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Published on December 11, 2007

The bank offers financial and technical assistance.

The falling US dollar and rising baht are positive for local industry. A stronger baht makes imported machinery cheaper, he said.

He said the SME Bank offered technical services for customers. It employs technicians who can assist companies with upgrading machinery.

If machines designed by bank technicians do not work, companies do not have to pay for its services.

He believes machines could be built cheaper by local technicians, which would help manufacturers cut production costs.

Old machines powered by oil should be changed into new ones running on electricity or biofuel, he suggested. As oil prices rise, so do production costs. Pongsak said SMEs could not raise prices, because of competition from China and Vietnam.

Intensified competition and a rising baht have put producers at a disadvantage in the world market.

Thailand is enjoying double-digit export growth this year, but only multinationals are making profit. Small local companies are struggling to survive.

The SME Bank suggests borrowers create their own brand-name products. Pongsak assures them there will be buyers.

To help these companies, Pongsak said the bank would lower lending rates to less than 7 per cent annually.

"We plan to bring rates down to about 6 per cent plus."

Currently, its minimum lending rate is 7.25 per cent.

The bank cut lending rates 25 basis points in the past two months. Pongsak said the latest cut attracted borrowers looking to restructure their debts.

"We reduced non-performing loans by about Bt5 billion over the past two months," he said, adding that borrowers were willing to service their debts when rates were down.

However, non-performing loans are still high, at Bt18 billion, or 47 per cent of all outstanding loans. Doubtful loans should be brought down to about 20 per cent in the near future, he added.

Meanwhile, Finance Minister Chalongphob Sussangkarn suggested that the new government have a policy of helping industry face high competition.

Labour-intensive industries like textiles, shoes and leather currently face competition from China. Thailand needs to move to medium or high-end markets, said Chalongphob.

 A new government should help workers retrain, he said.

Chalongphob believes the auto, electronics, electrical-products, food and tourism sectors could absorb labour laid off from other industries.

Wichit Chaitrong

 The Nation