The cabinet on Tuesday approved a low-interest loan programme worth 5 billion baht to support the government’s “Ignite Thailand” vision and a credit guarantee fund valued at 50 billion baht to help small and medium-sized enterprises (SMEs) access credit.
According to Deputy Finance Minister Paopoom Rojanasakul, low-interest loans worth 5 billion baht in total will be provided to three targeted sectors: tourism, wellness and medical, and agriculture and food.
The maximum loan per borrower is 10 million baht, with a loan term of up to 10 years and an interest rate starting from 2.5% per year for the first two years, with a six-month principal repayment grace period.
The Ignite Thailand loan programme will help targeted industries access funding to enhance their business capabilities, serving as an economic driver and elevating Thailand to the position of a global industrial hub, he said.
Mr Paopoom said the Ignite Thailand vision comprises eight aspects, including the three targeted in the loan measures.
In terms of tourism, Thailand ranks eighth globally for foreign visitors, generating an economic value of up to 2.3 trillion baht a year, equal to 70% of the government’s expenditure budget, he said.
Health tourism alone generated about 40 billion baht last year, he said.
In a related development, government spokesman Chai Wacharonke said the cabinet also approved the new portfolio guarantee scheme (PGS 11) worth 50 billion baht to help SMEs access credit.
Operated by the state-owned Thai Credit Guarantee Corporation (TCG), the scheme guarantees loans provided by commercial banks for up to 40 million baht per borrower, with a maximum guarantee period of 10 years.
The guarantee can be issued from the date of the cabinet’s resolution until Dec 30, 2025.
The guarantee fee is 1.75% for the entire duration of the guarantee contract. TCG guarantees up to 30% of the loan amount extended.
The scheme is expected to provide a credit guarantee to 76,900 SMEs and generate credit in the system worth 60 billion baht.
Mr Paopoom said earlier that commercial bank loans for large businesses (worth more than 500 million baht) grew by 3.3% last year, but loans worth less than 500 million baht contracted by 5.1%. Banks’ capital adequacy ratio was 20.1%, and the liquidity coverage ratio 203%, while the non-performing loan (NPL) coverage ratio was 176%, he said.
These figures suggest banks are very stable, in part because they choose to lend only to large businesses, while SMEs still struggle to access credit as banks opt to avoid the risk, said Mr Paopoom.
This leaves SMEs without necessary funds, leading to closures, production slowdowns and job cuts, affecting the economy, he said.
TCG’s current guarantee portfolio amounts to 100 billion baht, with 12-13% covering the service sector, including tourism and wellness. Food and agriculture accounts for around 10% of the total portfolio.
Thienprasit Chaiyapatranun, president of the Thai Hotels Association (THA), said the low-interest loans for the tourism sector would benefit hoteliers that have not fully resumed their businesses.
“The loans with a 2.5% interest rate are a good start for small hotels, who have less competency to resume their business than large hotels,” said Mr Thienprasit.
“However, some of them might be unable to access these loans because of strict financial qualifications, particularly related to financial statements as they still cannot earn profits similar to branded hotels.”
The THA wants the government to set aside funds for hotel loans defined as NPLs, even though the borrower still regularly makes interest payments, he said.
These hotels still have the potential to welcome tourists and need funds to improve their facilities and services, said Mr Thienprasit.