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Thailand: Ministry proposes Bt20 bn SME development fund

THE Finance Ministry will today propose to the Cabinet an SME development fund with the initial size of Bt20 billion in an effort to sprout small and medium-sized enterprises in the agricultural, tourism and service industries across the country.

Deputy Prime Minister Somkid Jatusripitak, after chairing a meeting on the integration path to develop SMEs under the Pracha Rath concept, said yesterday that the fund would be a collaboration of the Finance and Industry ministries using the mechanisms of three state banks – Government Savings Bank (GSB), SME Development Bank and Krungthai Bank (KTB).

The fund will focus on agriculture, tourism and services. 

Lending is not the only element to push small businesses in those industries. The Industry Ministry will increase its role in making SMEs happen in all provinces by cooperating with the chambers of commerce and universities in each province.  

The three banks must find a model to encourage individuals to start up their own businesses and a model to help SMEs that have problems to return to economic activities.

Around 20 million to 30 million Thais are involved in agriculture, while tourism and services are growing quickly, so the banks and the Industry Ministry want to change the concept from supporting manufacturing to non-manufacturing mainly in those sectors.

The problem in helping to breed SMEs is not the structure but the process of integration, which should start from motivating new SMEs in the provinces, helping them grow and rescuing them when they run into trouble, Somkid said.

Industry Minister Uttama Sownayon Savanayana said the fund was expected to kick off within two months after receiving approval from the Cabinet.

The three banks will have their own packages to accommodate the three SME stages – SME beginners, SMEs that are shifting to 4.0 and SMEs that have potential but are facing hardships. 

The struggling SMEs must not have non-performing loans (NPLs).

The Industry Ministry will oversee the local SME structural adjustment and the driving of S-curve SMEs.

Pativate Santavanond, first executive vice president and managing director of the Business Centre Group at KTB, said soft loans would be part of the fund, which will be developed by the GSB. 

The interest rate is expected to be 3 per cent versus 4 per cent for previous soft loans.

KTB is focusing on new S-curve SMEs that have their own innovations and use mechanisation as the key element to strengthen their business.

The integration policy of the government and the assistance measures for SMEs including tax incentives will help improve the SME situation and NPLs in the SME sector this year, Pativate said.

Source: http://www.nationmultimedia.com/news/business/EconomyAndTourism/30304260