A plethora of government measures in the pipeline to support SME sector

“The proposed SME Machine Fund will happen this year, along with one-stop service in Mae Sot’s special economic zone [SEZ], while Prime Minister Prayut Chan-o-cha last week green-lit the measure to increase the Thai Credit Guarantee Corporation’s [TCG] guarantee for SMEs to 30 per cent, from the current 18 per cent,” said institute president Sakchai Unchittikul.
Sakchai is also deputy secretary-general of the Federation of Thai Industries (FTI).
The government’s Machine Fund will be for SME operators or manufacturers wishing to improve the efficiency of existing machinery and mechanical systems, or to install new machines and control systems.
The matter regarding the introduction of the SME Machine Fund was submitted to Deputy Prime Minister Prawit Wongsuwan, and the Cabinet has acknowledged the scheme, which is currently awaiting approval in terms of its regulations, said Sakchai.
The SEZ in Mae Sot is due to open this year and business operators already have an eye on the development, as confirmed by FTI chairman Supant Mongkolsuthree, while the one-stop service is set to be used in the development zone since the measure has been approved by the Cabinet and “the service will be in operation as soon as the SEZ is launched”, he said.

Higher guarantee
The measure to increase the TCG’s guarantee for SMEs, which has been pushed for by the FTI, will go to the Cabinet in the next two weeks and, if approved, “would greatly improve SMEs’ chances of securing loans from any kind of domestic financial institution”, he added.
A recently launched nano-finance scheme was introduced by the Finance Ministry to help start-ups gain a foothold.
Penthip Pornchaded, president of the Association for the Promotion of Thai Small and Medium Entrepreneurs, yesterday confirmed that the scheme would help existing SMEs, but cast doubt over whether it could in fact help increase the number of new start-ups.
“The interest rate of 36 per cent that comes with nano-finance means that it is nearly impossible for start-ups to make enough money in time to pay back the interest, and that is one of the downsides of the scheme,” she said.
“The Bt100,000 limit per operator and the high interest rate mean that those SMEs that would consider such financing would be more likely to be existing operators in need of a short-term injection of liquidity to help maintain the operation of their businesses,” she added.
Penthip suggested that the government should also provide SMEs with more market channels and supply chains, alongside measures to increase their access to finance, as such assistance would sustain the policies’ effectiveness in the mid- to long term.
The Bank of Thailand, meanwhile, has said it is working on changing “P-loan” (personal loan) regulations by adding “business operation” as another objective that can be used to secure such lending from commercial banks and specific P-loan operators.
The amendment would increase business and other productive activities, said assistant central-bank governor Ronadol Numnonda, who added that there were currently 34 P-loan operators in the country.
A P-loan has an effective interest rate of no more than 28 per cent, but this does not include other operating fees, while the overall interest rate for nano-finance – including operating fees – is capped at 36 per cent.
The central bank monitors the offering and repayment collection of P-loans and nano-finance.

Statement of income
Business operators seeking a P-loan have to be able to show a statement of income to P-loan operators, and the limit for a loan is set at five times the operator’s income.
Those wishing to secure nano-financing do not require a statement of income, but need to show a business plan to nano-finance providers – and the lending limit is set at Bt100,000.
 “The purpose of nano-finance is to help start-ups to gain access to much-needed seed capital, and the measure’s effect on the economy via increased business activity is expected to be more apparent in the third quarter of this year,” said Ronadol.