Postpone AEC for a year,bankers urge

Bankers want the full implementation of the Asean Economic Community (AEC) postponed by one year to 2016 because Thai small and mediumsized enterprises need more time to
prepare for the single market. The extension would give time for banks to help improve the cost efficiency of SME customers, said Paphon Mangkhalathanakun, TMB’s chief officer for small and mediumsized enterprises and supply chains.

He said Thai SMEs had little knowledge about the AEC, and if its implementation could be delayed by one year, it would give them more time to adjust. TMB will provide seminars for
SMEs in a bid to help increase their competitiveness, the priority being cost management.
Some of the bank’s SME customers run businesses in border provinces and export into Indochina. Jiratchayuth Amyongka, head of SME banking at Thanachart Bank, said a delay in the formation of the AEC would help SMEs prepare. Their operators should quickly think about
improving their workers’ language skills, because Thai SMEs are at a disadvantage
in that area compared with other countries in the region. Sayam Prasitsirikul, head of corporate
and small and medium enterprise products at Bank of Ayudhya, said customers needed time to understand the AEC.
He said SME customers in border provinces were moving ahead by setting up auto dealerships to serve the demand for vehicles that would grow under seamless trade.
Sayam added that small enterprises this year were likely to be the
key driver of the SME portfolios for medium-sized banks because this segment gives higher margins and benefits from cross-border trade. Jiratchayuth said about 20 per cent of Thanachart Bank’s new customers must be small companies, which the bank would draw in from
other banks, while its existing customers would use more of its other products such as credit cards and instalment loans.
Paphon said TMB Bank would launch new products to capture small companies and supply-chain businesses late this month, as small businesses were key recipients of its SME
lending.
Outstanding loans of small businesses in the first eight months amounted to Bt60 billion, equal to the full-year target. He believes this figure has a high chance of reaching Bt65 billion.
Sayam said very small businesses with credit lines not exceeding Bt12 million and small businesses with credit lines of no more than Bt30 million were the key drivers of Bank of
Ayudhya’s SME portfolio this year. The bank believes its outstanding loans this year will grow by 16 per cent to Bt180 billion from Bt155 billion in 2011.