Thirachai plans Bt50-bn credit package for flood-hit firms

The finance minister will propose to the Cabinet next week a Bt50-billion credit plan for companies affected by the flood crisis, especially small and medium-sized enterprises, through SME Bank and commercial banks.
The minister, Thirachai Phuvanatnaranubala, said yesterday that there was no need to implement additional tax measures to help businesses affected by the floods because their tax burdens would automatically decrease should their profits fall. As well, the costs from the flood are fully deductible when they calculate their tax.
He said the ministry would pursue steps to enable sufficient credit lines, especially for SMEs, to allow for a smooth recovery from the floods. Accordingly, he will propose to the Cabinet in a meeting next week that it approve low-interest loans through the SME Bank totalling Bt10 billion and a further Bt50 billion from the commercial banks.
However, the Small Business Credit Guarantee Corporation will need to increase the current 15-per-cent loan guarantee to ensure lenders’ confidence in the measure.
In addition, he said, the ministry would set aside Bt10 billion to assist start-up companies that have operated for not more than two years with financial support.
“The ministry will propose 2012 to be the year of investment so as to improve productivity efficiency,” Thirachai said.
“Apart from measures designed to help businesses prepare for the new daily Bt300 minimum wage, there will be additional measures for businesses that invest in productivity efficiency. “Investments in new equipment will be allowed 100-per-cent depreciation in the first year. And those businesses with insufficient profit will be able to deduct depreciation gradually. These measures will provide flexibility and facilitate investment.”
He noted that the large factories affected by floods were mostly owned by international corporations. Initial discussions with these large companies have indicated that they will not be affected too badly because they have both asset and work-stoppage insurance that covers damage resulting from floods. Also their banks will likely be keen to offer short-term loans.
Thirachai believes that these companies are not likely to lay off their employees, but will continue to subsidise wages until production resumes. Companies that do lay off workers will pay them compensation.
The government will rush to help clean up flood damage in industrial estates to help these factories get back into production.
“In the case of businesses that are forced to close down, the government will help take care of workers, including foreign labourers, who lost their jobs.
“The Labour Ministry is looking to help transfer workers to work temporarily in factories not affected, to reduce the social impact of the floods.
“Today I will be meeting with the Thai Bankers’ Association to discuss the details of commercial-bank involvement and interest-exempt loans for flood-affected businesses,” Thirachai said.