A fee waiver scheme initiated by the government, the Bank of Thailand and banks for small and medium-sized enterprises (SMEs) to buy foreign exchange option contracts on trial is estimated to add 20 billion baht in export value, says the chief of the Export-Import Bank of Thailand (Exim Thailand).
Pisit Serewiwattana, president of Exim Thailand, said 2,037 SME operators have been granted premium lines under the foreign currency risk management project for SMEs to buy foreign exchange option contracts on trial, involving a total of 61.1 million baht or 41% of the project budget of 150 million approved by the cabinet.
Several SMEs have been reluctant to join the project because they lack knowledge and understanding of the options' benefits. Some prefer to take a wait-and-see approach on the foreign exchange direction, while others believe there is still time for them to decide before the project ends in June 2018, Mr Pisit said.
To educate SMEs about foreign exchange option contracts, Exim Thailand has joined with allies to organise a seminar on foreign currency risk management.
Moreover, Exim Thailand will provide online training via video clips at participating organisations, such as branches of the eight participating commercial banks: Bangkok Bank, Krungthai Bank, Bank of Ayudhya, Kasikornbank, CIMB Thai Bank, TMB Bank, Siam Commercial Bank and United Overseas Bank Thai.
Training is also scheduled for central bank regional offices, regional industrial promotion centres of the Industrial Promotion Department in 11 provinces, the Office of Small and Medium-Sized Enterprises Promotion, and the New Economy Academy under the Department of International Trade Promotion.
"Due to volatility, foreign exchange direction is hard to predict," Mr Pisit said. "However, exporters can hedge risk to avoid business disruptions if foreign exchange fluctuates. Purchase of foreign exchange options can be a tool for risk hedging, and the government is encouraging exporters to acquaint themselves and make a trial purchase to earn either definite income or profit from each shipment."
The project aims to attract 5,000 SMEs.