By The Nation
As the SMEs have been experiencing high risk stemming from the US-China trade tensions, uncertainty of the global economy, export contraction and the strengthening of the baht, the Cabinet on Tuesday approved an assistance package proposed by the Finance Ministry, Lavaron Sangsnit, director-general of Fiscal Policy Office, told a press conference.
For those who need more liquidity to run their business, the state-owned Thai Credit Guarantee Corporation (TCG) has set aside a credit guarantee facility worth up to Bt60 billion. Eligible are those have business potential but whose ability to repay debt had reduced , those who are on the list of non-performing loans, or those who restructure their debts with banks and get new loans from those banks. The TCG insurance will cover 40 per cent of total loan losses incurred by SMEs for banks.
The Government Savings Bank (GSB) will offer soft loans to commercial banks worth up to Bt15 billion at 0.1 per cent annually. Then those banks will charge SMEs an interest rate lower than the market rate, or at 4 per cent for a seven-year loan.
Banks can re-lend to SMEs that are in the supply chain, those that are not among 10 S-Curve businesses. Banks could also give loans to SMEs placed on the non-performing loan list but who have been successful in getting their debt restructured with banks.
The GSB will also launch SMEs Extra Liquidity with loans of Bt 50 billion. Each borrower could get up to Bt50 million with interest rate based on the minimum loan rate (MLR) minus 1 percentage point. Currently the MLR is 6.375 per cent, meaning that SMEs will be charged just 5.357 per cent per annum. Borrowers could have up to a six-year contract with a one-year grace period for principal payment.
The TCG will extend credit guarantee for SMEs that are needed for immediate support under the PG5-PGS7 programme for another five years. Banks are allowed to restructure debts with these SMEs.
The Small and Medium Enterprise Development Bank of Thailand will offer soft loans worth Bt5 billion to micro-SMEs. The SME bank will charge an interest of just 1 per cent per annum, a maximum loan term of seven years and a one-year grace period of principal payment. Eligible borrowers are those who have business potential or those who have debt restructured.
The SME bank will also offer loans worth up to Bt20 billion for SMEs, aimed at promoting the local economy. Those eligible will be on the bank’s bad debt list who have had their debts restructured.
GSB will also offer loans worth Bt45 billion to SMEs at 4 per cent interest rate in the first two years. The GSB will also pay the TCG credit guarantee fee for SMEs for four years.
State-owned Krung Thai Bank will top up its SME loans by more by Bt10 billion, leading to total SME portfolios loans up to Bt60 billion. The interest rate will start at 4 per cent per annum and KTB will pay TGC guarantee fee for SMEs for four years.
The TCG will also pay compensation to
banks participating in the PGS8 programe, in order to discourage banks from taking legal action against debt defaulters and encouraging banks to facilitate loan restructuring.
The TCG also offers direct guarantee worth up to Bt5 billion and each SME could get up to Bt10 million insured amount.The TCG will charge a guarantee fee according to risk-based pricing and insured period no more than 10 years.
The Bank of Thailand will consider relaxing the loan reserve ratio for commercial banks and specialised financial institutions, said Lavaron.
A member of Thai Bankers’ Association will help SMEs with debt restructuring. Each bank will set as target for supporting SMEs
Tax measures to support SMEs.
Income tax exemption will be applied to debtors who get debt forgiven by creditors engaging in credit card and personal loan businesses.
Exemption of taxes including income tax, value-added tax, specific business tax will be applied for transaction of assets or services involved in debt restructuring.
Firms that undergo debt restructuring are exempted from income tax, value-added tax, specific business tax and stamp fee for related transactions of real estate being placed as loan collateral.
The Revenue Department will also suspend existing regulations related to debt write-off for restructuring debt.
Those engaged in debt restructuring will get a reduction in registration fee, mortgage fee for home and residential condominium units from 2 per cent to 0.01 per cent.