantage of their ability

to put weight behind their aims and apply their expertise in product specialization. By and large, Thai SMEs do not need a large start ups capital and are likely to

penetrate niche markets with relative ease. There are many excellent opportunities for Thai

SMEs, such as in the recruitment of unskilled employees who can fairly easily be trained to

become semi-skilled laborers, or even fully skilled professionals.

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Another advantage for Thai SMEs is that doing business in Thailand tends to be

relatively free from restrictions, while there is ample availability of services to promote and

market product lines. To this existing positive business climate is now added the state-of-the-

art mechanism of the Office of Thai SMEs Promotion, ironing out the obstacles that soon will

be regarded as belonging to the past.

3. The Policies for the Promotion of Thai SMEs

The policies of the Thai Small and Medium Enterprise (Thai SMEs) Promotion Plan

2002-2006 is to make Thai SMEs the engine for the economy as a whole, functioning

environmentally friendly yet fully-competitively at international levels, while maintaining

high standards of quality and doing so with sustainability, to the benefit of the entire

population as follow;

1. Development of Thai SMEs with the aim of having them plays a pivoting role in

the building of sustainable economic as well as social growth.

2. Maximizing the potential of Thai SMEs through increasing their efficacy and in

doing so considerably improving their competitive capabilities. To achieve this, emphasis is

given to restructuring of Thai SMEs regarding manufacturing, trade and services. This

restructuring includes human resources development, technological updating, management

and products and services for domestic and international markets.

3. Development of certain Thai small and medium-sized enterprises (Thai SMEs) at

the grassroots level of local communities, aimed at utilizing locally available resources and

opportunities. This not only creates employment and additional income at the local level, but

also opens up new ways to connect further field, including international markets.

4. Encouraging entrepreneurs to join the Thai SMEs community, applying their

skills so as to participate in a harmonious, sustainable manner in this new progressive trend in

the nation’s economy, thus contributing to the nation’s economic recovery, and reap the

benefits of the many opportunities this entails

RESEARCH METHODOLOGY

In order to achieve objectives of this study, the research had limit the scope of the

survey correctly, selected the appropriate investigative tools and methods, and conducted

proper analysis and summary, and then reached a conclusion. Therefore, this chapter was

designed is mix research method qualitative research method and quantitative research

method, proposed sample and population, showed the design of data collection and analysis,

and also provided guidelines for this study.

Research Design

This study is the mixture of quantitative and qualitative methods. Population and interested

samples were the SME business operators or owners, shareholders, relatives, or business

managers in investing at least 5 years in border trade area between Sakaeo province, Thailand

and Banteay Meanchey province, Cambodia. The data were collected through a total of 86

(out of 109 operators population) self-administered questionnaires passing the evaluation for

content validity and internal consistency reliability index (Cronbach’s alpha = .854) via

purposive sampling, and interviewed through a convenience sampling of 5 business

operators. Regarding the quantitative data analysis, descriptive statistics such as frequency,

percentage, mean score, and standard deviation were calculated. And inferential statistics

through t-test two-population independent test and One-way analysis of Variance (ANOVA)

were performed. In regard to the qualitative data, they were obtained through content analysis

with use of business environment analysis through SWOT analysis.

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RESULTS

The results of this study were presented in fourth parts as follows:

Symbol of Data Analysis

n = Sample size S.D. = Standard deviation

t = t-value F = F value Sig. = Data valuable significant level of 0.05

1. Characteristics Profile

Table 1 Managerial Business Factors of business operator’s investment of

SMEs decision making in border trade area.

(n = 86)

Managerial Business Factors Frequency Percent

Gender

Male 59 68.6

Female 27 31.4

Age

less than 30 years old 3 3.5

30-40 years old 15 17.4

41-50 years old 29 33.7

More than 50 years old 39 45.3

Marital status

Single 9 10.5

Married 77 89.5

Entrepreneurs education level

Higher Diploma/Association 27 31.4

Bachelor Degree 41 47.7

Master Degree and higher 18 20.9

Current employee

Less than 5 employees 10 11.6

5-50 employees 59 78.6

More than 50 employees 17 19.8

Current company annual income (In Bath)

Not more than 8,000,000 11 12.8

8,000,001-16,000,000 20 23.3

More than 16,000,000 55 64.0

Current business of Business Operator

Agricultural/food products 22 25.6

Forest products 6 7.0

Machines for investment purposes 8 9.3

Animal 6 7.0

Jewelry 5 5.8

Using goods 11 12.8

Electrical appliances and spare parts 10 11.6

Equipment and Construction materials 5 5.8

Fuel 1 1.2

Oil 3 3.5

Garment 3 3.5

Services 3 3.5

Processed product and raw materials 3 3.5

Total 86 100.0

12

Table 1 illustrated that the majority of the respondents were males which accounted for 59

(68.6%, followed by females which accounted for 27 (31.4 %).Age shows that most of them

were between More than 50 years old which accounted for 39 (45.3%), the majority of

respondents were married which accounted for 77 (89.5%), bachelor degree holders which

accounted for 41 (47.7%). The current employee size in Business, it was found that the

majority was 6-11 persons which accounted for 29 (33.7%). Current annual company income

with the majority of respondents’ current annual company income (in baht) between Over

16,000,000 baht which accounted for 55 (64.0%). Current business of Business Operator that

most of respondents owned in Agricultural/food products which accounted for 22 (25.6%).

Table 2 Characteristics of the business in Border trade area (n = 86)

Characteristics of the business in Border trade area

Type of business in border trade area Frequency Percent

Import 3 3.5

Export 47 54.7

Import-Export 18 20.9

Dealer 15 17.4

Services 3 3.5

Period of time in business

5-10 years 58 68.4

More than 10 years 28 31.6

Value of the business per month

Not more than 100,000 Bath 15 17.4

100,001-500,000 Bath 12 14.0

500,001-1,000,000 Bath 10 11.6

More than 1,000,000 Bath 49 57.0

Number of trade partner countries

One country(Cambodia) 69 80.2

Two countries(Cambodia, Vietnam) 13 15.1

Three Countries(Cambodia, Vietnam, Laos) 4 4.7

Model of business communication.

Business communication by self 36 41.9

Business communication by agency 25 29.1

Business communication by business to business 25 29.1

The channels of business’ operation in district trade area

Arayaprathet District 74 86.0

Arayaprathat and Klonghath District 12 14.0

The category list of goods and service of business

Agricultural/food products 22 25.6

Forest products 6 7.0

Machines for investment purposes 8 9.3

Animal 6 7.0

Jewelry 5 5.8

Using goods 11 12.8

Electrical appliances and spare parts 10 11.6

Equipment and Construction materials 5 5.8

Fuel 1 1.2

Oil 3 3.5

Garment 3 3.5

13

The form of payment in Business

Domestic Banks 15 17.4

Clearing Agent 3 3.5

Clearing between partners 3 3.5

Cash 65 75.6

Currency in the business

Thai Bath 77 89.5

USD 1 1.2

Thai and USD 8 9.3

Document used in the business

Letter of Bill 70 81.4

Letter of Credit (L/C) 7 8.1

Customs documents 9 10.5

Total 86 100.0

Table 2 illustrated that the majority of the respondents were type of business in border trade

area, it was found that the majority of respondents were exporters which accounted for 47

(54.7%). Concerning the respondents’ period of time in business, it was found that the

majority of respondents were period of time in 5-10 years which accounted for 10

(68.4%).Value of the business with the majority of respondents’ value of the business per

month (in baht) between over 1,000,000 Bath which accounted for 49 (57.0%).Concerning

the respondents’ number of trade partner countries, it was found that the majority of

respondents were one country (Cambodia) which accounted for 69 (80.2%) as the result of

Sakaeo province have the border trade with Cambodia border that Arayapathet border trade

which is a economic and society gateway to Indochina.

The majority of respondents were business communication by self which accounted

for 36 (41.9%) because Cambodia has the best culture as similar to Thai as well as the people

in the close border can communication by the both language. Concerning the respondents’

period of time in business, it was found that the majority of respondents were period of time

in 5-10 years which accounted for 10 (68.4%) as show that business in the adjust of period of

time of economic growing in Sakeao province. Model of business communication with the

respondents’ model of business communication, it was found that the majority of respondents

were Arayaprathet District which accounted for 74 (86.0%) as by the result saw that

Arayapathet in Sakaeo province, Thailand, Which is an economic and society gateway to

Indochina, had the high potential to become an important border trade area as trading hub

since many roads and transportation network were extended to Vietnam.

The category list of goods and service of business most of respondents owned in

Agricultural/food products which accounted for 22 (25.6%), followed by Using goods which

accounted for 11 (12.8%) and Electrical appliances and spare parts which accounted for 10

(11.6%) and smallest is Fuel which accounted for 1 (1.2%) of the category list of goods and

service of business by Agricultural/food products is very important goods in Sakaeo province

and the operator still imports and exports good with much lower value, such as forestry

product, lumber, log ,wooden furniture, charcoal, local agricultural products, wearing fabric,

and long grain rice. Concerning the respondents’ the form of payment in Business, it was

found that the majority of respondents were Cash which accounted for 65 (75.6%) as show

that more of business operators always used the case for payment rather than by domestic

bank or clearing agent because of Cambodia Riel currency instability in the market.

The respondents’ currency in the business, it was found that the majority of

respondents were Thai Bath which accounted for 77 (89.5%). Concerning the respondents’

document used in the business, it was found that the majority of respondents were Letter of

Bill which accounted for 70 (81.4%).

14

Hypotheses Testing Results.

The factors of investment decision making as dependent variables focus on 5 areas

as follows:

1. Government trade and investment policy

2. Labor cost

3. Market size of business/industry

4. Market potential of business/industry

5. Border-trade cooperation

In order to test the three hypotheses (H1, H2, and H3) and research questions, one-

way analysis of variance (ANOVA) were employed with the .05 level of significance. The

hypothetical testing results supported hypothesis hat there were significantly differences in

government trade and investment policy based on current employee(H1), while the results

did not show any supporting hypothesis that there were significant differences in government

trade and investment policy based on the other managerial business factors (H2 and H3)

(Table 3).

Table 3: Hypotheses testing results for Business operator’s investment of SMEs decision

making based on managerial business factors

(n = 86).

Characteristics Mean

1 2 3 4 5

1. Current employee

F

P-Value

5.473

0.002**

1.152

0.210

1.692

0.320

1.131

0.144

3.157

0.025

2. Current company annual income (In Bath)

F

P-Value

3.364

0.080

0.352

0.727

1.0264

0.145

0.023

0.982

0.400

0.696

3. Current business of Business Operator

F

P-Value

0.92

0.80

0.459

0.649

1.164

0.073

0.201

0.842

0.279

0.782

* p < .05 ** p < .01

15

Table 4 Hypotheses testing for business operator’s investment of SMEs decision making

based on business characteristics

(n = 86)

Characteristics Mean

1 2 3 4 5

1. Type of business in border trade area

Import

Export

Import-Export

Dealer

Service

4.57

4.17

4.31

4.36

4.33

3.64

3.11

3.50

3.31

3,00

3.51

3.00

3.09

3.22

3.11

3.41

3.42

3.98

3.59

3.77

4.43

4.25

4.55

4.43

4.21

F

P-Value

1.009

0.095

.064

0.074

1.004

0.125

0.040

0.969

0.529

0.066

2. Period of time in business

Not more than 5 years

5-10 years

4.57

4.17

3.64

3.41

3.48

3.40

3.43

3.14

4.43

4.07

t

P-Value

2.410

0.067

1.418

0.088

1.006

0.232

1.716

0.055

2.931

0.003**

3. Value of the business per month

Not more than 100,000 bath

100,001-500,000 bath

500,001-10,000,000 bath

More than 10,000,000 bath

4.38

4.48

4.69

4.21

3.60

3.40

3.50

3.15

3.14

3.55

3.52

3.05

3.40

3.09

3.22

3.11

4.00

4.09

4.22

4.11

F

P-Value

1.983

0.106

1.72

0.156

1.027

0.093

1.001

0.088

1.129

0.098

4. Number of trade partner countries

O ne country

Two countries

Three countries

4.57

4.17

4.42

3.64

3.11

3.42

3.48

3.00

3.36

3.43

3.14

3.49

4.43

4.07

4.88

F

P-Value

2.410

0.067

2.418

0.048*

1.046

0.073

1.716

0.065

2.931

0.009**

5. Model of business communication

Business communication by self

Business communication by agency Business communication by business to business

4.38 4.48 4.69

3.60 3.40 3.50

3.14 3.55 3.52

3.40 3.09 3.22

4.55 4.43 4.21

F

P-Value

1.983

0.106

1.72

0.156

1.027

0.053

1.124

0.093

1.002

0.193

* p < .05 ** p < .01

To test the three hypotheses (H4, H5, H6, H7 and H8) and research questions, t-test

and one-way analysis of variance (ANOVA) were employed with the .05 level of

significance. The hypothetical testing results supported hypothesis that there were

significantly differences in border-trade cooperation based on period of time in business and

number of trade partner countries (H5 and H7). And there were significantly differences in

labor cost based on number of trade partner countries(H7)., while the results did not show

any supporting hypothesis that there were significant differences in business operator’s

investment of SMEs decision making based on the other characteristics of business factors

(H4, H6 and H8) (Table 4).

16

The tended to future investment in Cambodia and opportunities development of Sakaeo

province to expand trade and investment to Cambodia, Lao (PDR) and Vietnam

Table 5 Frequency and percentage of respondents classified by the tended to future

investment in Cambodia.

(n = 86)

The tended to future investment in Cambodia Frequency Percent

Decrease 2 2.3

Be the same 19 22.1

Increase 65 75.6

Total 86 100.0

Concerning the respondents’ tended to future investment in Cambodia, it was found that the

majority of respondents were business operators increase for future investment in Cambodia

which accounted for 65 (75.6%), followed by be the same which accounted for 19 (22.1%)

and smallest by decrease for future investment which accounted for 2 (2.3%)

Opportunities development of Sakaeo province to expand trade and investment

Table 6 Frequency and percentage of respondents classified by opportunities development of

Sakaeo province to expand trade and investment to Cambodia, Lao (PDR) and Vietnam.

(n = 86)

The opportunities development of Sakaeo province

to expand trade and investment in Indochina Frequency Percent

Little 5 5.8

Moderately 30 34.9

Very much 38 44.2

Extremely 13 15.1

Total 86 100.0

Concerning the respondents’ opportunities development of Sakaeo province to expand trade

and investment in Indochina, it was found that the majority of respondents were business

operators very much to expand trade and investment in Indochina which accounted for 38

(44.2%), followed by moderately to expand trade and investment which accounted for 19

(22.1%), by extremely which accounted for 13 (15.1%) and a little expand trade and

investment in Indochina which accounted for 5 (5.8%).

Business Operators in term of confident

Table 7 Frequency and percentage of respondents classified by Business Operators in term of

confident to investment in Border trade area.

(n = 86)

Business Operators in term of confident Frequency Percent

Rather unconfident 9 10.5

Neutral confident 17 19.8

Rather confident 32 37.2

Very confident 28 32.6

Total 86 100.0

Table 7 identifies the majority of respondents rather confidence of Business Operators to

investment which accounted for 32 (37.2%), followed by very confidence which accounted

for 28 (32.6%), neutral confidence which accounted for 17 (19.8%) and Rather unconfident

which accounted for 9 (10.5%).

17

2. The measures of government and the performance of the officer to promote

investments have influencing investment making decision.

The measures and government policies of affecting to investment in border trade area

Table 8 Frequency and percentage of respondents classified by the measures and government

policies of affecting to investment in border trade area between Sakeao province, Thailand

and Banteay Meanchey province.

(n = 86)

The measures and government policies of affecting

to investment in border trade area Frequency Percent

Little 7 8.1

Moderately 40 46.5

Very much 31 36.0

Extremely 8 9.3

Total 86 100.0

Table 8 identifies the majority of respondents moderately which accounted for 40 (46.5%),

followed by Very much which accounted for 31 (36.0%), extremely which accounted for 8

(9.3%) and little which accounted for 7 (8.1%).

Business Operators know the improvement of the customers system EDI and

one stop service

Table 9 Frequency and percentage of respondents classified by know the improvement of the

customers system EDI and one stop service

(n = 86)

Know the improvement of the customers system EDI

and one stop service

Frequency Percent

Do not know and not know about system 1 1.2

Know but do not understand about system 17 19.8

Know and understand about system 33 38.4

Know and understand about system very much 35 40.7

Total 86 100.0

Table 9 identifies the majority of Know and understand about system very much which

accounted for 35 (40.7%), followed by Know and understand about system which accounted

for 33 (38.4%), Know but do not understand about system which accounted for 17 (19.3%)

and Do not know and not know about system which accounted for 1 (1.2%).

The prepared to change the Business when the pattern of trade changes by

the measures and government policies

Table 10 Frequency and percentage of respondents classified by change of business.

(n = 86)

The prepared to change the Business Frequency Percent

No change the business 9 10.5

Change all the business 12 14.0

Change in to the rule of government policies 56 65.1

Remove the trade 9 10.5

Total 86 100.0

Table 10 identifies the majority of Change in to the rule of government policies which

accounted for 56 (65.1%), followed by change all the business which accounted for 12

(14.0%), no change the business and Remove the trade which accounted for 9 (10.5%).

18

CONCLUSIONS AND DISCUSION

Summary of study

The manuscript entitled ―factors influencing business operator’s investment of

SMEs decision making in border trade area between Thailand and Cambodia‖ that the

purposes of the study were to examine the border trade structure and pattern in Sakaeo

province, Thailand and Banteay Meanchey province, Cambodia, to identify factors affecting

to business operator’s investment of SMEs decision making in border trade area between

Sakaeo province, Thailand and Banteay Meanchey province, Cambodia, and to study

problems and obstacles of investment border trade between the given areas between two

countries. Of which, the independent variables which includes Managerial Business Factors,

Characteristics of the business in border trade, factors influencing business operator’s

investment of SMEs decision making in border trade area between Thailand and Cambodia

and the measures of government and the performance of the officer to promote investment

have Influencing investment making decision.

The instruments implemented data collections were conducted through the

questionnaire. Samples were 86 Thai small and medium enterprises (SMEs) operators who

run the business in border trade area between Sakaeo province Thailand and Banteay

Meanchey province, Cambodia for more than 5 years, purposively selected. Descriptive and

Inferential statistics were performed to describe business profile and test the established

hypotheses with .05 level of significance, respectively.

Discussions

Concerning the respondents’ number of trade partner countries, it was found that the

majority of respondents were one country (Cambodia) which accounted for 69 (80.2%),

followed by two countries (Cambodia, Vietnam) which accounted for 13 (15.1%) and Three

Countries (Cambodia, Vietnam, Laos) which accounted for 4 (4.7%) as the result of Sakaeo

province have the border trade with Cambodia border that Arayapathet border trade which is

a economic and society gateway to Indochina and the majority of respondents were

Arayaprathet District which accounted for 74 (86.0%), followed by Arayaprathat and

Klonghath District which accounted for 12 (14.0%) as by the result saw that Arayapathet in

Sakaeo province, Thailand, Which is a economic and society gateway to Indochina, had the

high potential to become an important border trade area as trading hub since many roads and

transportation network were extended to Vietnam and the category list of goods and service

of business most of respondents owned in Agricultural/food products which accounted for 22

(25.6%), followed by Using goods which accounted for 11 (12.8%) by Agricultural/food

products is very important goods in Sakaeo province and the operator still imports and

exports good with much lower value, such as forestry product, lumber, log ,wooden furniture,

charcoal, local agricultural products, wearing fabric, and long grain rice and by concerning

the respondents’ the form of payment in Business, it was found that the majority of

respondents were Cash which accounted for 65 (75.6%), followed by domestic Banks which

accounted for 15 (17.4%, Clearing Agent and Clearing between partners which accounted for

3 (3.5%) as show that more of business operators always used the case for payment rather

than by domestic bank or clearing agent because of Cambodia Riel currency instability in the

market.

The study identified to examine the border trade structure and pattern as followed

the Sakaeo’s Vision in 2010-2013 that the province will be the logistics centre to Indochina

countries, Eco-tourism, Energy plant ( cassava, maize, sugar cane) and Safety food . Trade

and investment linkage with neighboring as Development of border trade system and

19

construction of road network to border passes as also improvement of border pass facilities

and economic development of border trade and custom and services at border pass.

Factors affecting to business operator’s investment of SMEs decision making in

border trade area between Sakaeo province, Thailand and Banteay Meanchey province,

Cambodia as it clearly showed that business opportunities and profit-oriented activities were

the most influencing factors, while the second most important factor was an opportunity to

expand their business to Vietnam, Laos as well as to other Asian countries and China. This

result from they saw that Aranyapathet in Sakaeo province, Thailand, which is economic and

society gateway to Indochina, had the high potential to become an important border trade

area as a trading hub since many roads and transportation networks were extended to

Cambodia and Vietnam.

The study identifies to study problems and obstacles of investment border trade

between the given areas between two countries as shows to concerning the respondents’

problems and obstacles it was found that the majority of respondents were limitations the

import and export of good which accounted for 67 (77.9%) with Mean 4.76 (S.D 0.48)

followed by political problem which accounted for 68 (76.5%) with Mean 4.72 (S.D 5.9). So

it found that problems and obstacles of investment border trade by custom service as no one

stop service at border pass and difference in transportation regulation between Thailand and

Cambodia.

Hypotheses testing results, it significantly showed that business operators realized

that Cambodia already promoted the Banteay Meanchey province to an international

checkpoint that enables business operators to obtain more convenient border crossing and

develop economic, business and tourism for both countries. Logistics system and political

issue were the big problems; however ongoing improvement and completion of roads in

Cambodia would facilitate a trading trip to Vietnam and Laos easier and safer. This will

create business and investment opportunities among Thailand, Cambodia, Vietnam and Laos

investment windows eventually.

Research limitations It is appropriate to briefly address a set difficulties and limitations that occur in the

undertaking of the research.

First, limitation is due to the difficulty to access respondents. Since respondents are

busy Operators, business owners, so it is not easy and simple to approach, contact, and get

information due to their time constraints and workload even they are willing to answer.

Furthermore, limitation occurs when some respondents may not be willing to give

true information about firm’s size in terms of registered capital or information relating to

financial issues due to a concern of confidentiality.

Recommendations The research findings indicated that the main reason for business operator’s

investment of SMEs decision making in border trade area between Thailand and Cambodia of

respondents are because of government trade and investment policy supported, low labor

cost, investment privileges and market potential in region.

Thus, Thai government, they should implement some promoting program to

encourage Thai’s SMEs expand business to border trade area between Thailand and

Cambodia such as create more cooperated programs, promote to holding conferences

between two countries to help Thai entrepreneurs have more understanding about Cambodia

market as well as legal regulation guidance to access Indochina market and other Asian

countries .

Recommendations for further study as this study is conducted only Thai SMEs

operators who run the business in border area between Sakeao province, Thailand and

Banteay Meanchey province Cambodia for more than 5 years and a currently potential to

20

investment in border trade area. Although the researcher used both of the quantitative and

qualitative method to conduct this study, researcher can only conducted the through h the

questionnaire. Simples were 86 Thai SMEs operators interview due to the difficulty in

accessing respondents. Consequently, recommendations for further research are as follows as

a study to identify determinant of successful Business Operator’s investment of Thai SMEs

decision making in Cambodia.

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