News Column

GSB partners with state agencies to offer B10bn to SMEs

July 1, 2014

By Wichit Chantanusornsiri, Bangkok Post, Thailand

July 01--The state-owned Government Savings Bank (GSB) is offering a combined 10 billion baht in loans and venture capital with the aim of raising the financial liquidity of 12,000 small and medium-sized enterprises (SMEs).

The scheme's potential borrowers and partners will be sorted out by the bank's allies including the Office of Small and Medium Enterprises Promotion, the National Science and Technology Development Agency, the National Innovation Agency and Thailand Post, said GSB acting president Tachaphol Kanjanakul.

SMEs and business incubators with growth potential but lacking funding are the scheme's main targets.

The bank's partners will also strengthen other business aspects of the scheme's participants, Mr Tachaphol said, adding that the cooperation would last five years.

The Bank of Thailand reported there were 2 million SMEs nationwide, most of which still lacked knowledge about product development, marketing and financial management skills, while financing remained inaccessible to them.

SMEs have been the most vulnerable during the recent months-long political impasse, as they typically have less working capital than companies, and banks are reluctant to lend to them for fear of defaults. Sharpening local SMEs' competitiveness is a priority for the National Council for Peace and Order (NCPO), as evidenced by the junta recently setting up an SME committee chaired by Gen Prayuth Chan-ocha.

The GSB has outstanding SME loans worth 70 billion baht, and the bank stands ready to extend more such loans to comply with junta policy.

The bank's total lending amounts to 1.6 trillion baht.

Mr Tachaphol said SMEs that were qualified to be partners in the venture capital scheme must have more than 20 million baht in assets and systematic management to ensure investment success as well as prevent any internal fraud problems from cropping up.

The GSB has invested 500 million and 300 million baht in two venture capital funds ? the SME Opportunity Fund and the Aureos Fund, respectively.

The SME Opportunity Fund has yielded a gigantic return of 200-300% for the bank, while Aureos Fund has provided a 30% return.

Finance permanent secretary Rungson Sriworasat said SME development was the second most urgent item on the NCPO's agenda after the pledging payments to rice farmers.

Should local SMEs suffer financially, it would create a knock-on effect at large companies for which SMEs are part of the supply chain, he said.

If SMEs continue to struggle and are forced to lay off employees, it will become a social issue for the NCPO, Mr Rungson added.


(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)

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