Exim providing new SME loans

The state-owned Export-Import Bank of Thailand (Exim Bank) has rolled out a lowinterest rate loan scheme bundled with free credit insurance, targeting small and medium-sized enterprises (SMEs) engaged in exports.

Each borrower is eligible to seek up to 50 million baht through Exim Export Credit Plus, which charges two different interest rates for those who borrow in terms of the baht and the US dollar, said president Pisit Serewiwattana.

Loan applicants are required to put collateral worth 25% of the total loan.

Those who secure loans in baht are charged at 4.5% for the first year and prime rate minus 1% for the second year. The bank’s prime rate stands at 6.25%. For those who borrow in US dollars, they are charged the London Interbank Offered Rate (Libor) plus 3% for the first year and Libor plus 3.5% for the second year.

Mr Pisit estimated that SMEs will borrow around 3 billion baht to fund turnovers estimated at 10 billion.

The bank not only charges debtors at a cheaper rate than normal but it also helps exporters save on credit insurance premiums, which cost 0.5-2% of export value.

The credit insurance covers 90% of exporters’ losses in case buyers fail to pay for products, Mr Pisit said, adding the credit insurance will encourage exporters to enter markets.

At the moment, Exim Bank cannot offer credit insurance services for some destination countries under UN sanctions, which include North Korea, Iran, Iraq, Lebanon and Venezuela.

SMEs who apply for the loan must consent to the bank checking their overseas trade partners.

He said that 15 exporters who took out the bank’s credit insurance claimed 20 million baht in losses last year, representing a 20% loss ratio.

Amid the global economic uncertainty, some exporters have loss ratios as high as 70-90%.

The state-owned bank targets new loans worth 35 billion baht this year, up from 20 billion last year.

The target has been based on the assumption that the global economic recovery is gaining momentum, he said.

He said the headwinds for Thai exports include US President Donald Trump’s possible protectionist policies, China’s economic slowdown, uncertainties from the upcoming elections in Europe and the high volatility of the baht.

Thai exports avoided recording a contraction for four years running last year after managing to grow by 0.5%.

The Commerce Ministry forecasts that Thai export growth will come in at 3.5-4% this year.