The state-owned Small and Medium Enterprise Development Bank of Thailand (SME Bank) has set up a joint venture fund to invest in four types of small businesses aimed at helping them during the economic slump.
The bank will use part of 1 billion baht from its recapitalisation approved by the Finance Ministry as seed money for the Private Equity Trust Fund, said chairwoman Salinee Wangtal. The fund will cap its investment at 30 million baht per small and medium-sized enterprise (SME) operator.
The four business areas targeted are related to exports and have growth potential, she said, with more details to be released on July 6.
SMEs are the most vulnerable to the economic slowdown, dealing with weak purchasing power, tepid domestic consumption and swelling household debt. Moody's Investors Service said earlier concerns were mounting over Thailand's individual and SME borrowers as their debt leverage ratio and asset quality were increasingly affected by sluggish growth conditions.
Non-performing loans (NPLs) for SMEs at commercial lenders surged to 3.3% at the end of March from 3.11% at the end of last year, valued at 149 billion baht, reported the central bank. It also warned that an uptick in special-mention loans, defined as 30-90 days overdue, in the SME segment could signify a coming deterioration in NPLs.
Mrs Salinee said the joint venture would not only allow SMEs to expand their business at a faster pace but also gain more credibility from their overseas trade partners.
In a related development, the cabinet approved subsidising the 3% interest cost of the SME Bank's 15-billion-baht cheap loan programme for innovation SMEs, those with the potential to grow to mid-sized firms and SMEs focusing on neighbouring countries.