BANGKOK: Thailand unveiled a raft of measures to help small and medium businesses and the tourism industry to weather a liquidity crunch, as a delay in full reopening to foreign visitors dims the prospects for recovery.
The cabinet approved a 250 billion baht (S$10.8 billion) soft loan programme that will allow small and medium enterprises to access credit at below-market rate, while also clearing a 100 billion baht plan that allows cash-starved companies to park their assets with lenders in exchange for credit, officials said on Tuesday at a briefing in Bangkok, report agencies.The government will extend credit for the so-called asset warehousing programme which will allow businesses such as hotel operators from having to liquidate distressed assets at firesale prices or go out of business because of their debts. The programme may be operational by May, Bank of Thailand governor Sethaput Suthiwartnarueput said.
The steps to channel more credit to business come a day ahead of a central bank rate decision, with the Bank of Thailand expected to hold its benchmark rate at a record low of 0.5 per cent for a seventh straight meeting. The central bank sees tourism, which accounted for about one-fifth of gross domestic product pre-pandemic, as key to returning the economy to growth after it shrank by 6.1 per cent last year.
The recovery will be uneven and some sectors of the economy are unlikely to employ the same number of people even with the return of growth to pre-Covid levels, Mr Sethaput said. The existing relief measures were seen as inadequate to aid a full recovery, spurring the authorities to issue additional stimulus to “close the existing gaps” for SMEs and some other sectors, he said.
“We’re coming towards the final stretch of Covid-19. These measures could create opportunities to as many as 60,000 businesses and support 800,000 jobs,” Deputy Prime Minister Supattanapong Punmeechaow said.
The programme comes as the Bank of Thailand has struggled to channel assistance to small and medium enterprises during the pandemic. Only about 130 billion baht out of 500 billion baht the central bank earmarked to help SMEs since last year has actually been delivered, as commercial banks are hesitant to lend with the central bank capping interest charges at 2 per cent and SMEs showing a high risk of default.
The government will provide guarantee of as many as 10 years under the new soft-loan programme with the average interest rate set at 5 per cent annually for a five-year loan. The rate will not exceed 2 per cent in the first two years with the government compensating interest in the first six months, officials said.Prime Minister Prayuth Chan-Ocha’s cabinet also approved the extension of a programme that subsidises air travel and hotel expenses to boost domestic tourism. The participants can use the benefits until the end of August, said Danucha Pichayanan, National Economic and Social Development Council secretary-general. It also cleared a plan to boost sales of tours, with both the programmes set to cost 10.7 billion baht, he said.