The Commerce Ministry is scheduled to meet with financial institutions after Songkran to ask the latter to accept high-value or economic trees as loan collateral from farmers.
According to Vuttikrai Leewiraphan, director-general of the Business Development Department, the department will call a joint meeting on April 19 with financial institutions and related state units, including the Bank for Agriculture and Agricultural Cooperatives (BAAC), the Small and Medium Enterprise Development Bank of Thailand, Krungthai Bank, Bangkok Bank, Kasikornbank, Siam Commercial Bank and the Thai Credit Guarantee Corporation.
Officials will ask all parties for help in accepting high-value trees as loan collateral and discuss other issues deemed as obstacles to farmers gaining access to loans.
The Commerce Ministry is working with the biodiversity-based Economy Development Office, the Royal Forest Department, the Forest Industry Organization, Kasetsart University and the BAAC to set up guideline prices for economic trees to be used as collateral under the new Secured Transactions Act.
The act, which came into force in July 2016, gives small and medium-sized enterprises (SMEs) and startups easier access to credit by letting them use inventory, raw materials and intellectual property as collateral.
The law helps unlock the financial limitations on entrepreneurs in securing loans to finance businesses, a move that should boost economic growth.
Previously, borrowers could not retain possession of movable assets pledged as collateral for the duration of the security period. Out-of-court enforcement options were also limited.
Sapit Diloksumpun, head of the Department of Silviculture in Kasetsart University's Faculty of Forestry, said the appraisal should be based on types of trees such as fast-growing trees with low-quality wood like eucalyptus; moderately growing trees with relatively high-quality wood like hairy-leafed apitong; moderately growing trees with high-quality wood such as teak; and slowly growing trees with premium-quality wood such as Siamese rosewood.
Pairat Monthapan, president of the Thai Valuers Association, said the price appraisal for the high-value trees should take into account production costs, market prices and expected future prices.
"The most suitable method for the high-value tree appraisal for Thailand is the comparison with market prices," he said.
Last year, the cabinet endorsed the Commerce Ministry's ministerial regulation to allow the use of 58 varieties of high-value trees such as teak and Siamese and Burmese rosewood as collateral under the Secured Transactions Act.
The new regulation aims to encourage people to grow more high-value trees on their land for income and allow SMEs to gain greater access to funding sources.
As part of efforts to promote reforestation and encourage people to grow high-value trees on their own land, the cabinet last June approved a steering committee proposal to amend the Forest Act of 1941, enabling people who grow high-value trees on their land to harvest or cut them for income.