Banker plans payment upgrade

He strongly believes support for cross-border trading is a key means of boosting exports, and that the country should use its geographic advantage in the region to drive export growth – and not rely solely on the baht’s depreciation to help exporters.
With the volume of cross-border trade with neighbouring countries having surpassed the Kingdom’s exports to Europe, the association has outlined a five-year plan, with the focus on a payments system to facilitate bilateral currency swaps between Thai traders and their partners, he said.
Thailand is adjusting its infrastructure to cash in on globalisation, and the role of banks is to support the real sector, for which the payments system needs to be improved, he said. The TBA expects a comprehensive payments system among Thai banks to be ready for takeoff in 2017.
The infrastructure for the country’s payments system must be complete in order to integrate with neighbours such as Laos, which are participating in the ATM integration project in the dual context of regional liberalisation under the AEC and global linkages, said the association chief.
Neighbouring countries have increased their competitiveness close to that of Thailand’s, while the Kingdom’s labour costs are no longer low, he said. It is therefore crucial that Thai businesses are able to operate within an efficient environment, he added, mentioning the transport bill and business collateral bill – both of which have been passed by the National Legislative Assembly – as important laws that will come into effect in the next year. Boontuck said the improvement of the banking-payments system would reinforce the competitiveness of Thai business long-term, while the relaxation of monetary policy could help the export sector only to a certain degree.
In the final piece of the puzzle, the market mechanism will play a key part, including the commercial banks adjusting borrowing rates, he added.
The policy interest rate is expected to be reduced further because of the fragile growth of the Thai economy, while the US Federal Reserve has sent a signal about increasing its key rate, which would have an impact on Thailand’s liquidity, he said.
Meanwhile, a trigger for the stabilisation of the economy is the government’s spending, with the private sector ready to invest when companies see a clear picture in terms of public investment.
The banking sector is ready to support businesses in the real sector in this respect, he stressed.
All banks are determined to support the real sector via all possible platforms, and small and medium-sized enterprises in particular, for which they have relaxed debt-repayment conditions, said the TBA chairman.
Increased loan guarantees from the Thai Credit Guarantee Corp (TCG) will also help increase financial access for SMEs and encourage banks to expand lending to the segment, he said.
Only 800,000-900,000 SMEs out of the 2 million to 3 million in Thailand currently have bank loans, which means financial access is the problem holding them back from getting the capital they need, he added.
Currently, the TCG guarantees 18 per cent of the value of an SME loan, but the TBA has proposed to the Finance Ministry that it consider extending the guarantee to 30 per cent, and to a maximum 50 per cent for SMEs involved in agriculture, which is the sector most seriously affected by external and internal factors.