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Business sector gets B350bn relief package

Business sector gets B350bn relief package

THAILAND: The cabinet yesterday (Mar 23) approved financial relief measures worth B350 billion to help the business sector recover from the impact of COVID-19 after the existing B500bn aid programme underperformed.

Wednesday 24 March 2021, 09:56AM

Graphics: Bangkok Post.

Graphics: Bangkok Post.

The measures include B250bn of soft loans provided by the central bank and another B100bn for asset warehousing to assist debtors who are still unable to repay loans.

Under the B250bn loan scheme, business operators with a credit line of no more than B500bn with financial institutions can seek loans of no more than 30% of the credit line as of Dec 31, 2019 or Feb 28, this year, depending on which is higher, but no more than B150 million.

For entrepreneurs which have no credit line with any financial institution as of Feb 28, they can seek loans of no more than B20mn at an annual interest rate of no more than 2% during the first two-year period of the contract and an average rate of no more than 5% per year.

The guarantee period will last no more than 10 years and the maximum claim of the portfolio guarantee is no more than 40% of debts under the scheme.

This measure aims to address limitations of the existing B500bn soft loan measure by expanding the pool of eligible borrowers to include both new and existing borrowers, raising credit limits, lengthening loan tenors, and amending interest rates to better support a business recovery, the Bank of Thailand (BoT) said.

Effective from April 2020, the B500bn soft loan decree has underperformed, with the disbursement rate falling below expectations.

Some B132.8bn worth of soft loans or only 26.6% of the money under the scheme had been disbursed to SMEs as of March 15, according to central bank data. As for the B100bn for asset warehousing, the measure includes the transfer of collateral assets for debt settlement and giving debtors the right to rent their assets or buy back their assets later.

The programme will prevent businesses such as hotel operators from having to liquidate distressed assets at firesale prices or from going out of business because of their debts.

BoT governor Sethaput Suthiwartnarueput told a briefing yesterday that the economy is expected to return to pre-COVID levels in the third quarter of next year, with the recovery slow and uneven as tourism remains sluggish.

The tourism-reliant economy could take at least four to five years to see the number of foreign tourists return to normal levels, he said.

“The existing measures are not enough to deal with the current sluggish situation which is lasting longer than expected. Therefore, it is necessary to roll out two new measures which are more flexible,” Mr Sethaput said.

The cabinet yesterday also approved the extension of the (We Travel Together) scheme to cover an additional 2 million people, to boost domestic tourism.

The cabinet meeting, chaired by Prime Minister Prayut Chan-o-cha, approved the third-phase extension of the stimulus package. The cabinet also approved a package tour stimulus programme called Tour Tiew Thai.

Earlier, the cabinet had turned down the proposed Rao Tiew Duay Kan extension, after the first stages were found to be riddled with fraudulent claims. It instructed the Tourism Authority of Thailand (TAT) and the Tourism and Sports Ministry to redesign it to prevent further misuse.

At the cabinet meeting on March 9, the TAT presented improvements and proposed extending it to cover more than 2 million more people and lengthening it.

It was due to end on April 30 but under the proposal approved yesterday, it will run to Aug 31.

Launched on July 15, 2020, the domestic tourism stimulus policy was part of the government’s effort to spur domestic travel, with foreign tourists still largely refused entry because of the pandemic.

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Foot | 24 March 2021 - 12:45:14

Business' can't pay their bills due to no tourism so lets loan them money, that they are required to repay, so they can fall even further behind.  Then, let's do it again!  Smart. This is a good way for others to end up with everything in a few years when these borrowers cannot repay the debt.  It will take years for thing to be real good again.


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