Lady with a plan
New Osmep director Salinee Wangtal intends to fulfil the government’s SME vision, write Apornrath Phoonphongphiphat and Lamonphet Apisitniran
Despite more than 10 years of government attempts to promote small and medium-sized enterprises through a special purpose organisation and billions of baht budgeted each year, SMEs remain weak and suffer from the same problems as ever.
But the present government is continuing efforts to develop SMEs in a bid to push them into significant growth that can drive a domestic market weary from weak consumer purchasing power.
The recent appointment of Salinee Wangtal, chairwoman of the Small and Medium Enterprise Development Bank of Thailand (SME Bank), as director of the Office of Small and Medium Enterprises Promotion (Osmep) is crucial to the present effort.
After trimming non-performing loans (NPLs), state-owned SME Bank is back on track and ready to synergise with related government agencies on a new mission.
“Balance is the key. Our mission is to push SMEs to play a greater role in boosting the economy,” says Mrs Salinee. “In the future, we want SMEs and big firms to drive the country’s growth equally instead of relying so heavily on large corporations alone.”
Osmep plans to instil entrepreneurship in the minds of new graduates and assist them in starting new businesses rather than enter the labour market as office workers, she says.
“The idea of boosting the number of SMEs is not new. But this time we’re not just creating more of them but rather using the tools we have at both SME Bank and Osmep to assist them instead of leaving them to work on their own,” says Mrs Salinee. “[By doing so] we’re creating a synergy between government agencies in terms of SME development. The resulting SMEs will be stronger.”
Mrs Salinee says now that SME Bank is in a better financial situation, it is ready for the task of lending more support to SMEs, which currently account for 30% of GDP.
With the government’s clear policy of increasing the number of SMEs to help stimulate the economy, SME Bank is on a dual track to create new SMEs innovatively and support existing ones in several regards.
“The idea is to help the existing ones continue their business smoothly while using innovative techniques to create new ones,” says Mrs Salinee, adding that the plan is to put the new SMEs on a transparent, systematic path.
She says some existing SMEs already in a healthy financial situation still need help with market analysis and access and business strategy.
“So the government agencies are synergising their jobs and coordinating with each other to support them,” says Mrs Salinee.
SME Bank is also working with Osmep to create new SMEs by inspiring new graduates to start their own business instead of just being an employee. Osmep now coordinates with universities nationwide to seek qualified students with strong talent and inspiration to form start-ups.
It assists them with market analyses and formulating suitable business plans, while SME Bank provides them with loans.
Mrs Salinee declines to tell how many new start-ups she thinks should be created, saying only that the government and SME Bank should pay greater attention to quality than quantity.
“This plan will take a long time to achieve, as it will be difficult for everyone to start such a tough job. But reaching one’s goals always starts with taking that first step,” she says.
Mrs Salinee says with 2.7 million SMEs employing 11 million people nationwide, these companies will play a major role in moving the Thai economy forward.
“I’m not saying corporations are not important. Certainly they are important,” she says. “But now it’s time to figure out how to develop our economy in a sustainable manner, and SMEs have a major role to play.”
Mrs Salinee says most large corporations can afford expensive high technology and manufacture at high economies of scale. They keep cutting operating costs by laying off workers and making do with less manpower.
“That’s why we must create more SMEs that still need manpower and which will help to stimulate the employment and ultimately the economy,” she says. “I’m not saying we should return to a more labour-intensive era, but it’s time to balance the Thai economy using the right mechanisms.”
A former Bank of Thailand deputy governor who took over the reins at SME Bank a year ago, Mrs Salinee says it was difficult turning around the bank from its debt-ridden status and making it strong enough to support SMEs at this crucial time.
“We had to admit there were grey areas in loan management and the overall loan process, and we needed to increase transparency in order to put the bank back on the right track,” she said.
After the loan process went through an overhaul, the number of bad loans dropped, allowing SME Bank to turn a profit by lending more money. It has gradually cut its NPLs to 30% of the outstanding total from 38% and expects a rate of 20% by year-end.
“Don’t be too concerned about bad loans. Be more concerned about increasing good loans by lending more money,” Mrs Salinee says. “And if we can just stay on the right track, I’m confident we can manage to have only 1-2% bad loans from the new ones we’re lending now. The bank can still make a profit.”
SME Bank has a loan portfolio worth 85 billion baht and expects 40 billion in new lending this year.
“But some clients will pay back their loans, so we expect an outstanding total of 100 billion baht at year-end,” says Mrs Salinee.
She says by increasing good loans at a time when bad loans are falling, SME Bank expects to post a net profit of 1 billion baht this year after 837 million for the first eight months.
Asked whether SME Bank has achieved its goal, Mrs Salinee replies, “Allow me to answer your question by quoting the Bible: ‘For every tree is known by its fruits.’ And now we see the fruit of the bank — a current profit of 837 million that is about to rise further.”