FTI calls for Bt50-bn soft-loan fund for SMEs

The money would provide liquidity to 20,000 small and medium-sized enterprises to enable them to continue manufacturing and expand their businesses.

This is one of eight urgent measures the FTI proposed to Finance Minister Suchart Thadathamrongvech. The proposals aim to ensure that Thai manufacturers are distanced from the effects of the US financial meltdown and the global credit squeeze.

The FTI urged the government to focus more on liquidity and fix an appropriate short-term interest rate - or to reduce rates - and to accelerate investment in meg- projects.

It also called on the government to enhance both Thai investment and foreign direct investment, strengthen consumer confidence, and establish a Bt30-billion fund to support manufacturers - as well as a Bt50-billion soft-loan fund for SMEs.

Also tabled was a reduction in corporate tax to 20-25 per cent and a waiver of import duty on machinery, with the savings companies make entitling them to double tax relief if the money is spent on goods that safeguard the environment.

The final proposal was tightened cooperation among government agencies to cope with the global economic slowdown.

FTI president Santi Vilassakdanont said the government should consider reducing interest rates, as the Kingdom is running counter to the global trend in this respect. As a result, Thai manufacturers have had to shoulder higher production costs than foreign competitors.

In addition, the government should concentrate on the baht's stability in order to maintain export competitiveness, he said.

Santi believes that export value will however still grow by 15 per cent this year, as projected by the Commerce Ministry, thanks to a continued healthy flow of orders, particularly in the electronics, jewellery and textile sectors.

Suchart said the Finance Ministry would closely monitor the fallout from the US financial crisis and the global credit crunch in order to prevent cash-flow problems for local businesses.

In addition, some of the red tape involved in export and import procedures will be reduced to make things easier for and reduce the costs of manufacturers.