Soft-loan project in south comes to an end

The central bank defended its decision saying it would not affect the business environment in the South as there had been few new applications for loans under the scheme.

The BOT recently adjusted its financial-assistance plan for some businesses following amendments to the Bank of Thailand Act, resulting in the cancellation of the assistance plan for businesses in the three southern-most provinces, especially small and medium-sized enterprises. BOT has a budget of Bt21 billion for the project.

Thawee Piyapatana, vice president of the Federation of Thai Industries (FTI) and chairman of the provincial chapter, said entrepreneurs understood the BOT's decision. But it should offer other choices to encourage enterprises to invest in the long term.

He suggested the government should provide more support and assistance than before to stimulate the economy.

Thawee urged the government to clarify three points:

l Continuing the soft-loan scheme that provides enterprises with bank minimum lending rates (MLR) plus 1.5 per cent annually

l Easing a problem of labour shortages in five affected provinces in the South by allowing a period of working registration from one to four times a year

l Solving the rising cost of construction materials.

Chairman of the Pattani Chamber of Commerce Sirichai Piticharoen said the BOT ending the assistance would have a serious impact on local investors because former project clients could convince new enterprises to invest their money. It was known there were plenty of natural resources such as palms and rubber trees in the South.

"Whenever the government stops any financial assistance measure, this affects incoming long-term investments," he said, adding the fishing industry, which is the Pattani's core business, will be the most affected.

Wirat Asavasuksunt, chairman of the Yala Chamber of Commerce, said although the soft-loan project did not create new enterprises, it was able to help existing enterprises to survive as well as stop them from moving to other locations. Data had shown between 30 and 40 per cent of enterprises had moved because of the unrest.

Niruth Raksaseree, senior director for the southern region office of the BOT, said only Bt2 billion out of Bt6 billion had been loaned to SMEs in the South. However, the agency had extended the application period for loans until 2010.

He said the authority believes nobody will be affected after the measure is stopped. However, the state will seek to support emergency cases.