First-time home-buyer programme will cost upwards of Bt60 billion
The government may have to shoulder a debt of Bt50 billion to Bt60 billion if it goes ahead with a plan to issue 15-year maturity bonds to finance its latest populist policy: 15-year fixed-rate loans for first-time home-buyers of properties valued at less than Bt1 million.
Caretaker Deputy Finance Minister Chaiyot Sasomsub said the long-term bonds would carry an interest rate of about 6 per cent per annum, while the loans would be available to home-buyers at a fixed rate of 5-5.5 per cent, with the government absorbing the difference.Chaiyot said a ministry survey indicated about 80,000 people a year would qualify for the fixed-rates loans, with the average home being purchased costing Bt800,000. As an alternative source of funding for the project, Chaiyot said the ministry had requested soft loans from the Japan Bank for International Cooperation (JBIC), which had yet to respond. All details of the project will be forwarded to caretaker Prime Minister Thaksin Shinawatra on Friday. Meanwhile, the JBIC yesterday agreed to lend the Small and Medium Enterprise Development Bank of Thailand (SME Bank) US$80 million (Bt2.98 billion) to support development of small and medium-sized enterprises (SMEs) in Thailand. The loan agreement was signed yesterday by the two parties at the Finance Ministry. Chaiyot said the JBIC had offered the SME Bank 15-year loans at a rate of 5 per cent interest per annum. The loans will be used to help replace machinery in SMEs, which will lead to reduced energy consumption and promote environmentally friendly production. New entrepreneurs could also benefit from the loans. SME Bank president Pongsak Chewcharat said that since the loans would reduce the cost of funding for the bank, it would be able to match the JBIC's loan rates. The SME Bank expects to charge interest of slightly more than 5 per cent per annum on its loans, which would be limited to Bt100 million per applicant. Toyoaki Fujita, director-general of the JBIC's International Finance Department, said both SMEs in Thailand and Japanese SMEs that wanted to invest in the Kingdom could use the loans. He said Japanese investors had confidence in the Thai economy but were concerned about the country's political instability. Wichit Chaitrong The Nation
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