Enhancing the Competitiveness of SMEs

(26/04/2012)

Small and medium-sized enterprises (SMEs) in Thailand are receiving a major boost, as the Cabinet has approved measures to assist them. The Cabinet, during its meeting on 24 April 2012, gave the green light to the measures, proposed by the Ministry of Finance. The measures seek to enhance the competitiveness of SMEs by supporting production development and enabling them to have access to funding sources. They also aim to reduce production costs following an increase in the daily minimum wage. Financial assistance and tax breaks under these measures are also intended to help SMEs affected by the severe flooding in 2011. Apart from approving a budget of not more than 7,325 million baht to help SMEs, the Cabinet also approved three draft bills on financial and tax measures to ease problems and obstacles faced by SMEs. As part of the financial measures, the productivity improvement loan, worth 20 billion baht, will be extended by the Small and Medium Enterprise Development Bank of Thailand. It is divided into two types, one for the development of machinery and the other for the development of the working process. The project will last two years, with financial support of not more than 1,805 million baht. In the second project, Portfolio Guarantee Scheme Phase 4, 24 billion baht in credit guarantees will be offered by the Thai Credit Guarantee Corporation, which will pay a coverage ratio of not higher than 18 percent of the average insurance burden to financial institutions throughout the five-year period of the project. The Government will provide realistic compensation of up to 2.22 billion baht. The third project, the Portfolio Guarantee Scheme, involves new enterprises operating not more than two years, with 10 billion baht in credit guarantee. The Thai Credit Guarantee Corporation will pay financial institutions the coverage ratio not higher than 48 percent of the insurance burden throughout the seven-year period of the project. Financial support for this project is worth 3.3 billion baht. In the fourth project, the Skill Development Fund will offer loans for SMEs to use in training at an interest rate of only 0.1 percent annually. Each SME will be offered not more than 42,000 baht, with a four-year repayment period. Today the fund consists of 570 million baht. Another project calls for providing credit to promote employment generation. In this connection, commercial banks will extend low-interest loans to SMEs affected by the wage increase. The funding source of the loans will come from the Social Security Fund. As for the tax measures, tax breaks will be offered to SMEs for replacing old machines with new ones to enhance production efficiency.