Finance Ministry to set up fund for ailing SMEs

Finance Ministry to set up fund for ailing SMEs

B2bn for scheme to help small operators

People register for the government's welfare scheme for poverty at the Government Savings Bank. Registration began yesterday and continues through Aug 15 at GSB, the Bank for Agriculture and Agricultural Cooperatives and Krungthai Bank. (Photo by Apichart Jinakul)
People register for the government's welfare scheme for poverty at the Government Savings Bank. Registration began yesterday and continues through Aug 15 at GSB, the Bank for Agriculture and Agricultural Cooperatives and Krungthai Bank. (Photo by Apichart Jinakul)

The Finance Ministry is on course to provide 2 billion baht as seed money for rehabilitating small and medium-sized enterprises (SMEs).

Deputy Prime Minister Somkid Jatusripitak said on Friday that as part of efforts to aid SMEs hit hard by the economic slowdown, the Finance Ministry plans to set up a fund tasked with supporting SMEs.

"The SME rehabilitation fund will be proposed to the cabinet for approval by the end of this month," Mr Somkid said.

The fund is to assist SMEs facing liquidity problems and which are unable to access financial sources.

Financial institutions are unwilling to lend money to SMEs during the economic slowdown, mainly due to their high risk of default and lack of collateral or credit guarantee.

"The government has a duty to support them until they are strong enough to be able to seek borrowing from commercial banks," Mr Somkid said.

Policymakers, however, will have to set conditions to ensure that the SMEs receiving support from the fund are using the money to rehabilitate their business.

"We will set up a rescue centre to work closely with related agencies such as the Office of Small and Medium Enterprises Promotion," Mr Somkid said. "It is essential to have close collaboration if we want to spend the fund effectively."

In addition, companies seeking support from the rehabilitation fund will require the consideration of the committee in which members will be recruited from different parties to ensure fairness.

The move is a part of the government's attempts to help small operators.

Recently the government successfully amended the bankruptcy act to allow ailing SMEs to enter a rehabilitation plan under the supervision of the Central Bankruptcy Court.

Once a company enters the rehabilitation plan, they will be legally protected from creditors forcing them to repay their debts immediately. In addition, creditors cannot request the seizure of assets, but their rehabilitation plan must be finished within three years.

The Finance Ministry is also set to offer privileges to people who take care of their parents and is pushing to set up a mandatory pension fund as part of its efforts to prepare for the coming aged society.

As an example, Mr Somkid said people who take care of their parents will be put on the government's priority list to get special mortgage rates for residential projects developed by state.

"Those who are grateful to their parents deserve to get higher privileges than others," he said.

Mr Somkid has instructed the National Housing Authority to consider building homes for elderly people.

When he was finance minister in the Thaksin Shinawatra government, Mr Somkid successfully pushed for a tax deduction of up to 60,000 baht for individual taxpayers who take care of their parents.

Seeking measures to care of the growing number of senior citizens is among the government's urgent tasks to prevent itself from shouldering too much financial burden in providing a retirement safety net.

The Finance Ministry is considering a set of measures including reverse mortgages -- a loan for senior citizens that lets them convert equity in their debt-free homes into cash -- and tax incentives for companies that hire older workers.

The ministry plans to enforce the long-awaited mandatory pension fund within the current government's tenure, said Mr Somkid.

Tax incentives to encourage companies to hire older workers will be put on the front burner, he said.

The Finance Ministry will seek cabinet approval for tax allowances to companies which employ older workers to be able to deduct twice the employees' salary with a set cap from their income tax.

In addition, the Public Health Ministry has been instructed to come up with measures to help the elderly, he said.

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