Exim Bank assists capital-heavy firms

Exim Bank assists capital-heavy firms

Loans have lower rates, grace periods

An engineer works at an auto parts facility in Chachoengsao province in the Eastern Economic Corridor.
An engineer works at an auto parts facility in Chachoengsao province in the Eastern Economic Corridor.

The Export-Import Bank of Thailand (Exim Thailand) vows to offer loans with a special low interest rate and longer grace period to promote Thailand's future industries.

With investments in future industries such as electric vehicles (EVs) requiring relatively hefty capital and posing high risk because of uncertain demand, the bank is offering a longer grace period to allow these businesses to become viable, said Rak Vorrakitpokatorn, the bank's president.

"Business operators are unlikely to survive if they are offered loans with a normal interest rate of 5% or a grace period of only one year," he said.

"If we want to promote and support Thai entrepreneurs in the supply chain of the EV industry, which requires a high level of capital, we need to help them with lending.

"This scheme has an interest rate of 2% a year for the first two years and concessional rates in subsequent years, where the government may be asked to offer an interest subsidy, or Exim Thailand may shoulder such concessional rates itself."

To pursue such services, Mr Rak said the bank requested the Finance Ministry classify loans extended to support future industries as in the public service, meaning any losses or damages caused later by the loan extension would not be considered a policy mistake because of the good intentions.

He said the bank is committed to helping absorb higher investment risk in high-tech industries, which require larger amounts of capital.

In normal lending practices, the debt/equity ratio of Grade A clients who apply for the bank's loans should not exceed 70%, meaning operators have to raise 30% of the investment project apart from the loan.

In the case of high-tech industries or those classified by the government as new S-curve industries (robotics; aviation and logistics; digital; biofuels and biochemicals; and medical services), the bank will allow Grade A applicants to have a debt/equity ratio of as high as 90%, said Mr Rak.

However, there are conditions for applicants, he said.

Operators must increase their proportion of exports to at least 10% in the first three years of the loan, and 30-50% in the fifth through seventh years, said Mr Rak.

In addition, for operators affected by the pandemic that want to implement preventive measures in terms of sanitary standards or import of new machinery to reduce production costs, he said this month the bank is offering a soft loan scheme worth a combined 2 billion baht, with an interest rate of 2% per year and a two-year grace period.

Successful applicants are allowed loans of up to 100 million baht each.

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