Thai government initiates measures to alleviate SMEs’ debt

As part of its ongoing commitment to address economic issues, the government has launched a programme to suspend and alleviate debt for small to medium-sized enterprises (SMEs). Government spokesperson, Chai Wacharonke, confirmed this.

The board of the Thai Credit Guarantee Corporation (TCG), a state-owned specialised financial institution under the jurisdiction of the Finance Ministry, has recently given the go-ahead for two assistance measures for SMEs.

The initial measure is an 18-month debt suspension for SMEs affected by the ongoing pandemic and those with invoice finance issues pending. This scheme has been in effect since January 1 of this year and will run until June 30, 2025.

SME debtors who are eligible for this scheme include individuals and juristic persons with a status code of 21. This refers to debtors who have overdue payments exceeding 90 days due to the impact of Covid-19 in 2019 or have non-performing loans as of December 31 last year. The scheme is also open to SME debtors who are part of the debt restructuring scheme and other assistance measures provided by the TCG.

For the former, a contracted amount of not more than 10 million baht is a requirement. For the latter, compliance with the conditions of the programmes for three months is necessary. Registration can be done via the Line Official Account @tcgfirst and at TCG branches nationwide.

Chai Wacharonke disclosed that the second initiative involves reducing the principal by 15% from January 1 to June 30. He expects this six-month measure to assist approximately 5,000 micro or retail debtors in returning to the system more quickly.

Prime Minister Srettha Thavisin previously stated that resolving the informal debt issue, which he equated to contemporary slavery, is a national agenda. This resolution requires a series of measures involving various agencies working in conjunction with the Interior Ministry and the National Police Bureau to prevent unregulated lending.

The measures encompass debtor assistance, dispute mediation and reconciliation, vigilance, prevention, and strict action against intimidation and unfair practices in debt collection. Following successful mediation, the government can assist in restructuring the debt.

Household debt is projected to surpass 90% of GDP. The government cautiously estimates informal debt at 50 billion baht (US$1.4 billion). PM Srettha believes that without state intervention, the problem cannot be alleviated.

In related news, Thailand’s top six banks report 0.71% loan growth in 2023’s first three quarters, due to SMEs’ reduced uptake and increased household debt.