The Bank of Thailand is exploring a tripartite credit guarantee model used by other countries to improve funding access for Thai small and medium-sized enterprises (SMEs).
Speaking at a seminar hosted by the central bank on Tuesday, Somchai Lertlarpwasin, assistant governor for the financial institutions policy group at the regulator, said the Bank of Thailand has studied credit guarantee systems in South Korea, Taiwan and Malaysia that involve collaboration among government agencies, debtors and SMEs.
This model could enhance Thai SMEs' access to funding, Mr Somchai said.
Thailand's credit guarantee system is managed by the Thai Credit Guarantee Corporation (TCG) and involves cooperation between TCG and financial institutions.
The study found these countries charge credit guarantee fees based on the SME client's risk profile. For instance, South Korea's fees range from 0.5-3%, while Malaysia's average is between 0.75% and 4%.
These countries provide credit guarantee services for both loans and bonds.
The tripartite model not only strengthens the funding source of the credit guarantee mechanism, but also offers comprehensive advice to SMEs, supporting sustainable business growth, Mr Somchai said.
Chaiyot Tunpisut, first senior vice-president at Kasikornbank, said continuous financial support from the government's credit guarantee is crucial. South Korea and Taiwan allocate 0.2% of their fiscal budgets for credit guarantees.
"If the Thai government allocates 0.2% of its fiscal budget, or about 7.4 billion baht from an annual budget of 3.7 trillion baht, it would support SME liquidity throughout the year," he said.
Somchai Jitsuchon, research director at the Thailand Development Research Institute, suggested regulators amend TCG's rules to allow credit guarantees for other debtors beyond financial institutions.
He also recommended TCG develop a digital ecosystem to expand SME credit assessment from existing portfolio data to individual data, broadening access to credit guarantees for smaller SMEs.
TCG president Sittikorn Direksoonthorn said the company has provided credit guarantees to around 800,000 SMEs, about 400,000 of which were affected by the pandemic.
Some 70% of the 400,000 affected SMEs are micro-businesses, each receiving a credit guarantee amount of 90,000-120,000 baht, which supports their liquidity.
"Although there are up to 3.2 million SMEs in the country, only a small portion can access bank loans and TCG's credit guarantees," said Mr Sittikorn.
"TCG has developed products to help SMEs access financial services."