E-Paper
Thailand unveils financial support for Covid-hit enterprises
The cabinet approved a 250 billion baht ($8.1 billion) soft loan program that will allow small and medium enterprises to access credit at below-market rate.
Thailand unveiled a raft of measures to help small and medium businesses and the tourism industry to weather a liquidity crunch, as a delay in full reopening to foreign visitors dims the prospects for recovery.
The cabinet approved a 250 billion baht ($8.1 billion) soft loan program that will allow small and medium enterprises to access credit at below-market rate, while also clearing a 100 billion baht plan that allows cash-starved companies to park their assets with lenders in exchange for credit, officials said Tuesday at a briefing in Bangkok.
The government will extend credit for the so-called asset warehousing program which will allow businesses such as hotel operators from having to liquidate distressed assets at firesale prices or go out of business because of their debts. The program may be operational by May, Bank of Thailand Governor Sethaput Suthiwartnarueput said.
The steps to channel more credit to business come a day ahead of a central bank rate decision, with the Bank of Thailand expected to hold its benchmark rate at a record low of 0.5% for a seventh straight meeting. The central bank sees tourism, which accounted for about one-fifth of gross domestic product pre-pandemic, as key to returning Southeast Asia’s second-largest economy to growth after it shrank by 6.1% last year.
Uneven Recovery
The recovery will be uneven and some sectors of the economy are unlikely to employ the same number of people even with the return of growth to pre-Covid levels, Sethaput said. The existing relief measures were seen as inadequate to aid a full recovery, spurring authorities to issue additional stimulus to “close the existing gaps” for SMEs and some other sectors, he said.
“We’re coming toward the final stretch of Covid-19. These measures could create opportunities to as many as 60,000 businesses and support 800,000 jobs,” Deputy Prime Minister Supattanapong Punmeechaow said.
The program comes as the Bank of Thailand has struggled to channel assistance to small and medium enterprises during the pandemic. Only about 130 billion baht out of 500 billion baht the central bank earmarked to help SMEs since last year has actually been delivered, as commercial banks are hesitant to lend with the central bank capping interest charges at 2% and SMEs showing a high risk of default.
The government will provide guarantee of as many as 10 years under the new soft-loan program with the average interest rate set at 5% annually for a five-year loan. The rate will not exceed 2% in the first two years with the government compensating interest in the first six months, officials said.
Prime Minister Prayuth Chan-Ocha’s cabinet also approved the extension of a program that subsidizes air travel and hotel expenses to boost domestic tourism. The participants can avail the benefits until the end of August, said Danucha Pichayanan, National Economic and Social Development Council secretary-general. It also cleared a plan to to boost sales of tours operators, with both the programs set to cost 10.7 billion baht, he said.
