Inside a two-story workshop on the outskirts of Bangkok, filled with the sharp smell of resin and paint thinner, a small art toy business is under pressure over rising costs and weakening demand.

Founded in 2018 and growing during the COVID-19 pandemic, Motmo Studio’s artisans make small handmade figurines, known as art toys, inspired by characters from Thailand’s Ramakien epic and local folklore. The studio also takes on original equipment manufacturing (OEM) work.

It is now facing an unprecedented crisis due to the global disruptions to oil and shipping caused by the conflict in the Middle East, reflecting the strain on small-scale businesses with limited financial buffers.

Komkrit Tepthian, founder of Motmo Studio, said production costs, which account for around 60 to 70 percent of total expenses, have risen sharply, particularly for plastics, imported materials and shipping. He said the cost of plastic gashapon capsules has increased from 1.8 baht ($0.05) to 2.5 baht ($0.07) per unit, with bulk orders of 3,000 to 5,000 pieces driving up overall costs.

“Prices have risen by 50 percent to as much as double,” Komkrit told Reuters.

Disruptions to oil and petrochemical flows through the Strait of Hormuz following the outbreak of conflict have tightened global chemical supplies and pushed prices of plastics and polymers — used in everything from auto parts to toys — to around four-year highs.

Iran has effectively shut the ​Strait of Hormuz, which normally carries about a fifth of the world's total oil trade, in retaliation for U.S.-Israeli attacks that began on February 28, starting the war.

Komkrit, who employs a staff of 10, said sales have fallen by more than 30 percent since the start of the year, and that pre-orders have disappeared over the past month, adding that he believes consumers have become more anxious and are tightening their spending.

"I may have to stop," he said, adding that decision would depend on whether the situation improves by August or September. The business is currently relying on remaining reserves and existing orders to maintain cash flow, and he has discussed possible job cuts with some staff to reduce costs.

“We are like small trees within a larger ecosystem. Before the big trees die, the small ones go first,” Komkrit said.

A senior Finance Ministry official in Thailand told a news conference on March 26 it was considering lowering oil taxes, after a plan was approved at a special cabinet meeting, to ease the impact of rising energy prices linked to tensions in the Middle East. The government is also planning support measures for those most affected. 

Production: Napat Wesshasartar/Reuters