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Published on August 1, 2007

Federation chairman Santi Vilassakdanont yesterday said banks had offered loans to the SME fund at minimum lending rate (MLR) minus 2.5 per cent at a recent meeting. MLR varied between 6.875 per cent and 7.25 per cent yesterday.

He said interest rates should be below 4 per cent to increase liquidity for SMEs.

The federation will ask the Bank of Thailand to fix interest rates at 1.5 per cent, as offered on soft loans to businesses in the deep South.

The SME fund is divided into two. One fund has Bt4.5 billion, of which half will come from the central bank and the rest from commercial banks.

The second will receive Bt500 million, of which 90 per cent is from the central bank and the remaining 10 per cent from commercial banks.

He said the fund was for helping businesses suffering exchange-rate losses, while the second part was especially for those suffering with non-performing loans. The federation will seek permission for SMEs to use inventories as collateral for loans from the fund.

Final interest-rate levels should be concluded this week and submitted to the Joint Private Sector Committee and the Economic Steering Committee on Monday.

Santi said a committee would establish borrowing conditions and the fund would start disbursing loans within a month.

Meanwhile, the Office of Small and Medium Enterprises Promotion will spend Bt80 million helping SMEs suffering from the baht's strength.

Director-general Jhitraporn Techacharn said half the money would be used to increase productivity and encourage investment in other countries via the Capacity Building Programme. The rest will boost liquidity.

In addition, she said the federation would spend Bt25 million opening five regional "incubation centres" for small businesses.

Chalida Ekvitthayavechnukul,

The Nation