THE Export-Import Bank of Thailand (Exim Thailand) has vowed to continue supporting small and medium-sized enterprises (SMEs) in their expansion plans for neighbouring countries, despite the lender having to shoulder the cost of funding, its president Pisit Serewiwattana said.
Pisit said he was optimistic about the economic outlook for Cambodia, Laos, Myanmar and Vietnam – known as the CLMV countries – and on Thailand’s export and investment opportunities in these countries. He said yesterday that Thailand’s exports to the CLMV grouping are expected to rise by double digits this year, building on the gains from the 16.6 per cent growth posted for last year.
Goods with robust growth prospects include capital goods such as mechanical devices and parts; agricultural machines; raw materials, such as chemicals, plastic resins and construction materials; and consumer goods like beverages, fresh fruit, instant foods, garments, cosmetics and accessories, he said.
Exim Thailand has recently set up representative offices in Yangon, Vientiane and Phnom Penh, aiming to help its customers capture more opportunities in Myanmar, Laos and Cambodia.
“We aim to support SMEs to export and invest more in these markets. But we acknowledge that we have to shoulder some of the funding costs,” he told a press conference.
The bank currently makes loans to investors mainly focused on the energy, hospitality and manufacturing sectors. Pisit concedes that loan growth to support investment in these countries has not risen as much as he had expected.
The major obstacles facing entrepreneurs are a shortage of capital and a lack of knowledge and skills related to export rules and procedures, international trade risk management, and prospective trade counterparts, he said.
To support them, Exim Thailand offers an incubation course for entrepreneurs who want to expand their businesses into these markets. Pisit also announced the launch of new financial facilities. These include EXIM CLMV SMEs Credit, which is a pre- and post-shipment revolving credit for SMEs exporting to the CLMV countries with a credit limit of up to Bt2 million per exporter at an interest rate of prime rate minus 1.75 per cent a year, or 4.5 per cent based on the current prime rate of 6.25 per cent. The bank also offers an interest discount of 0.5 per cent to export credit insurance clients.
Export credit insurance clients will be provided with a revolving credit facility to serve working capital needs and insurance coverage to hedge the risk from foreign buyers’ non-payment in conjunction with foreign exchange forward contracts worth up to the credit amount that has been approved, he said.
This credit facility can be secured by a letter of guarantee from Thai Credit Guarantee Corporation (TCG) and a personal guarantee. Credit approvals are being granted until the end of the year.
The bank has also developed an SMEs easy export insurance product to serve entrepreneurs with a plan to export in a small volumes per shipment. This insurance facility covers more than 140 countries, including CLMV. The insured amount is up to Bt2 million, with maximum coverage of 85 per cent of the declared loss amount.
Exim Thailand yesterday announced its operational results for the first three months of 2019, when the bank’s total outstanding loans jumped 18.57 per cent year on year to Bt106.3 billion. Of the total, the outstanding SMEs loans were Bt40.9 billion, marking growth of 12.42 per cent year on year.
Its non-performing loans ratio was 4.26 per cent. Some clients could not catch up with fast-changing technology and competition, resulting in a rise in bad debts, Pisit said. The bank’s net profit in the first quarter was Bt334 million, contributing to a strong balance sheet, he added.