SME Development Bank of ThailandSME Development Bank of Thailand

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TopicsTopics

SMEs in ThailandSMEs in Thailand

SME BANK Corporate Profile and OperationsSME BANK Corporate Profile and Operations

Example Loan Example Loan

SMEs Development ProgramSMEs Development Program

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SMEs in Thailand SMEs in Thailand

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The Importance of SMEs to the ThailandThe Importance of SMEs to the Thailand’’s Economys Economy

Employment Creation

Employment Creation

Generating Foreign

Currency Income

Generating Foreign

Currency Income

Development for Various

Types of Skills

Development for Various

Types of Skills

Linked with Businesses of

Large Enterprises

Linked with Businesses of

Large Enterprises

Creation of New

Entrepreneurs

Creation of New

Entrepreneurs

Creating Competition and a High

Quality Service Culture

Creating Competition and a High

Quality Service Culture

Increasing Utilization of

Domestic Products

Increasing Utilization of

Domestic Products

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Overview of the SME Sector in ThailandOverview of the SME Sector in Thailand

Number of Fixed Assets Number of Fixed AssetsEmployees excl. land Employees excl. land

(THB mm) (THB mm)

Manufacturing 50 or less 50 or less 51-200 > 50 to 200

Service 50 or less 50 or less 51-200 > 50 to 200

Wholesale 25 or less 50 or less 26-50 > 50 to 100

Retail 15 or less 30 or less 16-30 > 30 to 60

Small Medium

Production Value 43.0% of GDP (Not included Agriculture) Export Value 30.0% of Thailand Total Employment 78.0% of Thailand Total Employment

Production Value 43.0% of GDP (Not included Agriculture) Export Value 30.0% of Thailand Total Employment 78.0% of Thailand Total Employment

99.7% of all enterprises are SMEs

99.7% of all enterprises are SMEs

SME Classification: by employment and fixed assets

DefinitionDefinition

Source : OECD Research Paper

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Unique Position in ThailandUnique Position in Thailand’’s Bank Markets Bank Market

Government Savings Bank

“People’s Bank”To develop human capital

Bank of Agriculture and Agricultural Cooperatives

“Rural Development Bank”On-farm and off-farm community enterprises

SME Development Bank of Thailand

“SME Bank”Building an entrepreneurial society

Total SolutionsSmart SMEs, First-time exporters

Export-ImportBank of Thailand

“Exporter’s Bank”Full banking service

Export insurance and investment abroad

Specialized Financial Institutions for SMEs

SME Bank is set-up as an organization for which profit maximization is not the primary goal - it is the Bank’s policy not to compete with commercial banks

SME Bank collaborates with other special financial institutions and provides funding to SMEs which cannot obtain loans from commercial banks

SME Bank does not compete directly with the other SFIs - Bank of Agriculture and Agricultural Cooperatives and Government Savings Bank performs lending roles with an emphasis on different areas

Small Business Credit Guarantee Corporation (SBCG)

To provide Credit Guarantee for SMEs’s loans approved by banks.

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SME BANK ThailandSME BANK Thailand

SME Development Bank of Thailand

“SME Bank”Building an entrepreneurial society

Total SolutionsSmart SMEs, First-time exporters

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Corporate Profile Corporate Profile

and and

OperationsOperations

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The BankThe Bank’’s Historys History

Established as the Small Industry Finance Office (SIFO) under the Department of Industrial Promotion, Ministry of Industry to provide financial support to small industries

As a government-owned financial institution and solely funded from the National Budget, SIFO’s services was limited and could not enjoy all the flexibility enjoyed by other FIs

Established as the Small Industry Finance Office (SIFO) under the Department of Industrial Promotion, Ministry of Industry to provide financial support to small industries

As a government-owned financial institution and solely funded from the National Budget, SIFO’s services was limited and could not enjoy all the flexibility enjoyed by other FIs

The government has a long history in supporting small and medium enterprises. In 2002, it changed the role and name of the Policy Bank to Small and Medium Development Bank of Thailand

(SME Bank), with the objective of providing financial and developing services to SMEs1964

199

1

200

0

200

2

1964

199

1

200

0

200

2

Re-established by Act of Parliament as the Small Industries Finance Corporation (SIFC) under the Ministry of Finance and Ministry of Industry . Commenced operations again with an initial registered capital of THB 300 million, SIFC was able to source funds both domestically and overseas

Re-established by Act of Parliament as the Small Industries Finance Corporation (SIFC) under the Ministry of Finance and Ministry of Industry . Commenced operations again with an initial registered capital of THB 300 million, SIFC was able to source funds both domestically and overseas

SIFC was recapitalized to THB 2.8 billion, with Ministry of Finance holding 92% of the shares SIFC was recapitalized to THB 2.8 billion, with Ministry of Finance holding 92% of the shares

Reactivated by Act of Parliament as the Small and Medium Development Bank of Thailand (SME Bank) under Ministry of Finance and Ministry of Industry. SME Bank was formally established on 20 Dec 2002 with all assets, businesses, debts, capital, profits, reserves, etc transferred from SIFC. The authorized capital has been increased to THB 10 billion

Reactivated by Act of Parliament as the Small and Medium Development Bank of Thailand (SME Bank) under Ministry of Finance and Ministry of Industry. SME Bank was formally established on 20 Dec 2002 with all assets, businesses, debts, capital, profits, reserves, etc transferred from SIFC. The authorized capital has been increased to THB 10 billion

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Vision and MissionVision and Mission

Vision

“The Financial pillar that supports and promotes Thai SMEs”

”

Mission

- To support the government policies to assist and promote Thai SMEs

- To provide financial services that respond to Thai SMEs demands

- To promote and develop Thai SMEs along with the financial support

- To develop the information technology system and the organization  management  to be effective under the concept of

the good corporate governance

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NetworkNetwork

1,695 Officers

1 Bureau

14 District Areas

94 Business Development Centers

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Policy LoanPolicy Loan

Credit & ServiceCredit & Service

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Outstanding as of the end of February Outstanding as of the end of February

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Outstanding as of the end of February Outstanding as of the end of February

77%

1.5%

2.80%2.00%

2.50%5.10%

2.40% 6.10%

By Regional

Head Office

Regional 1

Regional 2

Regional 3

Regional 4

Regional 5

Regional 6

Regional 7

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SME POWER for Thai Strong SME POWER for Thai Strong ProgramProgram 22 Measures for ExporterMeasures for ExporterSME POWER for TourismsSME POWER for TourismsSME POWER for A New Start SME POWER for A New Start Thai Logistic BusinessThai Logistic Business Measures for Flood VictimsMeasures for Flood Victims

Gems and Jewelry Gems and Jewelry BusinessBusinessNGV NGV Energy Energy ConservationConservationHire Purchase for Hire Purchase for NGV VanNGV VanHire Purchase for Hire Purchase for NGV CarNGV Car

Thai Cuisine to Thai Cuisine to the Worldthe World IIII

OTOPOTOP Civil Sector Debt Civil Sector Debt

ReliefRelief

FranchiseFranchiseSmall Business Small Business ( ( Retail Retail ))

InnovativeInnovativeNew Entrepreneur New Entrepreneur CreationCreation

Intellectual Property Intellectual Property CapitalizationCapitalizationMachinery Machinery Capitalization Capitalization Royal Land TenantsRoyal Land Tenants

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Year: –

27,37333,487

38,121

23,73420,847 20,735

45,936

58,826

18,483

29,338

41,048 44,262 43,415 43,723

56,915

81,287

20.97% 22.52%

19.34%

43.54%44.41% 49.53%

37.16%

20.31%

-30%

20%

70%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2,003 2,004 2,005 2,006 2,007 2,008 2,009 2,010

Approved OUT NPLs /OUT

M.B.

Operation Performance in 8 years Operation Performance in 8 years

2003 2004 2005 2006 2007 2008 2009 2010

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Example Loan Example Loan

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Economic CrisisEconomic Crisis

DisasterDisaster

PoliticalPolitical

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Loans to help sustain employment and minimize layoffsLoans to help sustain employment and minimize layoffs

Support SMES who were effected from Support SMES who were effected from Economic Crisis to operate and minimize Economic Crisis to operate and minimize

layoffs or expand increase in employment layoffs or expand increase in employment

SMEs who registered and allowed in SMEs who registered and allowed in commitment withcommitment with

Social Security OfficeSocial Security Office

Not over 50 Million Baht / Case

5% 5 years (Not over year 2014)

ObjectiveObjective

TargetTarget

ConditionAmount

Interest Rate

Collateral-Land /land and buildings/ buildings/condominiums/apartments/ machinery/equipments or the rental agreement for the property owned by the State Property,  the Treasury Department - Letter of Guarantee from an individual or a juristic person - Cross Guarantee among applicants - Letter of Guarantee issued by the Small Business Credit Guarantee Corporation (SBCG)

Credit Amount of Project 5,000 million baht

Performance 25,200 million bath

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Condition

Amount

Collateral

Interest Rate

ObjectiveObjective

TargetTarget

Liquidity Support for SMEs Liquidity Support for SMEs Exporter who were effected from Exporter who were effected from

Baht AppreciationBaht Appreciation

SMEsSMEs Exporter or Related Supplier Exporter or Related Supplier

Year 1 -2 = MLR of GSB -Year 1 -2 = MLR of GSB - 15. 15. % % ( ( GSB Rate = GSB Rate = 6.0 6.0 %% ) )

> Year> Year 3 3 = SME BANK Rate = SME BANK Rate ( 7 ( 7 %% ) )Guaranteed by an individual/ a juristic person/or The Small Business Credit

Guarantee Corporation ( SBCG )

Not exceed 10% of the purchase order value (July – September 2010) but not over 5

million Baht

(Credit Amount of Project 2,500 million

baht )Performance 126

million bath

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To solving informal debts in the public sectors

Applicants with no more than Bt. 200,000 in the remaining debt(s) must register in the Informal Debt Account with the Government Savings Bank or The Bank for Agriculture and Agricultural Co-operatives. The debts must also incur before November 19, 2009 and must be registered within the required period (December 1-30, 2009)

- MLR annually for loans of Bt. 100,000 and under - MLR + 2.0% annually for loans of Bt. 100,001 - 200,000

MLR as announced by the bank (currently the MLR is 7.0% per year)

ConditionAmount

Collateral

Interest Rate

ObjectiveObjective

TargetTarget

- One guarantor for loans of no more than Bt. 100,000 - Two guarantors for loans of Bt, 100,001 - 200,000

(Credit Amount of Project - baht)

Performance 382 million bath Bt. 50,000 - 200,000 /

Case

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To be the Cash flow for business , Business development ,Payment

SMEs or government-supported overseas business entrepreneurs, such as in construction business

Fixed term loan 1st year MLR-2 per year2nd year MLR-1 per year  3rd year onwards MLR per year

ConditionAmount

Collateral

Interest Rate

ObjectiveObjective

TargetTarget

Not exceed 500 million Baht/ Case

-Land /land and buildings/ buildings/condominiums/apartments/ machinery/equipments or the rental agreement for the property owned by the State Property,  the Treasury Department - Letter of Guarantee from an individual or a juristic person - Cross Guarantee among applicants - Letter of Guarantee issued by the Small Business Credit Guarantee Corporation (SBCG)

(Credit Amount of Project 20,000 million baht)

Performance 4,095 million bath

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To help damaged or impacted SMEs recover.

SMEs and SME BANK clients in Bank-designated disaster areas that were devastated by floods, storms, mudslides, earthquakes or are indirect impacted

by designated disasters

1. Existing clients - interest rate is MLR for whole contract term 2. SME disaster victims - interest rate is MLR+0.5% per year

ConditionAmount

Collateral

Interest Rate

ObjectiveObjective

TargetTarget

Not more than Bt 500,000.

-Land /land and buildings/ buildings/condominiums/apartments/ machinery/equipments or the rental agreement for the property owned by the State Property,  the Treasury Department - Letter of Guarantee from an individual or a juristic person - Cross Guarantee among applicants - Letter of Guarantee issued by the Small Business Credit Guarantee Corporation (SBCG)

(Credit Amount of Project 5,000 million baht)

Performance 4,998 million bath

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““SME Power for a New Start”SME Power for a New Start”

To be used as cash flow for businessTo be used as cash flow for business

1 million Baht maximum / Case

None

Owners of Small and Medium Owners of Small and Medium Enterprise whose business is Enterprise whose business is

damaged by the recent political damaged by the recent political protest in Bangkok areaprotest in Bangkok area

ObjectiveObjective

TargetTarget

Condition

Interest Rate

Amount

Collateral

1. Damaged from fire : - Year 1st : 0 % , Year : 2nd - 6 th =

3%2. Effect but not damage : - MLR – 3 %

(Credit Amount of Project 8,000 million baht)

Performance 7,311 million bath

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ConditionAmount

Collateral

Interest Rate

ObjectiveObjective

TargetTarget

To support small and medium entrepreneurs in tourism business affected by economic downturn and local political unrest

Small and medium entrepreneurs in tourism and related business affected by economic downturn and local political unrest

- For the first 2 years, the interest rate equals to MLR - 3 per year   - For the third year onwards, the interest rate equals to MLR

50,000-5,000,000 Baht/ Case

-Land /land and buildings/ buildings/condominiums/apartments/ machinery/equipments or the rental agreement for the property owned by the State Property,  the Treasury Department - Letter of Guarantee from an individual or a juristic person - Cross Guarantee among applicants - Letter of Guarantee issued by the Small Business Credit Guarantee Corporation (SBCG)

(Credit Amount of Project 5,000 million baht)

Performance 4,496 million bath

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SMEs Development SMEs Development ProgramProgram

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Problems and Obstacles of SMEs in Thailand Problems and Obstacles of SMEs in Thailand

Problems & ObstaclesProblems & Obstaclesof SMEs* of SMEs*

Limitations in Gaining Access to Funds SMEs have difficulty in obtaining

loans from commercial banks because they do not meet basic requirement of the banks in terms of professional management and standard accounting procedures

SMEs cannot mobilize funds from the capital market

Government Efforts in Promoting SMEs In the past, the government sector has

lacked a systematic approach although agencies were assigned to manage their respective area

Lack of coordination and the absence of a comprehensive and systematic SME promotion plan

Lack of Competitive Advantages in areas such as: Use of technology/information

technology

Innovation and Product Development

Marketing

Productivity

Labor & Manpower

Deficiencies in Good Governance Most SMEs have limitations in the

application of good corporate governance and efficient management systems

To successfully implement the government’s national agenda with regard to SME sector development, SME Bank, as a specialized financial institutions, has been mandated to provide various forms of financing and business development services to SMEs

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How to increase SMEs GDPHow to increase SMEs GDP

Low cost of funding

Before lending

Provide knowledge for readiness

After lending

Provide knowledge/marketing

Capital Fund

Low cost funding

PSA

SMEsGov’t

External issues/ FTA

Financial Weakness

Lack of knowledge

- Management - Marketing - Technology & Innovation - Production standard - Accounting

Upgrade in production standard

Budget for SMEs development

Survive/Profit increase

Grow with more profit/

increase R &D / market

expansion

Increase ability to compete of SMEs

SMEs GDP

Employment

Income distribution

Small

enterprises

Medium

enterprises

TAX

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SME Development SME Development • Aim to Support and Develop Entrepreneurs both before and after lending credit • Increase Potential and Capacity in competition to Thai SMEs

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Training Training

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Business Diagnosis Business Diagnosis

Shin – Dan Program

-Diagnosis and Kai-zen for

SME BANK Clients

-Seminar to prepare

for improvement

and

- Consulting for implementation

Shin – Dan Program

-Diagnosis and Kai-zen for

SME BANK Clients

-Seminar to prepare

for improvement

and

- Consulting for implementation

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Market PlaceMarket Place

Holding the activities for helpingSME BANK’s Client to sell their products

at various place such as SME BANK

TOWER , Government organization and Alliance place in

domestic and international i.e.

Ministry of Finance, Ministry of Industry, included other provinces of Thailand

Holding the activities for helpingSME BANK’s Client to sell their products

at various place such as SME BANK

TOWER , Government organization and Alliance place in

domestic and international i.e.

Ministry of Finance, Ministry of Industry, included other provinces of Thailand

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Mass Communication for ClientsMass Communication for Clients

Visit SME BANK Entrepreneurs by mass media for helping inPublic Relations includingcreating SMEs image

Visit SME BANK Entrepreneurs by mass media for helping inPublic Relations includingcreating SMEs image

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SME CatalogueSME Catalogue

SME Catalogue for publishing SME BANK’s Client Product over 500 businesses targetgroup both domestic and internationalpurpose to support with increase in channel marketing

SME Catalogue for publishing SME BANK’s Client Product over 500 businesses targetgroup both domestic and internationalpurpose to support with increase in channel marketing

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Business MatchingBusiness Matching

Holding Business Matching with Japan Finance Cooperation

in Automobile

and Electronic Spare Parts Cluster

Holding Business Matching with Japan Finance Cooperation

in Automobile

and Electronic Spare Parts Cluster

THANK YOUTHANK YOU