Kasikornbank, the leader in SME lending, says it is not easy to convince customers to invest in machinery to survive the Bt300 daily minimum wage.
The new wage, which went into effect across the country on January 1, has hit some SMEs hard. Some have had to shed employees and some have decided to go out of business.
Medium-sized manufacturers have been hurt more than small operators because the bigger businesses rely more heavily on manpower, Patchara Samalapa, executive vice president of KBank, said yesterday.
Medium-sized customers account for no more than 20 per cent of KBank’s SME portfolio, he said.
The bank’s survey found that most customers can cope because their business has been growing for more than five years so they have accumulated sufficient working capital to continue operating as well as repaying debt.
Even though the higher wage has had less of an impact on SME customers, their demand for loans to buy new machines was not great because machine prices are too high for them.
KBank targets SME loan growth of 10 per cent this year, but that is a challenge because the bank’s policy is to seek out quality customers rather than to go for quantity. Working capital loans remain the main driver of loan growth, but KBank wants |to increase term loans, he added.
Siridej Aungudomsin, executive vice president of Bangkok Bank, said the Bt300 wage was not a serious problem for its SME customers because its portfolio was not in the labour-intensive sector. Some SMEs can handle the high employee cost by adding welfare to |wages.
Even though the Bt300 wage would drag down some SME performances, the bank believes that urbanisation and the healthy consumption in local and border areas are positive factors for loan growth.
"We are focusing on industries that stand to gain from consumption, particularly consumer-product distributors and building material dealers," he said.
Bangkok Bank projects its SME loan portfolio expanding more than 15 per cent this year, which is better than last year.