Export-Import Bank of Thailand launches New Year schemes to help SMEs
In making the announcement, the bank’s president Pisit Serewiwattana noted that the 2019 global economic and trade expansion at 10-year low rates of 3.0 per cent and 1.1 per cent respectively and the prevailing low inflation and interest rates have dampened Thailand’s international trade.
Coupled with the rising number of global players from new frontier markets who have been able to build up their own production bases, the increasing number of workers-turned-entrepreneurs and the greater role of online trade, exporters now have to bear higher costs in addition to those incurred on improvement of product and service quality to meet international standards that involve increasing rules and regulations, while also aiming to boost their competitiveness amid the intensifying risks from global economic and political uncertainties.
Exim Thailand has therefore launched new product programmes called “Liquidity Enhancement for Exporters” and “ Relieving Debt Burden for Clients” to support SME exporters, both new and existing clients in all sectors, so that they have higher business liquidity and lower debt burden in the face of possible decreases in purchase orders against fixed monthly costs and expenses. This allows them to drawdown revolving credit to meet the incoming orders and develop their products and services for higher value added and higher competitive edge to cope with global market uncertainties going into 2020.
Exim Liquidity Enhancement for Exporters is aimed at supporting SMEs that are exporters, importers for export-oriented producers, and producers for exporters. They are offered short-term and long-term loan choices to reduce their debt repayment burden and enhance their business liquidity with higher working capital to fund their export activities or improvement of their machinery, factories and manufacturing technology.
Each loan carries a maximum 7-year tenor, credit line of up to Bt20 million per borrower, and an interest rate of 3.99 per cent per annum for years 1-2. It can be secured by a letter of guarantee from Thai Credit Guarantee Corporation (TCG) in conjunction with other collateral assets. Moreover, no TCG credit guarantee fee is chargeable up to four years and total credit approval is targeted at Bt2 billion.t
Exim Relieving Debt Burden for Clients, meanwhile, aims to support SME clients who do not require additional credit facilities but reduction of installment repayment of short-term and long-term loans. For long-term loan clients, a loan rescheduling can be approved for up to two years. In case of rescheduling for not more than one year, the bank will grant a reduction of interest rate by 0.125 per cent per annum.
As for short-term loan clients, an increase in loan drawdown proportion and reduction of interest rate will be granted. Each client may drawdown up to 95 per cent of L/C value and 85 per cent of P/O value and have interest rate cut down by 0.125 per cent per annum for one year. The total support amount is targeted at Bt4 billion.
Both schemes are available from December 2019 until 31 December 2020.
Approximately Bt15.7 billion is expected to be injected into the economic system to create 5,200 job opportunities, increase liquidity and relieve debt burden for more than 750 SME exporters. This will enable SMEs in the export value chain to carry less debt burden and lower operating costs, as well as to develop their products and services for higher competitive advantage.
The Exim president added that exports of countries in several regions around the world have currently tended to contract in line with global economic slowdown and as repercussion from the trade war. Thai exports in 2019 have been shrinking for the first time in four years, predicted at 2.0 per cent, which is however still lower than those of such countries as South Korea at 10.7 per cent since early 2019, Indonesia at 7.8 per cent, Malaysia at 5.0 per cent and Japan at 4.6 per cent. Thai exports in 2020 are forecast to expand by 0-2 per cent.
In view of this, Exim Thailand has rolled out schemes toward the end of 2019 to assist Thai exporters, particularly SMEs who are the key to driving Thai export and economic growth, in running their businesses with adequate liquidity and ongoing development to ensure their competitive potential under the increasing international trade barrier circumstances. They are expected to be part of the stimulators of Thai export recovery in 2020 based on many strengths, including high resilience of Thai goods.
Some Thai foods and electrical appliances can also penetrate the Japanese market, especially those serving the Olympic Games to be hosted by Japan in 2020. Approximately 50 per cent of Thai exports today go to new frontier markets like India, Vietnam, Hungary, Poland, Nigeria, Morocco and Mexico.
