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Published on August 1, 2007

The Small and Medium Enterprise Development Bank of Thailand will ask the Finance Ministry for permission to establish an assistance fund for clients hurt by the baht's appreciation.

Managing director Pongsak Chewcharat yesterday said many small- and medium-sized enterprises would not benefit from the Bt5-billion government fund aimed at exporters in trouble from currency appreciation.

"Since most of our clients are subcontractors, they do not meet the requirement of the government fund," he said.

He explained there were 500-600 bank clients suffering from the baht's appreciation against the US dollar. Their combined loans are estimated to be Bt5 billion.

"The bank plans to help them by establishing our own fund, but we need the government to provide interest-rate subsidies," he said.

The bank plans to raise Bt5 billion by issuing bonds.

"If we must give investors a coupon rate of 3 per cent, we'll ask the government to subsidise that by 1 per cent," he said.

Potential buyers include the Social Security Fund. The bonds will benefit the fund by preventing unemployment, he said.

Pongsak asked MFC Asset Management to help sell the bonds.

Meanwhile, Furniture Industries Association secretary-general Jirawat Tangkijngamwong said he worried about exchange-rate appreciation and competition from China and Vietnam, because those two countries made furniture cheaper than Thailand.

He said about 50 manufacturers had shut down this year.

The government is looking at misleading data, because it remains upbeat about overall good export growth of 18 per cent in the first half of the year, he said. But almost all exporters have suffered from very low margins or suffered a loss, he argued.

In a separate development, the draft Pubic-Private Joint Venture Act will close loopholes in the existing law that allow corruption to occur, a Finance Ministry source said.

The bill is with the Council of State and expected to be tabled in the National Legislative Assembly soon, the source said. Amendments will see projects worth more than Bt3 billion subject to the law, which means evaluation by the National Economic and Social Development Board and Cabinet approval.

Projects involving government spending come within the ambit of the new Act.

Currently, projects worth Bt1 billion and more are covered by the Act. However, politicians allegedly use "many tactics" to circumvent this, the source said.

Wichit Chaitrong

The Nation