Thai banks team up to boost halal exports with low-interest loans
The Export-Import Bank of Thailand (Exim Bank) has partnered with the Islamic Bank of Thailand (IBank) to provide loans at interest rates lower than the prime rate, aiming to establish Thailand as ASEAN’s halal hub by 2028.
Representatives from Exim Bank, IBank, the Sheikhul Islam Office (Chularatchamontri), and various sectors involved in supporting halal products, yesterday, August 6, signed an agreement for a project titled Support and Promote Halal Product Entrepreneurs to Export.
This initiative aims to boost Thailand’s halal export sector, enhancing the capabilities of small and medium-sized enterprises (SMEs) to penetrate international markets through integrated efforts in promoting and developing academic knowledge on halal products.
Exim Bank President Rak Vorrakitpokatorn highlighted that Thailand is currently the world’s 15th largest exporter of halal food and the fourth most popular destination for Muslim tourists. Thai food and cultural tourism are particularly appealing to Muslim visitors.
Leading exporters of halal food to the Organisation of Islamic Cooperation (OIC) nations include Brazil, India, the US, Russia, and Indonesia. Key importers within the OIC group are Indonesia, Malaysia, Turkey, Saudi Arabia, and the United Arab Emirates.
Rak emphasised the importance of Thai entrepreneurs enhancing their halal product development, especially food, for which Thailand is globally recognised. This includes naturally halal foods such as vegetables and fruits, and halal-certified foods known for their cleanliness, absence of alcohol and animal blood, and adherence to Islamic principles.
Halal exports
“Participants in the project will benefit from interest rates below the prime rate from Exim Bank to use as working capital or for investment expansion.”
For instance, Exim Bank’s First Step Export Financing scheme offers an interest rate of 5.35%, which is one percentage point lower than the bank’s prime rate, with a maximum loan amount of 3 million baht (US$84,000).
The Exim Green Start loan features an interest rate of 4.1%, 2.25 percentage points below the prime rate, with a maximum loan amount of 200 million baht (US$5.6 million). Export Ready Credit provides an interest rate of 4% with a maximum loan amount of 20 million baht (US$560,000).
IBank President Thaweelap Rittapirom noted that between 2012 and 2022, consumer spending in the halal market surged by over 40%, with the market value increasing from US$1.62 trillion to US$2.29 trillion. This growth is driven by the rapidly expanding Muslim population, which now numbers almost two billion worldwide.
“Global companies such as BRF, Nestlé, and Nike have continuously invested in and developed diverse products to cater to the halal market.”
Additionally, development institutions within the OIC, including the Islamic Development Bank and the Islamic Centre for Development of Trade, along with key UN agencies such as the UNHCR and the World Bank, have shown interest in Islamic finance from a social perspective, he added, reported Bangkok Post.
The collaboration between Exim Bank and IBank marks a strategic move to leverage Thailand’s position in the halal market, combining financial support and expertise to foster growth and international competitiveness for Thai halal product entrepreneurs.
