Financial Schemes and Facilities for SMI Gtz

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					                         Thai German Business Development
                         Services and Networks




Financial Facilities for SMI
Comprehensive Directory




Bureau of Supporting      Deutsche Gesellschaft für
Industries Development    Technische Zusammenarbeit (GTZ) GmbH
(BSID)
             Financial Schemes and Facilities for SMI

                               Comprehensive Directory




                                      THAILAND

                                    PN 1998.2159.6

                                Figures as of May 2000




Dr. Martin Godau on behalf of GTZ
Foreword

                                                                             December 2001


Dear Sir,


We have the pleasure to present to you a guide book and comprehensive directory of
41 financing schemes.

I was felt, since long, that SMIs have difficulties to access relevant information for their
business development and that comprehensive guide books are not readily available.

Since the German Technical Cooperation (GTZ) is giving much emphasis to support
Thailand’s efforts in SMI and SME development we have contracted out a study on the
availability of financial schemes.

The orientation of “guide book” focuses on:

-       facts about financial schemes
-       provides these facts institutions by institutions
-       quotes the criteria and regulations governing each scheme

The material – scheme by scheme – collected in this guide book was verified through
personal talks with representatives of the institutions and the final presentation of each
scheme was sent again to the respective institution for proof and verification.

During our research and compilation of data it became evident that such a guide book
is indeed an innovative approach which could be helpful for many business enterprises
in getting aware of financial opportunities – obtaining a realistic picture of conditions
and regulations. It might be also helpful for those facilities which do report a certain
lack of clients and demands for their financial schemes.



Yours sincerely,




Dr. Rolf Sülzer

Country Director

GTZ Thailand




Financial Schemes and Facilities for SMI: Comprehensive Directory                              2
Structure

0. Executive summary of the financial schemes identified ............................ 10

1. Introduction................................................................................................ 23

2. Bank of Thailand (BOT)............................................................................. 31

3. The Department of Industrial Promotion (DIP) .......................................... 35

4. State-owned Finance Corporations ........................................................... 53

5. State-owned Banks ................................................................................... 91

6. Commercial Banks .................................................................................. 131

7. Capital Market ......................................................................................... 150

8. Other institutions providing financial assistance ...................................... 156

9. Resume and Outlook............................................................................... 188

Appendix ..................................................................................................... 189




Financial Schemes and Facilities for SMI: Comprehensive Directory                                                    3
Contents

0. Executive summary of the financial schemes identified .......................... 10

1. Introduction............................................................................................... 23
  1.1 Background ............................................................................................. 23

    1.2 Definition of SMEs................................................................................ 24
  1.3 Financial assistance towards SMEs ........................................................ 24
  1.4 SME Policy Issues................................................................................... 27

2. Bank of Thailand (BOT)............................................................................. 31
  2.1 Introduction.............................................................................................. 31
  2.2 Financial assistance for small- and medium-sized enterprises................ 31

3. The Department of Industrial Promotion (DIP) .......................................... 35
  3.1 Introduction.............................................................................................. 35
  3.2 Financial assistance for small and medium sized enterprises ................. 37
  3.3 Joint facilities with selected commercial and state owned banks ............ 37
  3.4 Specific loans for SMEs........................................................................... 38

        Revolving fund for operators of cottage industries and Thai
        handicraft ............................................................................................... 38

        Consultancy fund in support of small-scale industries in regional
        areas ....................................................................................................... 42

        Training fund in support of industrial personnel development ........ 45

        SMEs Consultancy Fund Project ......................................................... 47

        Rural Industrial Development Support Program (Sor-Or-Chor) ........ 49

4. State-owned Finance Corporations ........................................................... 53
  4.1 The Industrial Finance Corporation of Thailand (IFCT) ........................... 53

     4.1.1 Introduction........................................................................................ 53

     4.1.2 IFCT's services and conditions in general ......................................... 54

     4.1.3 Financial assistance for small and medium-sized enterprises........... 55

     4.1.4 Specific loans for SMEs..................................................................... 57

        Credit for Small- and Medium-scale Industries .................................. 57

        Credit under the Industrial Restructuring Program............................ 59

        Credit for environmental conservation, energy saving or pollution
        control .................................................................................................... 62


Financial Schemes and Facilities for SMI: Comprehensive Directory                                                     4
       Small- and Medium-scale Industry Credit from Japan (AJDF II) ....... 64

       KfW Export Credit (Credit for Purchase of Machinery from Germany)
       ................................................................................................................ 66

       Credit for Small- and Medium-Scale Industries from Japan (OECF VI)
       ................................................................................................................ 68

      Italy Export Credit ................................................................................. 70
  4.2 Small Industry Finance Corporation (SIFC)............................................. 72

     4.2.1 Introduction........................................................................................ 72

     4.2.2 Financial assistance for small and medium-sized enterprises........... 74

     4.2.3 Specific Loans for SMEs ................................................................... 76

       Long Time Loan (fixed term) ................................................................ 76

      Short Term Loan As Promissory Note................................................. 80
  4.3 Small Industry Credit Guarantee Corporation (SICGC) ........................... 85

     4.3.1 Introduction........................................................................................ 85

     4.3.2 Restructuring of the Small Industry Credit Guarantee Corporation ... 86

     4.3.3 Specific loan guarantees for SMEs ................................................... 87

       Credit guarantee for SMEs ................................................................... 87

5. State-owned Banks ................................................................................... 91
  5.1 Government Savings Bank (GSB) ........................................................... 91

     5.1.1 Introduction........................................................................................ 91

     5.1.2 Services and conditions in general .................................................... 91

     5.1.3 Financial assistance for small and medium-sized enterprises........... 92

     5.1.4 Specific loans for SMEs..................................................................... 92

      Loan for SMEs ....................................................................................... 92
  5.2 Export-Import Bank of Thailand (EXIM)................................................... 95

     5.2.1 Introduction........................................................................................ 95

     5.2.2 Financial Schemes and Facilities for SMEs....................................... 96

     5.2.3 Export Credit Insurance Facility......................................................... 98

     5.2.4 Specific Loans for SMEs ................................................................. 100

Financial Schemes and Facilities for SMI: Comprehensive Directory                                                       5
       Credit for adjusting the product efficiency, relocation to industrial
       estates and environmental protection............................................... 100

       Direct Packing Credit Facility............................................................. 102

       Pre-Shipment Financing Facility (“Export Preparation Credit”) ..... 105

       Term Loan for business expansion ................................................... 108

      Term Loan for Machinery Upgrading................................................. 111
  5.3 Bank of Agriculture and Agricultural Cooperatives (BAAC) ................... 114

     5.3.1 Introduction...................................................................................... 114

     5.3.2 General services ............................................................................. 114

     5.3.3 Financial assistance for small and medium-sized enterprises......... 116

     5.3.4 Specific loans for SMEs................................................................... 117

      SME loan program (Credit for activities outside the agricultural
      sector) .................................................................................................. 117
  5.4 Krung Thai Bank (KTB) ......................................................................... 119

     5.4.1 Introduction...................................................................................... 119

     5.4.2 KTB’s loan services in general ........................................................ 120

     5.4.3 Financial assistance for small and medium-sized enterprises......... 121

     5.4.4 Specific Loans for SMEs ................................................................. 122

       SME promotion program (MoI joint facility with Krung Thai Bank) 122

       Promissory Note Project..................................................................... 125

       Credit Guarantee for SMEs between Krung Thai Bank and Small
       Industry Credit Guarantee Corporation (SICGC) .............................. 128

6. Commercial Banks .................................................................................. 131
  6.1 Bangkok Bank (BBL) ............................................................................. 131

     6.1.1 Introduction...................................................................................... 131

     6.1.2 Financial assistance for small and medium-sized enterprises......... 131

     6.1.3 Specific Loans for SMEs ................................................................. 132

       Credit for SMEs Program (MoI joint facility with Bangkok Bank) ... 132

       “RUAM JAI PATTANA SMEs” Privileged Loans available to SMEs 135


Financial Schemes and Facilities for SMI: Comprehensive Directory                                                 6
       Promissory Note Project (P/N Re-BOT) ............................................. 137

      Cost Reduction Project for SMEs ...................................................... 139
  6.2 Siam Commercial Bank ......................................................................... 141

     6.2.1 Introduction...................................................................................... 141

     6.2.2 Specific loans for SMEs................................................................... 142

       SMEs loan ............................................................................................ 142

      SBE loan............................................................................................... 144
  6.3 Other commercial banks........................................................................ 147

     6.3.1 Introduction...................................................................................... 147

     6.3.2 Specific loans for SMEs................................................................... 147

       Asia Business Link for SMEs ............................................................. 147

7. Capital Market ......................................................................................... 150
  7.1 Market for Alternative Investment (MAI) ................................................ 150
  7.2 Venture Capital Providers...................................................................... 151
  7.3 Leasing and factoring firms ................................................................... 152
  7.4 Equity investment through funds ........................................................... 153

     Equity Fund .............................................................................................. 154

     Fund for Venture Capital Investment in SMEs (“SME Fund”) ................... 154

    SME Restructuring Fund .......................................................................... 155
  7.5 Subcontracting ...................................................................................... 156
  7.6. Supplier’s credit .................................................................................... 156
  7.7 Franchising............................................................................................ 156

8. Other institutions providing financial assistance ...................................... 156
  8.1 Credit Unions......................................................................................... 157

    8.1.1 Introduction...................................................................................... 157
  8.2 National Science and Technology Development Agency (NSTDA)....... 158

     8.2.1 Introduction...................................................................................... 158

     8.2.2 Specific Loans for SMEs ................................................................. 159

      Loan for research and development (RD & E) .................................. 159
  8.3 Energy- and environment-related funds ................................................ 161

     8.3.1 Fund to support the implementation of the Energy Conservation Act
     ................................................................................................................. 161



Financial Schemes and Facilities for SMI: Comprehensive Directory                                                       7
     8.3.2 The Environmental Fund ................................................................. 162

    8.3.3 Revolving Fund for Technology Research and Development.......... 165
  8.4 Urban Community Development Office (UCDO) ................................... 166

     8.4.1 Introduction...................................................................................... 166

     8.4.2 Specific Loans ................................................................................. 167

       Revolving Loan.................................................................................... 167

       Loan for Income generation ............................................................... 169

       Loan for Housing projects.................................................................. 170

       Loan for housing renovation.............................................................. 172

       Loan for network fund......................................................................... 174

      Miyazawa Loan .................................................................................... 176
  8.5 Department of Public Welfare (DPW) .................................................... 178

     8.5.1. Introduction..................................................................................... 178

     8.5.2 Specific Loans and Grants .............................................................. 178

       Thais Help Thais Vocational Groups Project .................................... 178

       Occupational Assistance Revolving Fund ........................................ 180

       Revolving Fund for Job Creation for Women ................................... 182

      Loans for Self-Employed Business Investment Projects for People
      with Disabilities ................................................................................... 184
  8.6. The Thailand Research Fund (TRF)..................................................... 185

     8.6.1 Introduction...................................................................................... 185

     ResearchFunding ..................................................................................... 187

9. Resume and Outlook............................................................................... 188

Appendix .................................................................................................... 189
 A. Abbreviations .......................................................................................... 189
 B. Addresses and contact persons .............................................................. 191

     Major Service Providers: .......................................................................... 191

     Leasing Companies:................................................................................. 196

     Factoring Companies: .............................................................................. 207


Financial Schemes and Facilities for SMI: Comprehensive Directory                                              8
   Venture Capital Companies:..................................................................... 210
  C. Types of loans typical in Thailand ........................................................... 215




Financial Schemes and Facilities for SMI: Comprehensive Directory                                    9
                     0. Executive summary of the financial schemes identified
Running No.




                         Name of
              Page No.




                                                                                                     Eligibility

                                             Provider




                                                          Amount
                                             Service




                                                                      Interest
                         Scheme




                                                                                  Period



                                                                                            Period
                                                                                            Grace
                                                          Loan




                                                                                  Loan
                                                                      Rate
1             34         Revolving          DIP         Up to       6%-8% 2-10             3-12      Any individual, group or
                         fund for                       500.000           years            month     juristic person engaged in
                         operators of                   Baht                               s         a cottage industry or Thai
                         cottage                                                                     handicraft having fixed
                         industries
                                                                                                     assets, excluding land, of
                         and Thai
                                                                                                     no more than Baht 10
                         handicraft
                                                                                                     million employing no more
                                                                                                     than 50 workers.

2             37         Consultancy        DIP         Up to       0%           Grant     Grant     The consultancy fund is
                         fund in                        400,000                                      provided for SMIs with no
                         support of                     Baht                                         financial obligations. It is
                         small-scale                    annually                                     intended to be used for
                         industries in                                                               hiring outside experts to
                         regional
                                                                                                     assist in problem-solving,
                         areas
                                                                                                     identifying opportunities or
                                                                                                     studying investment
                                                                                                     feasibilities

3             39         Training fund      DIP         No min.     0%           Grant     Grant     SMIs of no more than 200
                         in support of                  and                                          employees and investment
                         industrial                     max.                                         capital no more than Baht
                         personnel                                                                   50 million; Located in all
                         development                                                                 the provinces except
                                                                                                     Bangkok, Nonthaburi,
                                                                                                     Pathumthani, Samut
                                                                                                     Prakarn, Samut Sakorn
                                                                                                     and Nakorn Pathom;
                                                                                                     Operated under the 1992
                                                                                                     Factory Act

4             41         SMEs               DIP         No min.     0%           Grant     Grant     SMEs Entrepreneurs with
                         Consultancy                    and                                          Total Fixed Assets under
                         Fund Project                   max.                                         200 Million Baht; Must Be
                                                                                                     Operated under The 1992
                                                                                                     Factory Act (Applicable to
                                                                                                     Manufacturing Industries);
                                                                                                     More Than 51% of Thai
                                                                                                     Shareholder


                     Financial Schemes and Facilities for SMI: Comprehensive Directory                             10
5   43     Rural         DIP              No min.       0%          Grant    Grant    Produces and/or distributes
           Industrial                     and                                         its own goods, employs
           Development                    max.                                        production technology that
           Support                                                                    can be transferred to
           Program                                                                    locals, has definite
           (Sor-Or-Chor)                                                              markets, has been in
                                                                                      operation continually for at
                                                                                      least 3 years

6   51     Credit for   IFCT              3-100         AVG.        Max. 5   Incl. in Being a new or expansion
           Small- and                     million                   years    loan     project (any type of
           Medium-scale                   Baht          MLR –                period industry); Being a small-
           Industries                                   1%                            scale industrial enterprise
                                                                                      with net fixed assets of up
                                                                                      to Bt. 50 million; Being a
                                                                                      medium-scale industrial
                                                                                      enterprise with net fixed
                                                                                      assets of up to Bt. 200
                                                                                      million

7   53     Credit under         IFCT      Up to         AVG.        5-10     Incl. in Being an enterprise in one
           the Industrial                 Bt.200                    years    loan     of 13 industrial sectors and
           Restructuring                  million       MLR –                period related industrial sectors;
           Program                        per           1%                            Being a Thai national or
                                          project                                     juristic person under Thai
                                                                                      law; Being an enterprise
                                                                                      with net fixed assets of up
                                                                                      to Bt. 500 million; Being an
                                                                                      investment for one of the
                                                                                      following purposes: (p.53)

8   55     Credit for    IFCT             Max 300       Baht:  Max. 7        Incl. in For industrial projects
           environmenta                   million       8-8,5% years         loan     requiring funds for
           l                              Baht per      fix                  period construction and
           conservation,                  project                                     installation of a pollution
           energy saving                                Yen:                          control or treatment system
           or pollution                                 max.
           control                                      3,5%
                                                        fix or
                                                        float.
                                                        Rate
                                                        LIBOR
                                                        +2,25
                                                        %;
                                                        US$:

                                                        float.
                                                        rate
                                                        LIBOR


         Financial Schemes and Facilities for SMI: Comprehensive Directory                          11
                                                         +2,25
                                                         %

9    57       Small- and         IFCT      Up to         AVG.        Max. 7    Incl. in Being a project with fixed
              Medium-                      130                       years     loan     assets of not exceeding Bt.
              scale Industry               million       MLR                   period 80 million in all industries
              Credit from                  Baht per
              Japan (AJDF                                                               Being a project with fixed
                                           project
              II)                                                                       assets of not exceeding Bt.
                                                                                        400 million in any of the
                                                                                        following industries:
                                                                                        Export-oriented industry,
                                                                                        Export supporting industry,
                                                                                        Agro-industry, Service
                                                                                        industry contributing to
                                                                                        higher value added and
                                                                                        foreign exchange earning

10   59       KfW Export         IFCT      Max.          LIBOR       Based     Based    Being a project with
              Credit (Credit               85% of        + (2.50     on the    on the   purchase of Machinery
              for Purchase                 export        to          project   projec   from Germany; Being a
              of Machinery                 contract      2.75)%      apprai-   t        project with export contract
              from
                                           value                     sal       apprai   value of no less then US$
              Germany)
                                                                               -sal     500.000

11   61       Credit for         IFCT      Not over      Yen         5 to 10   Incl. in Projects with fixed assets
              Small- and                   Bt.360        portion     years     loan     ranging from equivalent to
              Medium-                      million       : Fixed               period over Bt. 50 million to Bt.
              Scale                        per           rate                           400 million; Projects that
              Industries
                                           project       3.25%                          involve with one of the
              from Japan
              (OECF VI)
                                                         p.a.                           following alternatives:
                                                         Floatin                        Technology and machinery
                                                         g rate                         rehabilitation or Projects
                                                         LIBOR                          intending to relocate their
                                                         +                              own facilities into rural
                                                         2.25%                          areas or industrial estates
                                                         p.a.                           or Projects located outside
                                                         US$                            Bangkok and its vicinity
                                                         portion
                                                         :
                                                         Floatin
                                                         g rate
                                                         LIBOR
                                                         +
                                                         2.25%
                                                         p.a.

12   63       Italy Export       IFCT      Not           About       7-10      Incl. in Projects purchasing
              Credit                       exceedin      LIBOR       years     loan     machinery and services
                                           g 85% of      +                     period from Italy; Projects with a

          Financial Schemes and Facilities for SMI: Comprehensive Directory                           12
                                           the           2.75%                        minimum contract value of
                                           machine       p.a.                         US$ 600.000; Date of
                                           ry                                         machinery delivery must
                                           contract      Plus                         not exceed 3-4 years from
                                           value         an                           the date designated in the
                                                         insura                       machinery purchasing
                                                         nce                          agreement
                                                         premiu
                                                         m of
                                                         2.45%-
                                                         5.07%
                                                         of total
                                                         loan

13   70       Long Time          SIFC      500.000       MLR-        Max.     Max 2   SMEs in general. Special
              Loan (fixed                  –5            1% up       10       years   conditions under the so-
              term)                        million       to          years            called policy based lending
                                           Baht          MLR+                         scheme for:
                                                         2%
                                                                                      SMEs located in the
                                                                                      Industrial Estate or SMEs
                                                                                      Estate, SMEs with ISO
                                                                                      certification, SMEs with a
                                                                                      transparent accounting
                                                                                      system, SMEs that joined
                                                                                      in for the Sor-Or-Chor
                                                                                      program of the Department
                                                                                      of Industrial Promotion,
                                                                                      SMEs that joined in for the
                                                                                      Energy Cost Reduction
                                                                                      Program with EGAT, SMEs
                                                                                      with the export business
                                                                                      and export industry, SMEs
                                                                                      that joined in for the
                                                                                      Industrial Restructuring
                                                                                      Plan, SMEs with business
                                                                                      restructuring/risk factors
                                                                                      Project, SMEs that joined
                                                                                      in for the research and
                                                                                      development program with
                                                                                      NSTDA

14   73       Short Term         SIFC      500.000       MLR         Max. 5   None    See above (Long time
              Loan as                      –5            +2%         years            loan)
              Promissory                   million       up to
              Note                         Baht          MLR         Annual
                                                         +3%         Renew
                                                                     al

15   79       Credit             SICG Guaran-            Fee    N/A           N/A     Applicants must be either
              guarantee for      C    tees for           betwee                       persons or legal entity such

          Financial Schemes and Facilities for SMI: Comprehensive Directory                        13
              SMEs                         loans of      n 2%                         as company limited,
                                           min.          and                          partnership, or limited
                                                         2,75%                        partnership with Thai
                                           200.000                                    nationality and must
                                           and                                        operate in Thailand; Must
                                           max. 10                                    be SMEs only; Must own
                                           million                                    total fixed assets under
                                           Baht                                       100 million Baht; Land and
                                                                                      buildings or factories
                                                                                      located in that estate must
                                                                                      be used as credit
                                                                                      guarantee to financial
                                                                                      service providers; Good
                                                                                      financial records with good
                                                                                      credit and bright yielding
                                                                                      ;opportunity; Loans are in
                                                                                      need of credit guarantee;
                                                                                      Applicants must have at
                                                                                      least 20% shares in total
                                                                                      capital of the enterprises
                                                                                      asked for credit guarantee

16   85       Loan for           GSB       From          Betwe Max.           Max.    Be an individual not under
              SMEs                         100.000       en      10           3       20 years of age or be a
                                           baht up       MLR/M years          years   juristic person; Have Thai
                                           to 50         OR                           nationality or be registered
                                           million       and                          under a Thai law; Doing
                                           baht          MLR/M                        one of the following
                                                         OR+3,                        business operations:
                                                         5% (up                       Industries (Manufacturing
                                                         to the                       Industry, Handicraft
                                                         custom                       Industry, Service Industry,
                                                         er risk                      Agro-industry), General
                                                         rating)                      Commercial Businesses,
                                                                                      Retail and Wholesale
                                                                                      Business, Service
                                                                                      Business, Import Business,
                                                                                      Export Business

17   93       Credit for         EXIM Max.200            Under       5-7      Incl. in SMEs Having Fewer Than
              adjusting the           Million            MLR-        years    loan     200 Million Baht Fixed
              product                 Baht per           1%                   period Assets; Must Be 13 Kind of
              efficiency,             project                                          Enterprises on Industrial
              relocation to                                                            Restructuring Program;
              industrial
              estates and
                                                                                       Applicants Must Seek
              environmenta                                                             National Food Institute,
              l protection                                                             Thai Textile Institute, Thai
                                                                                       Automotive Institute or Thai
                                                                                       German Institute's
                                                                                       Assurance Letter before

          Financial Schemes and Facilities for SMI: Comprehensive Directory                         14
                                                                                      Applying for This Loan;
                                                                                      Must be Environmental
                                                                                      Friendly Enterprises;
                                                                                      Having Intent to Improve
                                                                                      Condition of Manufacturing
                                                                                      Relocate to Industrial
                                                                                      Estate and Environmental
                                                                                      Protection

18   95       Direct             EXIM No min.            Not         Max.     N/A     The facility is provided to
              Packing                 and                over        180              exporters and export-
              Credit Facility         max.               8%          days             oriented manufacturers
                                                                                      according to regulations
                                                         Penalt                       outlined by EXIM Bank.
                                                         y:                           Applications for credit lines
                                                         5,5%                         should be directed to EXIM
                                                         on the                       Bank's Business Promotion
                                                         P/N                          Department.
                                                         amoun
                                                         t

19   98       Pre-Shipment       EXIM No min.            EXIM        Max.     N/A     Exporters of all kinds of
              Financing               and                Prime       120              products
              Facility                max.               Rate +      days
              (“Export                                   1,5%
              Preparation
              Credit”)

20   101      Term Loan          EXIM No min.            Baht:       2-5      Incl. in A loan to support the
              for business            and                EXIM        years    loan     expansion of exporters'
              expansion               max.               Prime                period production capacities for
                                                         Rate +                        export, for instance, in
                                                         1,5%                          factory expansion, in the
                                                                                       purchase of additional
                                                         US                            machinery and also other
                                                         Dollar:                       additional fixed asset
                                                         LIBOR                         investment. This loan is
                                                         + 3.5%                        also available for the
                                                                                       investment in new
                                                                                       manufacturing plant,
                                                                                       provided that this
                                                                                       investment is for export.

21   103      Long-Term          EXIM No min.            Baht:       Max. 7   Incl. in The exporter utilizing this
              Credit for              and                EXIM        years    loan     facility is required to
              Machinery               max.               Prime                period possess a machinery
              Upgrading                                  Rate +                        replacement certificate
                                                         1,5%                          issued by the Ministry of
                                                                                       Industry or relevant
                                                         US                            agencies authorized by the
                                                         Dollar:                       Ministry of Industry. For

          Financial Schemes and Facilities for SMI: Comprehensive Directory                         15
                                                      LIBOR                        textile industry, a certificate
                                                      + 3.5%                       from the Thailand Textile
                                                                                   Institute is required.

22   109   SME loan           BAA       Max. 5        MLR         Max.     Max.    Must have Thai nationality,
           program            C         million       up to       15       2       at least twenty years of
           (Credit for                  Baht          MLR +       years    years   age, be genuine farmers as
           activities                                 3%                           defined in BAAC
           outside the
                                                      (MLR                         regulations, have sufficient
           agricultural
                                                                                   farm experience or training
           sector)
                                                      =9%)                         in the field of agriculture;
                                                                                   Must be permanent
                                                                                   residents and undertake
                                                                                   major agricultural activities
                                                                                   within the operating area of
                                                                                   the BAAC branch where
                                                                                   client registration will be
                                                                                   made, for a period of not
                                                                                   less than one year; Must
                                                                                   be honest, well known,
                                                                                   industrious and thrifty;
                                                                                   Must not be of unsound
                                                                                   mind or mentally infirm;
                                                                                   Must not be bankrupt or
                                                                                   insolvent; Must not have
                                                                                   been expelled by any
                                                                                   BAAC branch, and must
                                                                                   not currently have an
                                                                                   outstanding loan

23   115   SME                KTB       Max. 50       MRR         5-10     Max.    Manufacturing Factor
           promotion                    million                   years    2       Categories under Industrial
           program (MoI                 Baht                               years   Restructuring Plan or
           joint facility                                                          SMEs; SMEs and other
           with Krung
                                                                                   Investors Who Want to
           Thai Bank)
                                                                                   Expand or Establish
                                                                                   Enterprises in Up Country
                                                                                   Area Who Ask for Advice
                                                                                   and Support Information in
                                                                                   Setting Up Business from
                                                                                   DIP or ask for permission
                                                                                   to Set Up New Factory of
                                                                                   Factory; Expansion from
                                                                                   Regional /Provincial
                                                                                   Industry Office; Cottage
                                                                                   and Handcraft Is Preferred;
                                                                                   Applicants' Enterprise Must
                                                                                   Be Environmental Friendly;
                                                                                   Applicants' Enterprises
                                                                                   must have Ministry of

       Financial Schemes and Facilities for SMI: Comprehensive Directory                          16
                                                                                   Industry's support, help or
                                                                                   promotion on the following
                                                                                   fields such as,
                                                                                   Administration,
                                                                                   Management, Technical,
                                                                                   Knowledge, Manufacturing,
                                                                                   Marketing, Finance,
                                                                                   Human Resource
                                                                                   Development or others;
                                                                                   Manufacturing SME
                                                                                   Enterprises must have a
                                                                                   valid factory permit; Eligible
                                                                                   Candidate Can Be from All
                                                                                   Province in Thailand

24   118   Promissory         KTB       Max. 25       MLR-   Max.          N/A     Not necessary to be a
           Note Project                 million       1%     120                   bank’s customer before
                                        Baht          (MLR= days
                                                      8.75%)                       Fixed assets not more than
                                                                                   200 million baht in
                                                                                   Manufacturing business
                                                                                   and service business

                                                                                   Fixed assets not more than
                                                                                   100 million baht in
                                                                                   wholesales business

                                                                                   Fixed assets not more than
                                                                                   60 million baht in retail
                                                                                   business

25   120   Credit             KTB       Max. 20       Credit      Max. 5   Incl. in Applicants must be either
           Guarantee for                million       guaran      years    loan     Thai nationality or legal
           SMEs                         Baht          -tee                 period entity that operate in
           between                                    fee                           Thailand; Must be SMEs
           Krung Thai
                                                      1.75%                         only and own total fixed
           Bank and
           SICGC
                                                      p.a.                          assets under 100 million
                                                                                    baht; Land and buildings or
                                                                                    factories located in that
                                                                                    estate must be used as
                                                                                    credit guarantee;
                                                                                    Applicants must have at
                                                                                    least 20% shares in total
                                                                                    capital of the enterprises
                                                                                    asked for credit guarantee.

26   124   Credit for         BBL       Min.          MRR         Max. 5   Incl. in General Manufacturing
           SMEs                                                   years    loan     SMEs Enterprises;
           Program (MoI                 30,000                             period Manufacturing Enterprises;
           joint facility                                                           Retail - Wholesales
           with Bangkok                 Max.                                        Business; Import - Export

       Financial Schemes and Facilities for SMI: Comprehensive Directory                         17
           Bank)                                                                     Business; Agricultural
                                        100                                          Industries; Not more than
                                        million                                      200 million baht in fixed
                                        baht                                         assets; Potential to pay
                                                                                     back the loan; The
                                                                                     business activity is not
                                                                                     covered by EXIM banks
                                                                                     support

27   126   “RUAM JAI          BBL       Max.          MRR         Max. 5    Incl. in Bangkok Bank is extending
           PATTANA                                                years     loan     credit facilities with special
           SMEs”                        100                                 period rate offer to SMEs, which
           Privileged                   million                                      fall under the definition of
           Loans                        baht                                         the MoI, reported in this
           available to
                                                                                     study.
           SMEs
                                                                                     Both new and existing
                                                                                     customers are eligible to
                                                                                     apply.

28   128   Promissory         BBL       Max.          MLR-        120       N/A      Not necessary to be a
           Note Project                               1%          days               bank’s customer before
           (P/N Re-                     100           (MLR
           BOT)                         million       Rate        Re-                Fixed assets not more than
                                        baht          8.75%)      newal              200 million baht in
                                                                  up to 5            Manufacturing business
                                                                  years              and service business

                                                                                     Fixed assets not more than
                                                                                     100 million baht in
                                                                                     wholesales business

                                                                                     Fixed assets not more than
                                                                                     60 million baht in retail
                                                                                     business

29   130   Cost               BBL       Max. 5        MRR         Max. 5    N/A      Must apply and get the
           Reduction                    million                   years              approval from the
           Project for                  Baht                                         Department of Industrial
           SMEs                                                                      Promotion (DIP)

                                                                                     Both new and existing
                                                                                     customers are eligible to
                                                                                     apply.

30   134   SMEs loan          SCB       Max. 8        7.5%        Max. 7    Incl. in Private person age
                                        million       for the     years     loan     between 30-50 years
                                        baht          first 2               period
                                                      years;                         SMEs with 100 million baht
                                                      GLR                            in fixed asset
                                                      after

       Financial Schemes and Facilities for SMI: Comprehensive Directory                            18
                                                                                   Operate businesses more
                                                                                   than three years

                                                                                   No NPL with other financial
                                                                                   institution

                                                                                   Must be agricultural
                                                                                   industries, general
                                                                                   manufacturing and
                                                                                   services

31   136   SBE loan           SCB       Max. 3        8% for Max. 7        Incl. in Private person age
                                        million       the     years        loan     between 30-50 years
                                        baht          first 2              period
                                                      years;                        SMEs with 100 million baht
                                                      GLR+1                         in fixed asset
                                                      % after
                                                                                   Operate businesses more
                                                                                   than one year

                                                                                   No NPL with other financial
                                                                                   institution

                                                                                   Must be agricultural
                                                                                   industries, general
                                                                                   manufacturing and
                                                                                   services

32   139   Asia               BOA       250,000       MLR         Max. 7   Incl. in All SMEs that want to
           Business Link                to 1          or          years    loan     purchase goods, expand
           for SMEs                     million       MOR                  period business utility or buy
                                        baht                                        machines/equipment/devic
                                                                                    es

33   154   Loan for           NST       Loan:         Averag Max. 7        Incl. in Supported Areas:
           research and       DA        max. 20       e       years        loan     1.Genetic Engineering and
           development                  million       deposit              period Biotechnology 2. Metallic
           (RD & E)                     baht          rate                          and material 3. Electronic
                                                      (for 1                        and computer 4. Other
                                        Grant:        year                          areas that lead to an
                                        not over      deposit                       advancement in science
                                        3 million     )+                            and technology
                                        baht          2.25%
                                                                                   At least 51% of shares hold
                                                                                   by Thai nationals; Must be
                                                                                   a small or medium sized
                                                                                   firm (not over 200
                                                                                   employees); Have
                                                                                   expertise in financial,
                                                                                   technology and


       Financial Schemes and Facilities for SMI: Comprehensive Directory                         19
                                                                                 management fields; Have
                                                                                 never received financial
                                                                                 support for research,
                                                                                 development and
                                                                                 engineering purposes from
                                                                                 other institutions under the
                                                                                 same project; No legal
                                                                                 issues pending that could
                                                                                 effect the firms ability of
                                                                                 successful completion of
                                                                                 the project

34   164   Revolving          UCD       See full      10%         Max. 3   N/A   Establish a community
           Loan               O         table                     years          revolving fund for on-
                                                                                 lending to individual
                                                                                 members in need of credit
                                                                                 for school fees, debt
                                                                                 repayment, etc.

                                                                                 Only for the member which
                                                                                 is the savings group that
                                                                                 has been established not
                                                                                 less than 6 months

35   166   Loan for           UCD       See full      8%          Max. 5   N/A   For individual or group
           Income             O         table                     years          business investment
           generation
                                                                                 Only for the member which
                                                                                 is the savings group that
                                                                                 has been established not
                                                                                 less than 6 months

36   168   Loan for           UCD       Max. 10       3% if       Max.     N/A   Purchase of land and
           Housing            O         times the     loan        15             construction of housing for
           projects                     amount        less        years          communities facing
                                        saved         than                       eviction
                                                      150,00
                                                      0 Baht                     Only for the member which
                                                                                 is the savings group that
                                                      8% if                      has been established not
                                                      loan                       less than 6 months
                                                      more
                                                      than
                                                      150,00
                                                      0 Baht

37   170   Loan for           UCD       Max. ten 10%              Max.     N/A   Repair and extension of
           housing            O         times the                 15             house and utilities
           renovation                   amount                    years
                                        saved                                    Only for the member which
                                                                                 is the savings group that

       Financial Schemes and Facilities for SMI: Comprehensive Directory                       20
                                                                                 has been established not
                                                                                 less than 6 months

     172   Loan for           UCD       See full      4%          Max. 5   N/A   To strengthen and develop
           network fund       O         table                     years          the savings group; The
                                                                                 savings group that has
                                                                                 been established not less
                                                                                 than 6 months.

     174   Miyazawa           UCD       Grant:        1% for      Max. 5   N/A   To strengthen and support
           Loan               O         Max.          networ      years          the savings group in the
                                        15,000        k                          urban communities
                                        baht/gro      group                      nationwide
                                        up
                                                      2% for                     The savings group that has
                                        150,000       group                      been established not less
                                        baht/                                    than 6 months.
                                        networkg
                                        roup

                                        Loan:
                                        Max.
                                        500,000
                                        baht/gro
                                        up

                                        5,000,00
                                        0 baht/
                                        network
                                        group

38   177   Thais Help         DPW       2,000-        0%          1 year   N/A   Laid-off workers and
           Thais                        4,000                                    unemployed; people
           Vocational                   baht per                                 adversely affected by
           Groups                       person                                   economic conditions
           Project
                                        20,000-                                  whose income is less than
                                        40,000                                   20,000 baht per year. Set
                                        per                                      up own business as a
                                        group                                    group consisting of 5-10
                                                                                 persons

39   179   Occupational       DPW       Up to         0%          5        N/A   Low income individuals
           Assistance                   10.000                    years          who are caring for a child
           Revolving                    Baht                                     or other person, who have
           Fund                                                                  the capacity to repay from
                                                                                 the investment, who are
                                                                                 unemployed, and who
                                                                                 have repaid any other
                                                                                 loans from the DPW

40   181   Revolving          DPW       Up to         0%          1 year   N/A   Women who meet the

       Financial Schemes and Facilities for SMI: Comprehensive Directory                      21
           Fund for Job                 15.000                                   following conditions: are
           Creation for                 Baht                                     members of a group who
           Women                                                                 have taken DPW
                                                                                 vocational training; have
                                                                                 low income and no savings
                                                                                 for investment; intend to
                                                                                 apply their vocational skills
                                                                                 in their communities; agree
                                                                                 to follow the DPW’s loan
                                                                                 conditions; the group has
                                                                                 received an order for their
                                                                                 production

41   183   Loans for          DPW       Up to         0%          5        N/A   Registered disabled
           Self-                        20.000                    years          persons over 15 years old
           Employed                     Baht
           Business
           Investment
           Projects for
           People with
           Disabilities




       Financial Schemes and Facilities for SMI: Comprehensive Directory                       22
1. Introduction

1.1 Background

There are at least 130,000 SMEs in Thailand.1 About 90% of the country’s
factories are SMEs.2 They employ 1.6 million workers, or 50 per cent of the
industrial workforce, according to government statistics.3 These SMEs typically
face operational problems, which make it difficult to start-up and to expand or
develop to reach their full potential. The lack of access to financing is one of the
major problems. Others are the lack of access to the market, a lack of skilled
workers, a lack of access to better technology and equipment, a lack of access
to information and the lack of business management skills.4 SMEs therefore
require generally spoken two types of services: financial services and non-
financial services. The latter are sometimes referred to as “business
development services”. Financial services help existing or would-be
entrepreneurs acquire the means for establishing or expanding a business (e.g.
finance for machinery, production premises, and working capital). In the majority
of cases, these services refer to bank loans or credit made available through
wide-ranging credit schemes.5

This directory is limited to the supply side of financial assistance towards SMEs.
The demand side, i.e. the question if the currently available schemes and
facilities meet the needs and demand of Thailand’s SMEs is not covered. The
directory is structured according to the financial service providers, which have
been identified during the research phase. In case of joint facilities the relevant
information is listed under those organizations where the loan application has to
be submitted. The meaning of “financial assistance” for this directory includes
funds provided for special purposes such as consulting, energy saving,
environmental protection and R&D-measures. However if one of these




1
 See “SET to open capital link for ailing SMEs”, Nation, 02/02/1999. Bangkok Post,
B100bn earmarked for loans, 27.4.2000, indicates that there are 440,000 SMEs in Thailand.
2
 Small business. Firms want tardy banks penalized, Bangkok Post, 12.5.2000. Another
Source mentions 98%: “SET to open capital link for ailing SMEs”, Nation, 02/02/1999.
3
    “SET to open capital link for ailing SMEs”, Nation, 02/02/1999
4
  Micro and Small Enterprise Development and Poverty Alleviation in Thailand Project,
ILO/UNDP, Working Paper No.5, July 1999, S.2
5
   See Micro and Small Enterprise Development and Poverty Alleviation in Thailand
Project, ILO/UNDP, Working Paper No.2, July 1999, S.3. In recent years, new types of
financial services have been offered to MSEs. These include the leasing of equipment, joint
ventures, and special types of subcontracting arrangements.

Financial Schemes and Facilities for SMI: Comprehensive Directory                       23
measures as such is provided without charges directly by a service provider it is
considered a non-financial scheme, which is not listed in this report.


1.2 Definition of SMEs

The Ministry of Industry (MoI) uses the amount of fixed assets and the number
of employees of a company to define it as small or medium. The sector of the
economy in which the company is active is also relevant. Companies engaged
in production (including manufacturing, agriculture and mining) or services are
considered to be medium-sized if their fixed assets are less then 200 Mio. Baht
and their number of employees are below 200. If assets are below 50 Mio. Baht
or employees numbering less than 50 they are classified as small. In the
service, wholesale trade and retail trade there are different classification criteria
for SMEs as summarized in the following table:



                     Number of employees                       Fixed Assets (Million Baht)
                     (persons)

                     Small                Medium               Small          Medium

Production           Not over 50          51-200               Not over 50    >50-200
sector

Service              Not over 50          51-200               Not over 50    >50-200
Sector

Trade Sector         Not over 25          26-50                Not over 50    >50-100
(Wholesale)

Trade Sector         Not over 15          16-30                Not over 30    >30-60
(Retail)



1.3 Financial assistance towards SMEs

The Thai government has been very active since mid-1998 in initiating new
policies and programs in favor of SME development in the form of an SME
promotion bill, a five-year industrial restructuring plan and other initiatives which
are still underway. These new moves are a reflection of the increased
importance attached by the Government to the promotion of small and medium
enterprises for the purpose of creating new jobs and reducing poverty, following
the recent economic crisis. However, efforts to extend new credit to SMEs have
fallen short of targets, despite substantial support from state and private
financial institutions. One problem is that many small and medium-sized
enterprises are in default on past loans, making banks wary of extending new




Financial Schemes and Facilities for SMI: Comprehensive Directory                            24
credit.6 Loan conditions are seen as to strict for firms to meet7. The industry
minister said in a speech, that SMEs assistance was hindered by red tape and
complications in getting state agencies to work together. 8

The access to funding is one of the most important issues, which concerns
small and medium sized companies. SMEs account for more than 90% of the
debtors in the banking system.9 Even if the government tries the best to help
SMEs by enlarging the funds available for SMEs, adding more types of
industries to be eligible for the funds, in practice the financial institutions in
Thailand lend less than 50% of the lending target for SMEs.10 According to a
senior director of the Bank of Thailand's debt-restructuring department, the
existing system of SME promotion is not working yet. Banks are not ready to
lend to SMEs because they are over-burdened with debts. Commercial banks
so far have apparently been reluctant for fears of rising non-performing loans.
Under the existing system, SMEs that have bad loans but still have potential to
grow are eligible to apply for new loans, though they are required to restructure
their debt according to BOT guidelines. Under the guidelines, the debtor
companies must have net assets not exceeding Bt200 million. Their loans will
be limited to Bt20 million each. Local banks in Thailand are lowering targets for
loan growth in 2000 because of the sluggish recovery and limited new
investment in the corporate sector. Achieving previously set targets of 3-4%
lending growth this year would be difficult according to the Bangkok Bank.11

Several hundred million baht loaned to small and medium-scale enterprises
(SMEs) by commercial banks will be completely restructured until the end of
2001 according to the former president of Siam Commercial Bank. About
300.000 SMEs have borrowed 1.55 trillion baht from commercial banks. About
60% of the amount, 900 billion baht have been categorized as non-performing.
However, of this figure, one-third, or 300 billion baht, was considered to be
unrecoverable. Of the remaining 600 billion baht, 200 billion baht has been
restructured and 400 billion baht is being restructured by commercial banks.12

The structure of financial funding sources of SMEs before the financial
crisis



6
    Bangkok Post, June 2000, “Bangkok Bank to increase loans”.
7
 Small business. Firms want tardy banks penalized, Bangkok Post, 12.5.2000. The Bank of
Thailand scheme was particularly mentioned in the article.
8
    Small business. Firms want tardy banks penalized, Bangkok Post, 12.5.2000
9
    SMEs get new Bt10bn credit line, Nation, 26.1.1999
10
     “Bansat Boritat”, Customer magazine of IFCT, Vol.19, Iss.8, March 2000, page 11.
11
     Banks lower targets for growth in loans, Bangkok Post, 5.7.2000
12
     Bangkok Post, „Solution to SME problem loans anticipated next year“, 24.6.00

Financial Schemes and Facilities for SMI: Comprehensive Directory                       25
      Source: “Bansat Boritat”, Customer magazine of IFCT, Vol.19, Iss.8, March
      2000, page 11.

      For the year 2000, the Thai government has set aside 100 billion Bath for loans
      to the country’s small and medium companies.13 This is about the double
      amount compared to 1999. A total of 50 billion bath would be offered through
      six core state financial institutions: the Export-Import Bank of Thailand,
      Industrial Finance Corporation of Thailand, Small Industry Finance Corporation,
      Government Savings Bank, Bank for Agriculture and Agricultural Cooperatives,
      and Small Industry Credit Guarantee Corporation. In addition, Krung Thai Bank,
      Bangkok Bank and Thai Farmers Bank will offer 10 billion bath each. The
      money will help SMEs who want to relocate and upgrade their factories. In
      addition 3.7 billion bath of the state’s venture capital fund has been set aside for
      small and medium businesses.14 However, the program is still relatively small
      given the importance of SMEs in the local economy. The 60 billion stand
      against a total credit from local banks at the amount of 2.4 trillion.15

      Financial Support to SMEs by different service providers

                 1999                                                     2000
                 (Jan-                                                    (Jan-
                 Dec)                                                     Mar)
Financial        Targeted    Approved      Number of     Approval         Targeted   Approved   Number of    Approval
Institution      loan        loan          clients       rate of          loan       loan       clients      rate of
                 amount      amount                      target           amount     amount                  target

1. Credits

BOT              12,000      15,416.40     3,476         128.47           12,000     1,167.38   197          9.73

IFCT             12,000      11,051.21     794           92.09            15,000     1,639.40   163          10.93

EXIM             5,000       6,541.61      352           130.83           7,000      181.44     68           13.25

SIFC             3,000       560.87        141           18.70            6,000      35.90      34           2.91

BAAC             2,000       1,184.00      3,633         59.20            4,000      1,025.00   1,870        25.63




      13
        Bangkok Post, B100bn earmarked for loans, 27.4.2000. See also “More state equity funds
      could help small firms”, Bangkok Post, 30.6.2000 confirming that State financial
      institutions and six local banks have pledged to extend loans of more than 100 billion baht
      this year to SMEs. Another article, Bangkok Post, June 2000, “Bangkok Bank to increase
      loans”, mentions that the government’s financial budget for SMEs in 2000 is only 60
      million Baht.
      14
           Bangkok Post, B100bn earmarked for loans, 27.4.2000.
      15
           Bangkok Post, June 2000, “Bangkok Bank to increase loans”.

      Financial Schemes and Facilities for SMI: Comprehensive Directory                                 26
GSB             1,000        674.60        2,211         67.46            1,300    253.56     672          19.51

2. Credit
Guarantee

SICGC           500          77.35         29            15.47            4,000    91.96      25           2.29

3. Joint
Projects

KTB             4,500        1,281.88      111           28.49            5,500    245.21     22           4.46

Total           40,000       36,788        10,747        91.97            54,800   5,523.97   3,051        10.08

      Source: MoI / www.sfac.or.th Website



      1.4 SME Policy Issues

      The 1997 Asian financial crisis shocked and disrupted the economic and social
      patterns of growth and development in Thailand and forced a fundamental
      review of development policies and programs. This included a greater
      recognition of the significant role small and medium-enterprises (SMEs) can
      play in achieving national development goals. The formulation of an SME
      Promotion Bill and the current development of a new Master Plan within the
      Department of Industrial Promotion (DIP) illustrate the desire of the Royal Thai
      Government to maximize the potential of this sector. These developments are
      occurring amidst a rapid process of policy reform and economic restructuring
      that has affected all sectors of the economy, most notably the financial sector.16

      The Government now fully recognizes the importance of SMEs in generating
      employment. It has enacted a series of ongoing measures to support SMEs.
      These include, among others, arranging credit for SMEs through the specialized
      financial institutions and the Bank of Thailand, as well as establishing a special
      stock market for SMEs. To further enhance the long-term effectiveness of SME
      financing, the Cabinet has approved the restructuring of two critical specialized
      financial institutions, the Small Industry Credit Guarantee Corporation and the
      Small Industry Finance Corporation, as well as the establishment of Financial
      Advisory Centers for SMEs. The establishment of the Thailand Recovery Fund
      and the Fund for Venture Capital Investment in SMEs form part of the equity
      investment measures initiated by the government.




      16
        Micro and Small Enterprise Development and Poverty Alleviation in Thailand Project,
      ILO/UNDP, Working Paper No.3, July 1999, S.1

      Financial Schemes and Facilities for SMI: Comprehensive Directory                               27
In February 2000 the SME Promotion Act came into effect. It regulates the set
up of a SME Promotion Committee, an SME Promotion Office, an SME
Promotion Fund and an SME Promotion Action Plan. The SME Promotion
Committee is chaired by the Prime Minister and consisting of 25 members of
whom at least 6 must be representatives from private-sector organizations. Key
responsibilities include recommending “SME Promotion Policy and Plan” to the
ministerial cabinet, defining SME, submitting “SME Status Report” to the cabinet
and the public, recommending incentives, new laws, or legislative amendments
to the authorized agencies and supervising concerned agencies on the
implementation of the SME Promotion Action Plan. The SME Promotion Office
has a status of a “special executive agency”, recommends the definition of SME
and target groups for promotion to the SME Promotion Committee, co-ordinates
the formulation of the SME Promotion Action Plan, prepares the SME Status
Report, manages the SME Promotion Fund and is empowered to carry out
lending, investing, holding shares, and assisting SMEs financially. The
Department of Industrial Promotion (DIP) will act on behalf of the Office during
the interim period.

Industrial Sectors Grouped By Importance and Urgency For SME Development:

         SME development is of utmost importance and urgency in the
         following sectors: Food & Animal Feeds, Textile & Garment, Plastics
         Products, Electrical & Electronic Appliance, and Auto & Auto parts.

         SME development is of moderate importance and some schemes /
         projects should be undertaken in the following sectors: Leather Products
         & Footwear, Wood Products & Furniture, Rubber & Rubber Products,
         Ceramics & Glass, and Gems & Jewelry.

         SME development is not of immediate urgency, but some SME
         promotion activities should be initiated in the following sectors:
         Chemicals & Pharmaceuticals, Iron & Steel, and Petrochemicals.

The Strategies for Incubation & Strengthening of Small & Medium-scale
Industries under the 5-Year Industrial Restructuring Plan 1998-2002 include
the provision of incentives and sources of funds as follows:

        Provide sources of long-term, low-interest loans. Encourage commercial
        banks to increase long-term loans to SMEs, with endorsement and
        assurance of the potential of each business sector through state policy
        and assessment.

        Introduce support measures for the relocation of SMEs out of congested
        towns and cities to more suitable locations, to facilitate future
        expansions, convenient transportation, and lower operational costs.
        Provide tax exemption on income from the sale of land and original
        assets in order to set up factory at the new location.

        Provide venture capitals for joint investment by the industry finance
        corporations and semi-state agencies in SMEs with high technologies, or


Financial Schemes and Facilities for SMI: Comprehensive Directory              28
        production of target products, with an aim to enlist in the Stock Exchange
        of Thailand when the enterprise has developed to a certain level.

The Strategies under the SME Development Master Plan with Particular
Reference to the Manufacturing Sector are as follows:

    1. Upgrade Technological & Management Capabilities of SMEs Strategy

    2. Develop Entrepreneurs and Human Resource of SMEs Strategy

    3. Enhance SMEs' Access to Markets Strategy

    4. Strengthen Financial Support System for SMEs Strategy

    5. Provide Conducive Business Environment Strategy

    6. Develop Micro-Enterprises and Community Enterprises Strategy

    7. Develop Networking of SMEs and Clusters



The following table gives a summary of Measures & Relevant Agencies of
Strategy   4:   Strengthen    Financial Support  System    for SMEs:


Measures                                            Relevant Agencies

4.1 Expand & develop credit
guarantee system for SMEs. 4.2
Develop existing specialized financial
Institution into an SME bank.                       Ministry of Finance
Aim to: Enable commercially-viable
SMEs to obtain adequate funding and                 Small Industry Credit Guarantee
other financial services more easily;               Corporation
Reduce reliance on collateral
By: Recapitalizing SIFC and SICGC;                  Small Industry Finance Corporation
Setting up branches in the provinces;
Enhancing credit risk assessment
capabilities; Linking up with enterprise
diagnosis & business consultancy
systems.

4.3 Establish Venture Capital Fund for
SMEs
Aim to: Encourage investments in                    Ministry of Finance
strategic SMEs; Enable strengthened                 Ministry of Industry
SMEs to get listed in the capital
market.

4.4 Establish SME Promotion Fund.
                                                    Ministry of Industry
Aim to: Facilitate expansion of

Financial Schemes and Facilities for SMI: Comprehensive Directory                        29
effective SME projects under
government & non-government                         SME Promotion Office
organizations; Encourage & support
groups/associations of SMEs to invest
in common facilities & joint activities.

4.5 Strengthen financial advisory
services for SMEs
Aim to: Enable SMEs to obtain                       Specialized financial institutions
pertinent advice from local service
centers regarding suitable sources of               Federation of Thai Industries
funds; Enable SMEs to obtain
pertinent advice from financial                     Chambers of Commerce
institutions regarding business plan
development.




Financial Schemes and Facilities for SMI: Comprehensive Directory                        30
2. Bank of Thailand (BOT)

2.1 Introduction

The Bank of Thailand Act was promulgated in 1942 decreeing the Bank of
Thailand a juristic person responsible for all central banking activities. The Bank
started operations on December 10, 1942. According to the Bank of Thailand
Act, the Minister of Finance is empowered to oversee the overall affairs of the
Bank of Thailand with the general control and direction being entrusted to a
Court of Directors which comprises the Governor and Deputy Governors,
appointed by His Majesty the King, as Chairman and Vice Chairmen
respectively and at least five other members appointed by the Cabinet.

As a central bank, the Bank of Thailand assumes the following responsibilities:

        Formulate monetary policy to maintain monetary stability

        Supervise financial institutions to ensure that they are secure and
        supportive of economic development

        Act as banker to the Government and recommend economic policy to the
        government

        Act as banker to financial institutions

        Manage the international reserves

        Print and issue bank notes.

2.2 Financial assistance for small- and medium-sized enterprises

There are a number of schemes under which the Bank of Thailand provides
financial assistance towards SMEs. However, this assistance is not provided
directly by BOT but through commercial banks and governmental financial
institutions. Therefore, the schemes are not presented in detail here. However,
due to its outstanding role, the BOT’s regulation on buying promissory notes
that occur from the business activity of Small and Medium Enterprises (SMEs)
and the BOT’s financial assistance to SMIs who obtained the Investment
Promotion Certificate of the Board of Investment (BoI) in the provincial area (BoI
Zone 3) will be presented here as an exception.




Financial Schemes and Facilities for SMI: Comprehensive Directory                31
                           Regulation on buying promissory notes that occur from
                           the business activity of Small and Medium Enterprises
                           (SMEs) from April 7, 2000

Objectives                 To provide working capital support for Small and Medium
                           Enterprises (SMEs) located in central and provincial areas in
                           order to encourage broad-based economic development.

Methods and                The BOT will purchase promissory notes issued by credit-
Procedures                 worthy SMEs through commercial banks, the IFCT, the Small
                           Industry Finance Corporation (SIFC), finance companies or
                           finance and securities companies.

Eligible Enterprises       Eligible SMEs are manufacturing industries, handicraft and
                           household industries, services, wholesale and retail trades,
                           and sub-contracting businesses. The BOT reserves the right
                           to withhold financial assistance to any enterprises, as it
                           deems appropriate.

Size of SMEs and                                Million Baht
Amount of
Refinancing                Type of              Small Enterprise          Medium Enterprise
                           Business
                                                Size           Amount     Size        Amount
                                                (Fixed         of         (Fixed      of
                                                Assets         Refinan-   Assets      Refinan-
                                                including      cing       including   cing
                                                land                      land
                                                value)                    value)

                           Manufacturing < 50                  < 15       < 200       < 60
                           (Incl. sub-
                           contracting)


                           Services             < 50           <5         < 200       < 10




                           Wholesale            < 50           <5         < 100       < 10
                           trade



                           Retail trade         < 30           <3         < 60        <6




 Financial Schemes and Facilities for SMI: Comprehensive Directory                           32
Amount of                  The BOT will purchase promissory notes at 60% of the total
Refinancing                value of promissory notes; the remainder 40% is to be
                           contributed by financial institutions through which the
                           promissory notes are sold.

Minimum Value of           10,000 Baht
P/N

Maturity of P/N            Manufacturing (Including sub-contracting): not exceeding
                           120 days from the day P/N is purchased by the BOT.
                           Services, wholesale and retail trade: not exceeding 60 days
                           from the day P/N is purchased by the BOT.

Interest Rate              The BOT charges financial institutions 3% p.a. for the
                           amount purchased which is 60% of the amount of the
                           promissory notes. Commercial banks are permitted to charge
                           SMEs at the rate not more than each bank's MLR minus 1%
                           p.a. Other financial institutions are permitted to charge the
                           average MLR of the 4 largest banks (i.e. the Bangkok Bank,
                           plc., the Krung Thai Bank, Plc., the Thai Farmers Bank, Plc.
                           and the Siam Commercial Bank, Plc.) minus 1% p.a..

Duration of financial      5 years at the maximum.
assistance

Penalty                    6.5% p.a. in respect of amount and duration involved.



                         Financial Assistance to SMIs who obtained the
                         Investment Promotion Certificate of the Board of
                         Investment (BoI) in the provincial area (BoI Zone 3)

Objectives               To promote income distribution and development to provincial
                         areas by encouraging agricultural or industrial investment in
                         the provinces.

Method                   The BOT will support small and medium size enterprises in
                         rural area that obtained the investment promotion certificate
                         from the Board of Investment by way of purchasing
                         promissory notes through commercial banks, the IFCT, the
                         SIFC, finance companies or finance and securities companies
                         either for fixed assets investment or working capital.

Eligible Investors       Business enterprises that receive the investment promotion
                         certificate in zone 3 from the Board of Investment under the
                         BOI Notification No. 1/2536 dated 9th April B.E. 2536 with the
                         total investment amount (excluding land cost and working
                         capital) of not more than Baht 200 million.


 Financial Schemes and Facilities for SMI: Comprehensive Directory                  33
Other Documents          Evidence of expenditure on fixed assets or working capital.
Required

P/N Buying Rate          The BOT will purchase the promissory notes at 40% of the
                         total value of promissory notes; financial institutions through
                         which the promissory notes are sold contribute the remainder
                         60%.

Maturity of P/N          The maturity date for each promissory note is as follows:
                         1. Promissory notes arising from the investment in fixed
                         assets: The maximum maturity date of each promissory note
                         must not exceed 5 years starting from the issuance of the first
                         promissory notes. Upon approval, investors must issue the
                         promissory notes for cash disbursement within 2 years.
                         2. Promissory notes arising from working capital: The
                         maximum maturity date of each promissory note must not
                         exceed 120 days. The BOT will purchase promissory notes
                         continuously for a maximum period of 5 years starting from
                         the issuance of the first promissory notes.

Interest Rate            The BOT will charge financial institutions 3% p.a. for the
                         amount purchased which is 40% of the amount of the
                         promissory notes. Commercial banks are permitted to charge
                         issuers at the rate of not more than each bank's MOR*/MLR
                         minus 2% p.a. Other financial institutions are permitted to
                         charge the average MOR/MLR of the 4 largest banks (i.e. the
                         Bangkok Bank, Plc., the Krung Thai Bank, Plc., the Thai
                         Farmers Bank, Plc., and the Siam Commercial Bank, Plc.)
                         minus 2% p.a.

Penalty                  4% p.a. in respect of amount and duration involved.

Duration of              1. Application for financial assistance must be submitted
Financial                before the end of the year 2000.
Assistance               2. The maximum period of financial assistance must not
                         exceed 5 years.




 Financial Schemes and Facilities for SMI: Comprehensive Directory                     34
3. The Department of Industrial Promotion (DIP)

3.1 Introduction

The Department of Industrial Promotion (DIP) under the Ministry of Industry
(MoI) is currently the main government agency responsible for promoting small
and medium scale enterprises, mainly those in the production sector, through
the provision of training and other business development services, as well as
with limited financial services. Direct responsibility of the Department of
Industrial Promotion is to encourage establishment of all types of essential
industries in Thailand, to increase efficiency of industries, and to promote
regional industrialization. The Vision of DIP is “To be the core organization in
promoting, supporting, and developing the capabilities of small and medium-
scale industries to compete in the world trade market arena”.17

The Organization of DIP includes besides the Office of the Secretary the
Bureau of Industrial Promotion Policy and Planning, Bureau of Industrial
Promotion Administration, Bureau of Industrial Enterprise Development, Bureau
of Cottage and Handicraft Industries Development, Bureau of Industrial Sector
Development, Bureau of Supporting Industries Development and Industrial
Promotion Centers in 11 Regions. The Regional Industrial Promotion Centers
are located in Chiang Mai, Pitsanuloke, Pichit, Udon-Thani, Khonkean, Nakorn
Ratchasrima, Buriram, Supanburi, Chonburi, Surat Thani and Songkla.

The clientele of the DIP is made up mostly of “formal” small and medium seized
enterprises in the manufacturing sector. It has fewer dealings with enterprises in
the trade and services sectors, although these sectors may be included more in
the future. The clientele is approximately divided as follows: 40 % of owners of
cottage industries and handicrafts production units (including probably some
micro enterprises); and 60% of the personnel of SMEs, including management
staff, supervisors and workers. Although the DIP does not apply strict rules on
selecting its clients, it would seem that there are few micro enterprises.
Furthermore, most DIP clients are formal sector enterprises, which have been
duly registered with the relevant authorities.

In 1998 some 10.000 clients of DIP have benefited from skills and business
trainings (250 to 300 enterprises) provided mostly by the Bureau of Cottage and
Handicraft Industries Development; consulting services have been provided to a
few hundred enterprises (less than 1000).18 The total DIP budget in 1998
amounted to approximately 700 million Baht with 50% covering fixed costs and
the rest being used for projects.




17
     www.dip.or.th
18
  Micro and Small Enterprise Development and Poverty Alleviation in Thailand Project,
ILO/UNDP, Working Paper No.1, July 1999, S.24

Financial Schemes and Facilities for SMI: Comprehensive Directory                 35
DIP’s three main missions are:

    1. To recommend policies and strategies to develop and enhance the
       capabilities of small and medium scale industries in accordance with the
       country's social and economic development and changes in the world
       economy.

    2. To cultivate and develop the capability of small and medium-scale
       industries in compliance with the government policies.

    3. To develop skilled personnel for the industrial sector, especially in
       technology and management, in order to upgrade productivity according
       to international standards.

DIP has three major target groups as follows:

    1. Small and medium-scale industries including cottage industries and
       handicraft

    2. Rural industries

    3. Personnel of public and private organizations

The main policy on SMEs promotion of the Department of Industrial Promotion
is threefold:

1. Upgrade the capabilities and efficiency of Small and Medium Scale
Industries:

         To develop skilled personnel for the industrial sector, especially in
         technology and management

         To strengthen the medium level of small industry particularly in standard
         quality of production of finished products in order to support linkage and
         subcontracting activities

         To support consultancy service activities as well as the information on
         production, technology, marketing, finance and management in order to
         solve the economic crisis

2. Support and promote the decentralization of SMEs to rural areas and
communities

         To support NGO entrepreneurs in rural communities with emphasis on
         the accelerated implementation of the Promotion of Rural Industrial
         Development Project

         To promote subcontracting activities from central factories to rural and
         community areas

3. Develop and strengthen the DIP’s capabilities and efficiency of SMEs
promotion

Financial Schemes and Facilities for SMI: Comprehensive Directory                   36
         To accelerate the SMEs development plan

         To adjust and improve the work system and coordination among various
         agencies in order to be more efficient and effective

         To develop the knowledge and capabilities of DIP personnel to work in a
         more aggressive way for industrial promotion and development



3.2 Financial assistance for small and medium sized enterprises

The DIP provides loans from a revolving fund directly operated by the
Department, the terms of which vary, depending on the type of loan. The loan
size varies from 50.000 Baht to 500.000 Baht; the interest rate ranges between
6 and 8 percent; and guarantees include securities and/or third party warranty.
Most of the loans are provided by the Bureau of Cottage and Handicraft
Industries Development.

Consultancy Fund & Training Fund. The concept is to encourage new
investment and to improve efficiency in business expansion of regional SMI.
DIP also launched the SME consultancy fund aiming at granting non-profit
financial support for SMEs Enterprises seeking for consolatory services from
external consultants. DIP will supply 30,000 baht for investigators and project
analysis and 50% on consultancy service, but do not over 200,000 baht per an
enterprise.

Revolving Fund. The Department of Industrial Promotion offers low-interest
loans for use as revolving funds to operators of cottage industries and Thai
handicraft. The Department of Industrial Promotion (DIP) also offers a variety of
non-services to industrial entrepreneurs as well as the general public. These
are Training and Seminars, Marketing Advise and Assistance, Testing on both
raw materials and finished products, General Information on investment
opportunities related to handicrafts and manufacturing.

The Bureau of Cottage and Handicraft Industries Development absorbs and
uses approximately 40% of the total DIP budget. The Bureau works mostly
outside Bangkok in the rural areas and the provinces. Initially the Bureau was
only involved in skill training. Subsequently it took up two additional functions –
provision of financial support and promoting the establishment of small
enterprise associations/groups. The Bureau also works through industrial
cooperatives, especially with a view to promoting subcontracting.

3.3 Joint facilities with selected commercial and state owned banks

The Ministry of Industry offers Joint facilities for SMEs with Krung Thai Bank,
Bangkok Bank, EXIM Bank, BOT and IFCT. As the applications for those loans
have to be submitted at the latter institutions there description is to be found in
the relevant chapters.

Three particular facilities have been identified:


Financial Schemes and Facilities for SMI: Comprehensive Directory                37
           MoI joint facility with BOT, IFCT and EXIM Bank (see chapter EXIM
           Bank)

           MoI joint facility with Bangkok Bank

           MoI joint facility with Krung Thai Bank



   3.4 Specific loans for SMEs


                                           Revolving fund for operators of cottage industries
Name of scheme/facility
                                           and Thai handicraft


Name in Thai language


Running number in this report              1

                                           Bureau of Cottage and Handicraft Industries,
Name of service provider
                                           Department of Industrial Promotion

                                           Head Office Bangkok, 11 Regional Offices, Provincial
Coverage
                                           Office in every province

                                           The Department of Industrial Promotion offers low-
                                           interest loans for use as revolving funds to operators of
                                           cottage industries and Thai handicraft, in both central
                                           and regional areas, particularly to those who have
                                           returned home after working in the cities. The idea is to
                                           help solve the issue of labor migration from rural areas
                                           to the cities. It was conceived by the Cabinet on October
Background                                 27, 1981, and is now known as "the Revolving Fund in
                                           Support of Cottage Industries and Thai handicraft".

                                           To provide an opportunity for cottage industry and Thai
                                           handicraft operators to obtain funding required in
                                           acquiring raw materials, equipment and labor, in making
                                           product distribution arrangements, or even in expanding
                                           their existing operations.

Basic characteristics

Total financial volume earmarked
                                 240 million Baht
for this scheme/facility

Total financial volume of the              N/A
delivering organization’s credit


   Financial Schemes and Facilities for SMI: Comprehensive Directory                      38
portfolio


Time limit of the scheme/facility           N/A

Total volume disbursed to date              N/A

Number and type of clients                  N/A
serviced to date

Conditions

                                            Those who have previously received training from or
                                            have been assisted by DIP in the areas of marketing,
                                            product development, production process development,
                                            or business practices, etc. OR any individual, group or
                                            juristic person engaged in a cottage industry or Thai
Eligibility
                                            handicraft whose business is considered feasible.

                                            - Has fixed assets, excluding land, of no more than Baht
                                            10 million in value.
                                            - Employs no more than 50 workers.

Loan amount (minimum and                    Loans, for production purposes, limited to Baht 500,000
maximum)                                    each.

Currency                                    Thai Baht

                                            Annual interest rates at 6% - 8% depending on loan
                                            amount as follows:

                                            Up to 50,000 Baht

                                            8 % p.a.

                                            50,000 < & >= 200,000 Baht

Interest rate                               8 % p.a.

                                            200,000 < & >= 500,000 Baht

                                            8 % p.a.

                                            Up to 500,000 Baht for Sor-Or-Chor (Rural Industrial
                                            Development Promotion) projects

                                            6 % p.a.

Disbursement schedule                       According to project requirements and phases

Maximum payback and grace                   Payback Period depending on loan amount as follows:

    Financial Schemes and Facilities for SMI: Comprehensive Directory                      39
period
                                           Up to 50,000 Baht

                                           2 years

                                           50,000 < & >= 200,000 Baht

                                           6 years

                                           200,000 < & >= 500,000 Baht

                                           10 years

                                           Up to 500,000 Baht for Sor-Or-Chor (Rural Industrial
                                           Development Promotion) projects

                                           5 - 10 years



                                           Maximum grace period depending on loan amount as
                                           follows:

                                           Up to 50,000 Baht

                                           4 months

                                           50,000 < & >= 200,000 Baht

                                           12 months

                                           200,000 < & >= 500,000 Baht

                                           12 months

                                           Up to 500,000 Baht for Sor-Or-Chor (Rural Industrial
                                           Development Promotion) projects

                                           3 - 12 months

                                           Interest and principal to be paid monthly on the calendar
Repayment schedule
                                           day that the lending contract was signed

                                           Individual guarantors are sufficient in case of Baht
                                           50,000 loan or less.

                                           Guarantor requirements:
Collateral and equity
requirements                               Size of loan Up to 20,000 Baht:

                                           No. of state officials (Monthly salary no less than 6,000
                                           Baht): 1


   Financial Schemes and Facilities for SMI: Comprehensive Directory                       40
                                           No. of creditable individuals (Monthly income no less
                                           than 12,000 baht): 1

                                           Loans between 20,000 < X Baht <= 50,000

                                           No. of state officials (Monthly salary no less than 6,000
                                           Baht): 2

                                           No. of creditable individuals (Monthly income no less
                                           than 12,000 baht): 2



                                           STATE OFFICIALS: public officials, permanent state
                                           employees or state agency officials
                                           CREDITABLE INDIVIDUALS: company employees or
                                           freelances possessing an accountable amount of assets



                                           Collateral (required for loans over 50.000 Baht):

                                           1. Land or land & building with a title deed or Nor-Sor 3
                                           Gor under one's own or another person's name
                                           2. Registered machinery
                                           3. Bank's guarantee

                                           Group 1,2,3

                                           Copy of House Certificate

                                           Documents about a name change If Any

                                           TAX ID Card

                                           Order Form of Products Manufactured

                                           Photograph or Product Sample
Application forms, supporting
documents, other input                     Map of Manufacturing Sites or House
necessary
                                           Group 4

                                           As Group 1,2,3

                                           District or Government Agencies' Certificate of
                                           Occupational Groups.

                                           Group 5

                                           As Group 1,2,3


   Financial Schemes and Facilities for SMI: Comprehensive Directory                         41
                                           Legal Entity Registration Certificate

                                           Power of Attorney

                                           Group 6

                                           Individual Person Use As Group 1,2,3

                                           Legal Entities Use As Group 5

                                           Depending on the loan amount

Average processing time                    Under 100.000 Baht about 1,5 months

                                           Over 100.000 Baht about 2 months

                                           Financial Department of Handicraft Promotion Division
Reporting and monitoring                   Is Responsible of Monitoring Debtors' repayment. In
requirements                               Case of Having Any Problem, Handicraft Promotion
                                           Division's Inspector Will Be Send for Special Monitoring

                                           Office for the Development of Cottage Industries and
                                           Handicraft, Department of Industrial Promotion

                                           Khun Raksak
Contact for further details
                                           DIP Building, Rama VI Road, Ratchatevee

                                           Bangkok 10400.

                                           Tel. 202-4475



                                           Consultancy fund in support of small-scale
Name of scheme/facility
                                           industries in regional areas



Name in Thai language



Running number in this report              2

Name of service provider                   Department of Industrial Promotion

                                           Head Office Bangkok, 11 Regional Offices, Provincial
Coverage
                                           Office in every province

                                           This is one of the main services offered by the
Background
                                           Department of Industrial Promotion. The concept is to

   Financial Schemes and Facilities for SMI: Comprehensive Directory                     42
                                            encourage new investment and to improve efficiency in
                                            business expansion of regional SMIs. DIP received
                                            financial assistance from the Canadian International
                                            Development Agency (CIDA) through a consultancy
                                            fund under the Small Scale Industry Development
                                            project (SSID) to put the concept into being initially in
                                            the northeast of Thailand. Its criteria thus follow those of
                                            the assisting fund. DIP now manages its own
                                            consultancy fund with an annual budget allocation from
                                            the Thai government

                                            The consultancy fund is provided for SMIs with no
                                            financial obligations. It is intended to be used for hiring
                                            outside experts to assist in problem-solving, identifying
                                            opportunities or studying investment feasibilities.

Basic characteristics

Total financial volume earmarked 15.5 million baht for the period from October 1,1999 to
for this scheme/facility         September 30, 2000.

Total financial volume of the
delivering organization’s credit            N/A
portfolio

Time limit of the scheme/facility           Unlimited

Total volume disbursed to date              N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            EXAMPLES OF PROJECTS ENTITLED TO THE FUND
                                            1. Feasibility study for production expansion/relocation
                                            or new investment
                                            2. Marketing feasibility study for investment project or
                                            marketing research
                                            3. Production feasibility study for investment project or
                                            research on supply of industrial raw materials
                                            4. Study to improve production processes or factory
Eligibility
                                            layout
                                            5. Study to improve product quality
                                            6. Implementation of ISO9000 and ISO14000 standard
                                            systems
                                            7. Study to improve organizational structure and
                                            management, or production of management handbook
                                            8. Study to solve personnel-related problems and to
                                            improve personnel aspect of the business

    Financial Schemes and Facilities for SMI: Comprehensive Directory                         43
                                            9. Set-up of documented accounting system
                                            10. Set-up of computerized accounting system
                                            11. Other projects aimed at enhancing business
                                            efficiency

                                            NOTE The following project types are not entitled to
                                            assistance:
                                            * services not intended for developing or improving
                                            business efficiency, or any part of normal business
                                            practice e.g. detailed construction plan, tax-filing, etc.
                                            * normal practice, facing no technical difficulties of any
                                            previously-assisted business which is seeking aid only
                                            to lessen its own financial burden

Loan amount (minimum and                    Maximum allowed: Baht 400,000/factory annually
maximum)
                                            Fund coverage: 50% of total expenses (consulting fee)

Currency                                    Thai Baht

Interest rate                               Grant

Disbursement schedule                       As required by the consulting contract

Maximum loan and grace period               Not applicable

Repayment schedule                          Not applicable

Collateral and equity
                                            Not required
requirements

                                            Very simple approving procedures. The entrepreneur
Application forms, supporting               describes his problems to DIP staff, which then prepares
documents, other input                      terms of reference for the consultancy. Bids are made
necessary                                   by two or three consultants, and the lowest bidder is
                                            selected.

Average processing time                     Depending on the individual case, around 1 month

Reporting and monitoring
                                            No reporting required but the DIP will monitor the project
requirements

                                            Office for the Industry Business Development,
                                            Department of Industrial Promotion

Contact for further details                 Khun Bundjuea, Khun Gumet

                                            DIP Building, Rama VI Road, Ratchatevee

                                            Bangkok 10400. Tel. 202-4559, 202-4565


    Financial Schemes and Facilities for SMI: Comprehensive Directory                        44
                                           Training fund in support of industrial personnel
Name of scheme/facility
                                           development



Name in Thai language



Running number in this report              3

Name of service provider                   Department of Industrial Promotion

                                           Head Office Bangkok, 11 Regional Offices, Provincial
Coverage
                                           Office in every province

                                           Resources which play a major role in the development
                                           of any SMI are technology, funding, information and,
                                           most importantly, its people. This is true for any
                                           organization since its personnel control and manages
                                           other kinds of resources to serve the organization to the
                                           fullest extent. Particularly in the case of SMIs, which
                                           cannot compete with large-scale industries in terms of
                                           other resources, its personnel are the only resources
                                           that can build up value on their own while machinery
                                           and other equipment will depreciate over the years. In
                                           line with the 8th National Economic and Social
                                           Development Plan, which places emphasis on industrial
                                           development through extensive personnel training,
                                           together with the current economic drawbacks, the
                                           Government has called for an urgent industrial
                                           personnel development program. For such a program to
                                           succeed, the private sector is required to assume a
Background
                                           more active role in providing training services, whether
                                           to assist or to substitute the role of the public sector.
                                           Inevitably, incentives must be attractive enough to
                                           induce the private sector to cooperate while costs
                                           incurred by the state must not be higher than what
                                           would be incurred with the state being the sole player.
                                           The Department of Industrial Promotion has responded
                                           to the above policy by adopting a consultancy hiring
                                           system for the training processes. The arrangement
                                           makes it possible to organize both by-session and by-
                                           membership training. Expenses are subsidized partly by
                                           the state and the balance is made up for by training-
                                           attending fees, which otherwise would have been
                                           higher.

                                           The training fund is provided for SMIs with no financial
                                           obligations. It is intended to be used to:

   Financial Schemes and Facilities for SMI: Comprehensive Directory                      45
                                            1. Ensure a continual and integrated development
                                            program for industrial personnel.
                                            2. Lessen financial burden regarding training of these
                                            industries while remaining within acceptable limits.
                                            3. Prepare these industries for an economic recovery.

Basic characteristics

Total financial volume earmarked Budget for the period of October 1999- 30 September
for this scheme/facility         2000 is 10 million Baht.

Total financial volume of the
delivering organization’s credit            N/A
portfolio

Time limit of the scheme/facility           Unlimited

Total volume disbursed to date              N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            1. An SMI of no more than 200 employees and
                                            investment capital no more than Baht 50 million
                                            2. Located in all the provinces except Bangkok,
Eligibility                                 Nonthaburi, Pathumthani, Samut Prakarn, Samut
                                            Sakorn and Nakorn Pathom
                                            3. (Applicable to manufacturing industries) must be
                                            operated under the 1992 Factory Act

Loan amount (minimum and
                                            No minimum and maximum
maximum)

Currency                                    Thai Baht

Interest rate                               Grant

Disbursement schedule                       Depending on the project needs.

Maximum loan and grace period               Not applicable

Repayment schedule                          Not applicable

Collateral and equity
                                            Not required
requirements

Application forms, supporting
                                            Contact DIP for details
documents, other input

    Financial Schemes and Facilities for SMI: Comprehensive Directory                     46
necessary


Average processing time                    Depending on the individual case, around 1 month

Reporting and monitoring
                                           No reporting required but the DIP will monitor the project
requirements

                                           Office for the Industry Business Development,
                                           Department of Industrial Promotion

                                           Khun Narymon
Contact for further details
                                           DIP Building, Rama VI Road, Ratchatevee

                                           Bangkok 10400.

                                           Tel. 202-4599



Name of scheme/facility                    SMEs Consultancy Fund Project

Name in Thai language                                                        SMEs
Running number in this report              4

Name of service provider                   Department of Industrial Development

                                           Headquarter in Bangkok plus 11 Regional Industrial
Coverage
                                           Promotion Centers

                                           To offer SME Investors Support Money to Hire
Background                                 Consultants to Develop Their Enterprises

                                           To Develop SMEs Entrepreneurs' Capability.

Basic characteristics

Total financial volume earmarked
                                 10 million Baht for budget year Oct 1999- Sep 2000
for this scheme/facility

Total financial volume of the
delivering organization’s credit           N/A
portfolio

Time limit of the scheme/facility          Unlimited

Total volume disbursed to date             N/A



   Financial Schemes and Facilities for SMI: Comprehensive Directory                       47
Number and type of clients
                                            N/A
serviced to date

Conditions

                                            SMEs Entrepreneurs with Total Fixed Assets under 200
                                            Million Baht.

Eligibility                                 Must Be Operated under The 1992 Factory
                                            Act(Applicable to Manufacturing Industries)

                                            More Than 51% of Thai Shareholder

                                            Problem Investigation and Analysis Fee

                                            DIP Supplies 30,000 Baht Grants with out No Financial
                                            Obligations, Each SMEs Entrepreneurs pays 5,000 baht
                                            for Each Investigation
Loan amount (minimum and
maximum)                                    Consultancy Services

                                            DIP Grants 50% No Financial Obligations
                                            Replenishment of Total Consultancy Fee, but do not
                                            exceed 200,000 baht per an enterprise per annum.

Currency                                    Thai Baht

Interest rate                               Grant

Disbursement schedule                       Depending on the project needs.

Maximum loan and grace period               Not applicable

Repayment schedule                          Not applicable

Collateral and equity
                                            Not required
requirements

Application forms, supporting
documents, other input                      Contact DIP for details
necessary

Average processing time                     Depending on the individual case, around 1 month

Reporting and monitoring
                                            No reporting required but the DIP will monitor the project
requirements

                                            Office for the Industry Business Development,
Contact for further details
                                            Department of Industrial Promotion


    Financial Schemes and Facilities for SMI: Comprehensive Directory                       48
                                           Khun Narymon

                                           DIP Building, Rama VI Road, Ratchatevee

                                           Bangkok 10400.

                                           Tel. 202-4599



                                      Rural Industrial Development Support Program (Sor-Or-
Name of scheme/facility
                                      Chor)

Name in Thai language                                                            (    .)
Running number in this
                                      5
report

Name of service provider              Department of Industrial Promotion

                                      Head Office Bangkok, 11 Regional Offices, Provincial Office
Coverage
                                      in every province




   Financial Schemes and Facilities for SMI: Comprehensive Directory                       49
                                      Attempts to develop the country have resulted in continual
                                      growths of the nation’s economy. Unfortunately, there are
                                      also disadvantages, both social and environmental: wider
                                      gaps between income distribution groups, worn-out natural
                                      resources and environment, confusions in the society, all of
                                      which are attributable to the lower quality of life.

                                      The Department of Industrial Promotion has established the
                                      Rural Industrial Development Support Program (Sor-Or-
                                      Chor) in an attempt to help lessen the problems mentioned
                                      above. Groups of locals in rural areas are brought to realize
                                      that, by engaging in an industry, they can all help towards
                                      strengthening their community’s economy. The program is in
                                      accordance with the 8th National Economic and Social
                                      Development Plan and the Government’s policy to establish
                                      more prosperity in the regional and rural areas.

                                      To encourage the establishment of an industry within a
                                      community in the form of community industry in which its
                                      locals participate in managing the operation and jointly
                                      benefit from it, using the community market as a place of
                                      transactions.

                                      To encourage private businesses to relocate their production
Background                            units to rural areas in the form of a 3-way coordination
                                      between state agencies, private businesses and local
                                      groups/local organizations, with support from non-
                                      governmental organizations (NGO) under certain
                                      circumstances to help towards setting up production units or
                                      community industries more rapidly and more extensively

                                      Benefits:

                                                Lower expansion investment

                                                Lower labor costs and thus lower production costs
                                                (labor costs can be kept low since employment is
                                                within the industry’s proximity)

                                                Cost-savings in personnel development

                                                Favorable loan arrangements which facilitate private
                                                businesses to relocate their production to rural areas

                                                Morale- and ego-boosting on part of employees to be
                                                involved in development of their own communities

                                                Good reputation and positive image for organization
                                                to be involved in development of society and nation


   Financial Schemes and Facilities for SMI: Comprehensive Directory                        50
Basic characteristics

Total financial volume
earmarked for this                     134 million Baht for budget year Oct 1999- Sep 2000
scheme/facility

Total financial volume of the
delivering organization’s              N/A
credit portfolio

Time limit of the
                                       Unlimited since 1996
scheme/facility

Total volume disbursed to
                                       N/A
date

Number and type of clients
                                       Over 176 manufacturing unit of 138 clients since 1996
serviced to date

Conditions

                                                Produces and/or distributes its own goods

                                                Employs production technology that can be
Eligibility                                     transferred to locals

                                                Has definite markets

                                                Has been in operation continually for at least 3 years

                                       No maximum; special ceilings for different cost types such
Loan amount (minimum and               as 80 Baht/day for food, 100 Baht/hour/trainer (max. 6 hours
maximum)                               per day allowed) for trainer, 500 Baht/person/60-day training
                                       period for raw materials used in the training process

Currency                               Thai Baht

Interest rate                          Grant

Disbursement schedule                  Depending on the project needs.

Maximum loan and grace
                                       Not applicable
period

Repayment schedule                     Not applicable

Collateral and equity
                                       Not required
requirements



    Financial Schemes and Facilities for SMI: Comprehensive Directory                       51
Application forms, supporting
documents, other input                Contact DIP for details
necessary

Average processing time               Depending on the individual case, around 1 month

Reporting and monitoring
                                      No reporting required but the DIP will monitor the project
requirements

                                      Office of Policy and Industrial Promotion Plan, Department
                                      of Industrial Promotion

                                      Khun Sri-uthai
Contact for further details
                                      Rama VI Road, Rachatevee, Bangkok 10400

                                      Tel. 202 4524 Fax. 246-5602.




   Financial Schemes and Facilities for SMI: Comprehensive Directory                     52
4. State-owned Finance Corporations

4.1 The Industrial Finance Corporation of Thailand (IFCT)

4.1.1 Introduction

IFCT was established on November 27, 1959 by the Industrial Finance
Corporation of Thailand Act B.E. 2502 with an initial registered capital of Bt. 20
million and main objectives to:

           Assist in the establishment, expansion and modernization of private
           industrial enterprises, and

           Encourage and arrange for participation of private capital, both local and
           foreign, in private industrial enterprises, as well as fund mobilization and
           capital market development.

IFCT’s shareholders consist of financial institutions, both local and overseas,
insurance institutions, industrial enterprises, commercial entities and individuals,
as well and the government by the Ministry of Finance, the Government
Savings Bank and Krung Thai Bank Plc. As of December 31, 1998, IFCT's
registered capital was Bt. 12.000 billion, about Bt. 5.448 billion of which was
paid-up, involving around 1,666 large and small shareholders. Its total assets
were Bt.185.109 billion and total manpower was 879. IFCT's creditworthiness
has been rated BBB- by Standard & Poor and Ba3 by Moody's Investor
Services while it’s rating by TRIS, which is a local credit rating agency, has
been A-.

In provision of financial support, IFCT mainly considers the project feasibility
and overall impacts of the projects on the country's economic development.
Moreover, the Corporation has set up 10 regional offices and 13 provincial
offices across the country to fully and conveniently responds to the demand of
investors in provincial and regional areas. IFCT renders financial assistance to
private industrial enterprises with emphasis on industrial projects both in central
and regional areas, which contribute to the country's development and respond
to the government's policy. IFCT focuses its operation on development, paving
foundation for industrial enterprises based on their project feasibility. It calls
itself a "source of funds for industrial activity for any entrepreneur who whishes
to launch an industrial project, either small-scale or large-scale", being "ready to
support your feasible project".19 Most important of all, IFCT sees itself strictly
committed to its mission and vision of "attaining the principal objective of being
a leading financial institution for industrial development and capital market
promotion with excellent performance".20



19
     IFCT brochure "Loan Facilities", 1st page
20
     IFCT website at www.ifct.co.th

Financial Schemes and Facilities for SMI: Comprehensive Directory                    53
For the past 39 years since its start of operations, IFCT has provided financial
facilities in the total amount of Bt. 250.153 billion for 8,008 industrial projects
nationwide. Of this total, Bt. 134.025 billion has been approved as long-term
loans for 3,732 projects, Bt. 61.715 billion as medium-term loans for 472
projects and Bt. 54.413 billion as working capital loans for 3,804 projects.
Classified by location, Bt. 93.353 billion has been approved for 2,344 projects in
Bangkok and the Greater Bangkok and Bt. 156.800 billion for 5,664 projects in
regional areas.

4.1.2 IFCT's services and conditions in general

Loans are generally in baht or foreign currencies, with majority of not over 10
years including a grace period of about 1-2 years. Interest rates are fixed or
floating according to the lending sources. Loan Facilities comprise short-term,
medium-term, long-term and working capital loans. Long-term loans make the
biggest share it. The facilities are in several forms as follows:

Medium and long-term loans with either fixed or floating interest rates based on
sources of fund for newly established projects or expansion or business
improvement projects to finance the fixed asset portion such as plant or office
construction, procurement of machinery and equipment, etc. IFCT's long-term
loan approvals are on a project-financing basis with a maximum maturity of 5-7
years including a grace period of 1-2 years. The projects to be approved by
IFCT must be appraised in market, technical, financial and management-related
aspects. Working capital financing is provided for projects, which have been
operated for a certain period of time and required working capital for operations.
Equity participation is available by IFCT in industrial projects, which contribute
significantly to the country's economic and social development. IFCT's equity
participation will not exceed 10 per cent of the registered capital of each project.

Procurement of loans for large projects: In case of projects requiring a large
amount of loans, which are unable to be provided solely by IFCT, IFCT may
offer loan syndication service or introduce foreign financing sources specifically
for such projects.Credit financing is clearly the core service of IFCT. However,
there are other facilities offered such as: Guarantees such as L/C guarantee,
guarantee for loan repayment to other financial institutions, guarantee for
construction/purchase of raw materials and guarantee for electricity
consumption. Trade financing including opening of L/C, trust receipt, packing
credit and negotiation/discount of export bills. There is also Investment banking
providing financial advisory services for issuance of financial instruments, listing
on the stock market and corporate debt restructuring as well as seeking
business alliances for industrial enterprises.

IFCT provides loans for different purposes, such as:

         Loans for small- and medium-scale enterprises (SMEs)

         Loans for export-oriented industries

         Loans for investment in and relocation of production base to provinces


Financial Schemes and Facilities for SMI: Comprehensive Directory                 54
          Loans for technological and machinery modification and replacement

          Loans for machinery acquisition overseas

          Loans for environmental protection and energy saving

          Loans for research and development (R&D)

          Working capital loans

4.1.3 Financial assistance for small and medium-sized enterprises

Of the corporation’s 2000 clients, 1600 are SMEs. Yet as a proportion of total
loans, SMEs have a much lower share, at around 30% of the total portfolio of
170 billion baht. IFCT has increased its lending to SMEs steadily over the past
several years, with around half of the five billion baht in new loans made in the
first quarter going to small firms. New lending growth has moved relatively
slowly, owing in large part to the sluggish economy. Many new clients are firms
refinancing of existing loans owed to other banks.

In 1999 the amount of loans provided to SMEs by IFCT was 12 billion baht.21
Though the IFCT projects fewer new loans in 1999, it could maintain the Bt12-
billion budget to serve SMEs on the expectation that they will recover sooner
than major corporations. During the first quarter of 2000, IFCT approved loans
to 251 projects in the total amount of Bt. 4,998 million representing an increase
of 19% from loan approval in the same period last year. Of these, 236 projects
totaled Bt. 2,141 million were SMEs.

The IFCT decided to set up a special department to supervise the SME
business both in a financing and advisory capacity. In the next two years the
IFCT aims to increase its human-resource allocation for SMEs from 30 per cent
to 40 per cent. Currently, IFCT's loans to more than 1,000 SMEs account for 25
per cent of its total lending of Bt130 billion. In addition, with only 24 outlets
nationwide, the IFCT still has problems accessing the provinces. It intends to
increase its outlets to 28 this year and 36 next.

However, because of the higher risks involved, 42 to 43 per cent of loans to
SMEs were non-performing in March, which was higher than the development
bank's average non-performing loans (NPLs) of 38 per cent. Since more than
50 per cent of the SMEs' applications for loans were for existing NPLs with
other financial institutions, the IFCT could approve loans for less than 50 per
cent of them. As of March 31, 2000, total outstanding loans amounted to Bt.
138,628 million, representing a growth of about 2% from 1999. Non-performing
loans stood at 27,8% of total credit at the beginning of the year 2000, with
around 500 out of 2000 accounts in default. The IFCT hopes to reduce NPLs to
15% by the end of 2000.




21
     SFAC Website

Financial Schemes and Facilities for SMI: Comprehensive Directory              55
IFCT could evolve into an SME bank under a concept supported by the Finance
Ministry to assist small and medium-sized enterprises. Executives were
studying the feasibility of a change in roles for the corporation since April
2000.22 Another area being studied was the structure and size of small and
medium-sized enterprises. If the IFCT were changed to become a bank,
changes in the definition of SMEs would be needed to ensure the institution’s
future profitability and an expanded customer base.

The IFCT enjoys a relatively lower cost of funds than other financial institutions,
due to state assistance. Lending margins to SMEs generally stay at two to three
percentage points, although competition is increasing as commercial banks
increase their marketing focus to companies.23 Clients are ranked on a four-step
scale with higher-quality firms receiving preferential interest rates. Most of the
risks associated with lending to SMEs steam from poor accounting and a lack of
transparency. The IFCT tries to assist customers by helping them draw up cash
flow projections and industry and economic forecasts.




22
     Bangkok Post, “IFCT may turn into SME bank”, 3/4/2000.
23
     Bangkok Post, “IFCT may turn into SME bank”, 3/4/2000.

Financial Schemes and Facilities for SMI: Comprehensive Directory                56
    4.1.4 Specific loans for SMEs

Name of scheme/facility                     Credit for Small- and Medium-scale Industries

Name in Thai language

Running number in this report               12

Name of service provider                    The Industrial Finance Corporation of Thailand (IFCT)

Coverage                                    31 branches

Background                                  Long term and/or Working Capital Loans

Basic characteristics

                                 Financial volume earmarked for SME promotion of
Total financial volume earmarked
                                 SMEs by IFCT (including this specific facility): 15 billion
for this scheme/facility
                                 Baht for 2000

Total financial volume of the
delivering organization’s credit            30 billion Baht targeted for 2000
portfolio

Time limit of the scheme/facility           One year starting January 2000

Total volume disbursed to date

                                            Number disclosed annually

Number and type of clients                  In 1999 a total of 506 SME clients have been reached
serviced to date                            under all relevant facilities, 403 clients have borrowed
                                            less then 50 Million Baht and 103 clients received
                                            between 50 and 100 Million Baht

Conditions

                                            Being a new or expansion project (any type of industry)

                                            Being a small-scale industrial enterprise with net fixed
Eligibility                                 assets of up to Bt. 50 million

                                            Being a medium-scale industrial enterprise with net fixed
                                            assets of up to Bt. 200 million

                                            3-25 million Baht for Small-scale enterprises
Loan amount (minimum and
maximum)                                    5-100 million Baht for Medium-scale enterprises


    Financial Schemes and Facilities for SMI: Comprehensive Directory                       57
Currency                                    Baht

Interest rate                               AVG.MLR (KTB, BBL, TFB, SCB) – 1% p.a.

Disbursement schedule                       Depending on completion of the project (in %)

Maximum payback and grace
                                            Not over 5 years (including grace period)
period

                                            Interest monthly, principal quarterly (loan amount less
                                            than 50 Mio. Baht)
Repayment schedule
                                            Interest quarterly, principal semi-annually (loan amount
                                            more than 50 Mio. Baht)

Collateral and equity                       Collateral: Fixed assets such as land, buildings, and
requirements                                machinery.

                                            Supporting documents:

                                                      Copy of certificate of incorporation

                                                      Copy of certificate of authorization of directors or
                                                      managers

                                                      Copy of shareholder list

                                                      Copies of balance sheet, income statement (for
                                                      the last three years) and bank statement
Application forms, supporting
                                                      Profile of business and key persons in
documents, other input
                                                      management and factory
necessary
                                                      Copy of project's land title deed

                                                      Copy of factory permit

                                                      Factory layout and details of construction and
                                                      machinery equipment

                                                      Business Plan (Sales projection incl. existing and
                                                      targeted customers)

                                                      BOI promotion certificate (if applicable)

Average processing time                     Average processing time has been 1 month.

Reporting and monitoring                    Once a year IFCT asks for a financial statement. Usually
requirements                                this happens during a site visit of IFCT officers.


    Financial Schemes and Facilities for SMI: Comprehensive Directory                             58
                                            The Industrial Finance Corporation of Thailand,
                                            Business Promotion Department, 1770 New Petchburi
Contact for further details                 Rd., Bangkok 10320

                                            Phone 253-7111, 253-9666 ext. 1159, 1112-1116



Name of scheme/facility                     Credit under the Industrial Restructuring Program

Name in Thai language

Running number in this report

Name of service provider                    The Industrial Finance Corporation of Thailand (IFCT)

Coverage                                    31 branches

Background                                  Long term and working capital loans investment only

Basic characteristics

Total financial volume earmarked
for this scheme/facility

Total financial volume of the
delivering organization’s credit            30 billion Baht targeted for 2000
portfolio

Time limit of the scheme/facility

Total volume disbursed to date

                                            Number disclosed annually

Number and type of clients                  In 1999 a total of 506 SME clients have been reached
serviced to date                            under all relevant facilities, 403 clients have borrowed
                                            less then 50 Million Baht and 103 clients received
                                            between 50 and 100 Million Baht

Conditions

                                            a) Being an enterprise in one of 13 industrial sectors and
                                            related industrial sectors (such as manufacturers of raw
Eligibility                                 materials and packaging, etc.) as follows:

                                              1. Food and animal feed 2. Textile and wearing
                                              apparel


    Financial Schemes and Facilities for SMI: Comprehensive Directory                       59
                                             3. Footwear and leather products 4. Wood products and
                                             furniture

                                            5. Medicine and chemical products 6. Para-rubber and
                                            rubber products

                                             7. Plastic products 8. Ceramics and glass

                                            9. Electrical appliances and electronics 10. Motor
                                            vehicles and parts

                                             11. Gems and jewelry 12. Iron and Steel

                                             13. Petrochemicals

                                             b) Being a Thai national juristic person under Thai law

                                             c) Being an enterprise with net fixed assets of up to Bt.
                                             500 million

                                             d) Being an investment for one of the following
                                             purposes:

                                              - Relocation of production base from Bangkok and
                                                Greater Bangkok to regional and rural areas

                                              - Establishment of a new production unit in regional
                                                and rural areas

                                              - Relocation of the factory to an industrial zone or
                                                industrial estate to enhance efficient pollution control

                                              - Technology and machinery modification or
                                                replacement to attain higher production efficiency

                                              - Shortening production process for higher production
                                                efficiency

                                              - Set-up or development of a laboratory to upgrade
                                                product quality and standard

Loan amount (minimum and
                                            Up to Bt.200 million per project
maximum)

Currency                                    Baht

Interest rate                               AVG.MLR (KTB, BBL, TFB, SCB) – 1% p.a.

                                            Loan is paid in several installments depending on the
Disbursement schedule
                                            progress of the project.


    Financial Schemes and Facilities for SMI: Comprehensive Directory                         60
Maximum payback and grace
                                           5-10 years (including grace period)
period

                                           Interest monthly, principal quarterly (loan amount less
                                           than 50 Mio. Baht)
Repayment schedule
                                           Interest quarterly, principal semi-annually (loan amount
                                           more than 50 Mio. Baht)

Collateral and equity                      Collateral: Fixed assets such as land, buildings, and
requirements                               machinery.

                                           Supporting documents:

                                                     Copy of certificate of incorporation

                                                     Copy of certificate of authorization of directors or
                                                     managers

                                                     Copy of shareholder list

                                                     Copies of balance sheet, income statement and
                                                     bank statement (for the last three years)
Application forms, supporting
                                                     Profile of business and key persons in
documents, other input
                                                     management and factory
necessary
                                                     Copy of project's land title deed

                                                     Copy of factory permit

                                                     Factory layout and details of construction and
                                                     machinery equipment

                                                     Business Plan (Sales projection incl. existing and
                                                     targeted customers)

                                           BOI promotion certificate (if applicable)

Average processing time                    Average processing time has been 1 month.

Reporting and monitoring                   Once a year IFCT asks for a financial statement. Usually
requirements                               this happens during a site visit of IFCT officers.

                                           The Industrial Finance Corporation of Thailand,
                                           Business Promotion Department, 1770 New Petchburi
                                           Rd., Bangkok 10320, Phone 253-7111, 253-9666 ext.
Contact for further details
                                           1159, 1112-1116




   Financial Schemes and Facilities for SMI: Comprehensive Directory                          61
                                            Credit for environmental conservation, energy
Name of scheme/facility
                                            saving or pollution control


Name in Thai language


Running number in this report

Name of service provider                    The Industrial Finance Corporation of Thailand (IFCT)

Coverage                                    31 branches

Background                                  Long term investment only

Basic characteristics

Total financial volume earmarked
for this scheme/facility

Total financial volume of the
delivering organization’s credit            30 billion Baht targeted for 2000
portfolio

Time limit of the scheme/facility

Total volume disbursed to date

Number and type of clients
                                            Number disclosed annually
serviced to date

Conditions

                                            For industrial projects requiring funds for construction
Eligibility
                                            and installation of a pollution control or treatment system

Loan amount (minimum and
                                            Not over the equivalent of Bt. 300 million per project
maximum)

Currency                                    Baht, Yen or US Dollar

                                            Baht: 8-8.5% fix

Interest rate                               Yen: not over 3.25% fix or floating rate LIBOR+2.25%

                                            US Dollar: floating rate LIBOR+2.25%

                                            Loan is paid in several installments depending on the
Disbursement schedule
                                            progress of the project

    Financial Schemes and Facilities for SMI: Comprehensive Directory                       62
Maximum payback and grace
                                           About 7 years (including grace period)
period

                                           Interest monthly, principal quarterly (loan amount less
                                           than 50 Mio. Baht)
Repayment schedule
                                           Interest quarterly, principal semi-annually (loan amount
                                           more than 50 Mio. Baht)

Collateral and equity                      Collateral: Fixed assets such as land, buildings, and
requirements                               machinery.

                                           Supporting documents:

                                                     Copy of certificate of incorporation

                                                     Copy of certificate of authorization of directors or
                                                     managers

                                                     Copy of shareholder list

                                                     Copies of balance sheet, income statement and
                                                     bank statement (for the last three years)
Application forms, supporting
                                                     Profile of business and key persons in
documents, other input
                                                     management and factory
necessary
                                                     Copy of project's land title deed

                                                     Copy of factory permit

                                                     Factory layout and details of construction and
                                                     machinery equipment

                                                     Business Plan (Sales projection incl. existing and
                                                     targeted customers)

                                                     BOI promotion certificate (if applicable)

Average processing time                    Average processing time has been 1 month

Reporting and monitoring                   Once a year IFCT asks for a financial statement. Usually
requirements                               this happens during a site visit of IFCT officers.

                                           The Industrial Finance Corporation of Thailand,
                                           Business Promotion Department, 1770 New Petchburi
Contact for further details                Rd., Bangkok 10320

                                           Phone 253-7111, 253-9666 ext. 1159, 1112-1116



   Financial Schemes and Facilities for SMI: Comprehensive Directory                             63
                                            Small- and Medium-scale Industry Credit from Japan
Name of scheme/facility
                                            (AJDF II)

Name in Thai language                                                                       (AJDF II)
Running number in this report

Name of service provider                    The Industrial Finance Corporation of Thailand (IFCT)

Coverage                                    31 branches

Background

Basic characteristics

Total financial volume earmarked
for this scheme/facility

Total financial volume of the
delivering organization’s credit            30 billion Baht targeted for 2000
portfolio

Time limit of the scheme/facility

Total volume disbursed to date

Number and type of clients
                                            Number disclosed annually
serviced to date

Conditions

                                                 1) Being a project with fixed assets of not exceeding
                                                    Bt. 80 million in all industries

                                                 2) Being a project with fixed assets of not exceeding
                                                    Bt. 400 million in any of the following industries

                                                 -Export-oriented industry
Eligibility
                                                 -Export supporting industry

                                                 -Agro-industry

                                                 -Service industry contributing to higher value added
                                                 and foreign exchange earning

Loan amount (minimum and
                                            Up to Bt. 130 million equivalence per project
maximum)


    Financial Schemes and Facilities for SMI: Comprehensive Directory                       64
Currency                                    Thai Baht

Interest rate                               AVG.MLR (KTB, BBL, TFB, SCB)

                                            Loan is paid in several installments depending on the
Disbursement schedule
                                            progress of the project.

Maximum payback and grace                   Based on the project appraisal, being not over 7 years
period                                      (including grace period)

                                            Interest monthly, principal quarterly (loan amount less
                                            than 50 Mio. Baht)
Repayment schedule
                                            Interest quarterly, principal semi-annually (loan amount
                                            more than 50 Mio. Baht)

Collateral and equity                       Collateral: Fixed assets such as land, buildings, and
requirements                                machinery.

                                            Supporting documents:

                                                      Copy of certificate of incorporation

                                                      Copy of certificate of authorization of directors or
                                                      managers

                                                      Copy of shareholder list

                                                      Copies of balance sheet, income statement and
                                                      bank statement (for the last three years)
Application forms, supporting
                                                      Profile of business and key persons in
documents, other input
                                                      management and factory
necessary
                                                      Copy of project's land title deed

                                                      Copy of factory permit

                                                      Factory layout and details of construction and
                                                      machinery equipment

                                                      Business Plan (Sales projection incl. existing and
                                                      targeted customers)

                                                      BOI promotion certificate (if applicable)

Average processing time                     Average processing time has been 1 month.

Reporting and monitoring                    Once a year IFCT asks for a financial statement. Usually
requirements                                this happens during a site visit of IFCT officers.

    Financial Schemes and Facilities for SMI: Comprehensive Directory                             65
                                            The Industrial Finance Corporation of Thailand,
                                            Business Promotion Department, 1770 New Petchburi
Contact for further details                 Rd., Bangkok 10320

                                            Phone 253-7111, 253-9666 est. 1159, 1112-1116



                                            KfW Export Credit (Credit for Purchase of Machinery
Name of scheme/facility
                                            from Germany)

Name in Thai language

Running number in this report

Name of service provider                    The Industrial Finance Corporation of Thailand (IFCT)

Coverage                                    31 branches

Background

Basic characteristics

Total financial volume earmarked
for this scheme/facility

Total financial volume of the
delivering organization’s credit
portfolio

Time limit of the scheme/facility

Total volume disbursed to date

Number and type of clients
serviced to date

Conditions

                                            Being a project with purchase of Machinery from
                                            Germany
Eligibility
                                            Being a project with export contract value of no less then
                                            US$ 500.000

Loan amount (minimum and
                                            Up to 85% of the export contract value
maximum)

Currency                                    US Dollar

    Financial Schemes and Facilities for SMI: Comprehensive Directory                      66
Interest rate                               About LIBOR + (2.50 to 2.75)% p.a.

                                            Direct payment by the lending source to machinery
Disbursement schedule
                                            suppliers in Germany

                                            Interest monthly, principal quarterly (loan amount less
Repayment schedule                          than 50 Mio. Baht). Interest quarterly, principal semi-
                                            annually (loan amount more than 50 Mio. Baht).

Maximum payback and grace
                                            Based on the project appraisal
period

Collateral and equity                       Collateral: Fixed assets such as land, buildings, and
requirements                                machinery.

                                            Supporting documents:

                                                      Copy of certificate of incorporation

                                                      Copy of certificate of authorization of directors or
                                                      managers

                                                      Copy of shareholder list

                                                      Copies of balance sheet, income statement and
                                                      bank statement (for the last three years)
Application forms, supporting
                                                      Profile of business and key persons in
documents, other input
                                                      management and factory
necessary
                                                      Copy of project's land title deed

                                                      Copy of factory permit

                                                      Factory layout and details of construction and
                                                      machinery equipment

                                                      Business Plan (Sales projection incl. existing and
                                                      targeted customers)

                                                      BOI promotion certificate (if applicable)

                                            Pre-evaluation (Screening): 2-7 days

                                            Application submission 1 day

Average processing time                     Check of feasibility: 2 weeks (result is communicated)

                                            Final approval/rejection after 2 more weeks

                                            The processing time is about 50% more then at

    Financial Schemes and Facilities for SMI: Comprehensive Directory                             67
                                            commercial banks because IFCT makes a more detailed
                                            appraisal. However, average processing time has been
                                            cut from 6 weeks in the past two 4 weeks.

Reporting and monitoring                    Once a year IFCT asks for a financial statement. Usually
requirements                                this happens during a site visit of IFCT officers.

                                            The Industrial Finance Corporation of Thailand,
                                            Business Promotion Department, 1770 New Petchburi
Contact for further details                 Rd., Bangkok 10320

                                            Phone 253-7111, 253-9666



                                            Credit for Small- and Medium-Scale Industries from
Name of scheme/facility
                                            Japan (OECF VI)

Name in Thai language                                                                         (OECF VI)
Running number in this report

Name of service provider                    The Industrial Finance Corporation of Thailand (IFCT)

Coverage                                    31 branches

Background

Basic characteristics

Total financial volume earmarked
for this scheme/facility

Total financial volume of the
delivering organization’s credit
portfolio

Time limit of the scheme/facility

Total volume disbursed to date

Number and type of clients
serviced to date

Conditions

                                            Projects with fixed assets ranging from equivalent to
                                            over Bt. 50 million to Bt. 400 million
Eligibility
                                            Projects that involve with one of the following

    Financial Schemes and Facilities for SMI: Comprehensive Directory                         68
                                            alternatives:

                                                 -     Technology and machinery rehabilitation

                                                 -     Projects intending to relocate their own facilities
                                                       into rural areas or industrial estates

                                                 -     Projects located outside Bangkok and its vicinity

Loan amount (minimum and
                                            Equivalent not over Bt.360 million per project
maximum)

Currency                                    Yen /or US Dollar

                                            Yen:

                                                     Fixed rate 3.25% p.a.

Interest rate                                        Floating rate LIBOR + 2.25% p.a.

                                            US$:

                                                     Floating rate LIBOR + 2.25% p.a.

Disbursement schedule                       Depending on the provress of the project

Maximum payback and grace
                                            Based on the project appraisal from 5 to 10 years
period

                                            Interest monthly, principal quarterly (loan amount less
Repayment schedule                          than 50 Mio. Baht). Interest quarterly, principal semi-
                                            annually (loan amount more than 50 Mio. Baht).

Collateral and equity                       Collateral: Fixed assets such as land, buildings, and
requirements                                machinery.

                                            Supporting documents:

                                                        Copy of certificate of incorporation

                                                        Copy of certificate of authorization of directors or
                                                        managers
Application forms, supporting
                                                        Copy of shareholder list
documents, other input
necessary                                               Copies of balance sheet, income statement and
                                                        bank statement (for the last three years)

                                                        Profile of business and key persons in
                                                        management and factory

                                                        Copy of project's land title deed

    Financial Schemes and Facilities for SMI: Comprehensive Directory                            69
                                                     Copy of factory permit

                                                     Factory layout and details of construction and
                                                     machinery equipment

                                                     Business Plan (Sales projection incl. existing and
                                                     targeted customers)

                                                     BOI promotion certificate (if applicable)

Average processing time                    Average processing time has been 1 month.

Reporting and monitoring                   Once a year IFCT asks for a financial statement. Usually
requirements                               this happens during a site visit of IFCT officers.

                                           The Industrial Finance Corporation of Thailand,
                                           Business Promotion Department, 1770 New Petchburi
Contact for further details                Rd., Bangkok 10320

                                           Phone 253-7111, 253-9666 ext. 1159, 1112-1116



Name of scheme/facility                    Italy Export Credit

Name in Thai language

Running number in this report

Name of service provider                   The Industrial Finance Corporation of Thailand (IFCT)

Coverage                                   31 branches

Background

Basic characteristics

Total financial volume earmarked
for this scheme/facility

Total financial volume of the
delivering organization’s credit
portfolio

Time limit of the scheme/facility

Total volume disbursed to date



   Financial Schemes and Facilities for SMI: Comprehensive Directory                             70
Number and type of clients
serviced to date

Conditions

                                                 1) Projects purchasing machinery and services from
                                                    Italy

                                                 2) Projects with a minimum contract value of US$
Eligibility                                         600.000

                                                 3) Date of machinery delivery must not exceed 3-4
                                                    years from the date designated in the machinery
                                                    purchasing agreement

Loan amount (minimum and
                                            Not exceeding 85% of the machinery contract value
maximum)

Currency                                    US Dollar

                                            About LIBOR + 2.75% p.a.


Interest rate                               An insurance premium of 2.45%-5.07% of the total loan
                                            amount (depending on loan period) will be submitted to
                                            SACE, The Italian State Insurance Agency, through
                                            IFCT.

                                            Within 2-3 years with a minimum amount of USD
Disbursement schedule                       250.000 for each disbursement except for the last
                                            amount

Maximum payback and grace
                                            5-11.5 years
period

                                            Interest monthly, principal quarterly (loan amount less
Repayment schedule                          than 50 Mio. Baht). Interest quarterly, principal semi-
                                            annually (loan amount more than 50 Mio. Baht).

Collateral and equity                       Collateral: Fixed assets such as land, buildings, and
requirements                                machinery.

                                            Supporting documents:
Application forms, supporting
                                                      Copy of certificate of incorporation
documents, other input
necessary
                                                      Copy of certificate of authorization of directors or
                                                      managers



    Financial Schemes and Facilities for SMI: Comprehensive Directory                          71
                                                     Copy of shareholder list

                                                     Copies of balance sheet, income statement and
                                                     bank statement (for the last three years)

                                                     Profile of business and key persons in
                                                     management and factory

                                                     Copy of project's land title deed

                                                     Copy of factory permit

                                                     Factory layout and details of construction and
                                                     machinery equipment

                                                     Business Plan (Sales projection incl. existing and
                                                     targeted customers)

                                                     BOI promotion certificate (if applicable)

Average processing time                    Average processing time has been 1 month.

Reporting and monitoring                   Once a year IFCT asks for a financial statement. Usually
requirements                               this happens during a site visit of IFCT officers.

                                           The Industrial Finance Corporation of Thailand,
                                           Business Promotion Department, 1770 New Petchburi
Contact for further details                Rd., Bangkok 10320

                                           Phone 253-7111, 253-9666 ext. 1159, 1112-1116



   4.2 Small Industry Finance Corporation (SIFC)

   4.2.1 Introduction

   The Small Investment Finance Corporation (SIFC) was established 1991 under
   the Small Investment Finance Corporation Act B.E. 2534 to provide short and
   long-term financing for SMEs with fixed assets of less than 50 million baht. The
   SIFC has initial start-up capital of 300 million baht. Its major shareholders
   include the Ministry of Finance; the Government Savings Bank; the Industrial
   Finance Corporation of Thailand; the Crown Property Bureau; and members of
   the Thai Bankers Association. The proportion of shareholding on the public
   sector to the private sector is 50:50. The role of SIFC has been upgraded with
   the Cabinet’s resolution on August 10, 1999 on increasing SIFC’s potential as
   the financial institution for the promotion and development of small and medium
   sized enterprises (SMEs).




   Financial Schemes and Facilities for SMI: Comprehensive Directory                             72
The Government recognizes that the SIFC has a critical role to play in providing
financing for SMEs. However, SIFC currently lacks the capability to fully carry
out this role. For this reason, the Cabinet has approved the restructuring of the
SIFC allowing SIFC to play a key role in providing financial and technical
support to SMEs with the following measures: 24

     1. SIFC will be recapitalized by 2.5 billion baht in 1999 and by another 5
        billion baht in 2003. This should allow SIFC to increase its loans as a
        percentage of total loans granted to SMEs to approximately 2 percent by
        2008. As with the SICGC, the performance of the SIFC will be carefully
        reviewed prior to the second round of recapitalization. Further business
        expansion following 2008 may warrant a further reconsideration of
        SIFC’s capital needs.

     2. SIFC will expand the scope of its services to cover SMEs that own fixed
        assets including land up to 100 million baht, up from the current ceiling of
        50 million baht, and increase the loan ceiling for each customer from 25
        million baht to 50 million baht;

     3. SIFC will strengthen the credit evaluation, approval and monitoring
        process to improve the quality of the loan portfolio. It will also develop the
        use of agency loans in addition to the direct loans currently provided.

     4. The management structure, management, and staff will be improved to
        enhance the effectiveness of the SIFC.

     5. SIFC will expand its branch network, which will be increased to six by
        1999 and eleven subsequently.

     6. SIFC will introduce advisory services to assist customers in upgrading
        their operations and financial management.

     7. SIFC will consider the possibility of joint investment with target customer
        groups.



Shareholders of SIFC                                    Amount (Million Baht)   Percentage

Ministry of Finance                                     75                      25.00

Government’s Saving Bank                                55                      18.33

Bureau of Royal Estate                                  40                      13.33

Member       of    Finance       Association       of 40                        13.33



24
 Measures to Encourage Private Investment, Announcement by the Ministry of Finance,
No. 91/1999, 10 August 1999

Financial Schemes and Facilities for SMI: Comprehensive Directory                       73
Thailand

Member of Thai Associate’s Banker                       40                13.33

Industry Finance Corporation of Thailand                30                10.00

Krung Thai Bank (Public Company)                        20                6.68

Total                                                   300               100



Purposes of SIFC:

        Support setting up, expand and improvement SMEs

        Support and acquire domestic and international private fund to
        participate in SMEs business

        Offer financial services or cooperate with other financial institute to SMEs
        according to Ministerial Decree’s regulation with cabinet’s approval.
        Financial support can be provided with or with out credit guarantee.

        Giving advice on administration, management, technical knowledge and
        helping SMEs entrepreneurs to get services on aspects mentioned
        above.

4.2.2 Financial assistance for small and medium-sized enterprises

According to an interview with SIFC executives 100% of SIFC’s clients are
SMEs. The SME’s loan applications at SIFC in 1999 have decreased from the
previous year for two reasons: One is the strong competition among financial
institutions to provide loan services to SMEs. The other is SIFC’s higher interest
rate compared to other institutions. In addition, most loan applications submitted
to SIFC are coming from groups that can not borrow from other financial
institutions because of NPL problems, forcing the SIFC to suspend the loan
applications at the very high rates although the relaxation is made to give the
maximum opportunities to SMEs. Of the total of 653 loan applications with the
amount of 5,843.53 million baht, only 143 loan applications with the amount of
560.87 million baht have been approved, which is equivalent to 21.59 percent of
the total.

With the result of the cabinet’s resolution on August 10, 1999, the restructuring
adjustment and the increasing of SIFC’s potential have been made in which the
SIFC will receive funding at the amount of 7,500 million baht within 10 years.
2,500 million baht within 1999-2000 and another 5,000 million baht in 2003 so
as to allow SIFC to have a market share of about 2% of the SME’s loans within
2008. For this, SIFC has already received the first installment of payment for the
SME’s loans of 1,000 million baht on December 30, 1999.




Financial Schemes and Facilities for SMI: Comprehensive Directory                 74
SIFC is expanding the target group for the loan service e.g. to increase the fixed
assets of the business that are in the service boundary from 50 million baht to
100 million baht and to increase the extend of maximum loan from 25 million
baht to 50 million baht including the expansion of SME’s business categories
apart from the industrial business such as service business and wholesale and
retail business. SIFC has realized that it is a very small unit compared to the
whole SME’s financial service requirements and is therefore searching for
cooperation with various agencies, which have the same goal of SME
development. There are co-operations with the DIP, EGAT, NEPO, IEAT and
other institutions.

SIFC categorizes its loans roughly in two groups:

     1. Loans to general SMEs

     2. Loans under policy based lending schemes (only started in 2000)

However the difference between the two groups is only the interest rate. There
are three types of schemes: Fixed term loans, working capital loans (promissory
notes) and letter of guarantee, the latter being a minor service. Fixed Loans
account for about 70% of SIFC’s service, project financing through working
capital loans for about 30%. The loans under the policy based lending scheme
follow the government’s policy in promoting SMEs, i.e. under the Industrial
Restructuring Plan, which was set up to restructure 13 industries. It is a policy of
SIFC to consider the possibility of loan repayment of the project rather than the
sufficiency of security in order to develop the SMEs entrepreneurs in Thailand
to be able to stay in their business.

Normally machinery is not accepted as collateral by financial institutions but
SIFC is an exception, as it wants SMEs to borrow more easily. As most
borrowers are short of high-value collateral such as land, houses or savings
accounts, other lenders nearly always reject their loan requests. SIFC extended
600 million baht in loans out of its 1.8 billion baht target in 1999, which was
regarded as rather low. SIFC spent a long time checking the borrower’s
backgrounds and plans because of a greater variety of industries applying and
SIFCs lack of information about the industries. SIFC aims to extend 6 billion
baht in loans this year. Through this amount is 10 times that lent last year, it
believes it will not be difficult to reach the target now that the restriction has
been lifted.25

In 1999 SIFC was considering 653 applications for a total loan amount of 5,843
million baht. Only 141 applications have been granted a loan, however the total
amount of the granted loans was only 560 million compared to 926 million
requested by these applicants. Of the remaining applications, 430 with the
volume of 4.064 million baht where rejected whereas 82 application for a total of




25
  Bangkok Post, 21.3.2000, “SIFC accepts machinery as collateral for credit”. However the
present statistics show a slightly different picture of the lending target (editors note)

Financial Schemes and Facilities for SMI: Comprehensive Directory                     75
   852 million baht where further considered.26 From January to March 2000,
   including the 852 million baht remaining considered from 1999 the total amount
   of requested loans was 2,671 million baht by 249 applications. 73 Applicants
   have been granted 453 million baht of 487 million requested. 94 applications for
   1,326 million baht have been turned down whereas 82 applications for 857
   million baht were still considered.27

   4.2.3 Specific Loans for SMEs


Name of scheme/facility                    Long Time Loan (fixed term)

Name in Thai language

Running number in this report              13

Name of service provider                   Small Industry Finance Corporation (SIFC)

Coverage                                   6 branches with the target of 11 as of end 2000

                                           To Establish, Expand and Improve Industrial
                                           Entrepreneurs by Supplying Loans for the Following
                                           Purposes (Apply for Every Kind of Candidates):

                                           Real Estates acquisition and development, Buildings,
Background                                 Machinery Acquisition, Vehicles Acquisition, Installation
                                           of Pollution Control/ Pollution Treatment and
                                           Infrastructures, Short Term and Long Term Working
                                           Capital, Debt Payment, Cost of Efficient Management
                                           Development and other Investment based on SIFC
                                           committee’s approval

Basic characteristics

                                           1999 (only General SME loan)

                                           Target: 3,000 Million Baht
Total financial volume earmarked
                                 2000 (including policy based lending scheme)
for this scheme/facility
                                           Target: Maximum: 6000 Million Baht

                                           Minimum: 3000 Million Baht




   26
        Statistics provided by SIFC’s research section, 24.12.1999
   27
        Statistics provided by SIFC’s research section, 19.6.2000

   Financial Schemes and Facilities for SMI: Comprehensive Directory                      76
Total financial volume of the
delivering organization’s credit            3 billion Baht
portfolio

Time limit of the scheme/facility           Unlimited

                                            Actual Amount Provided in 2000 to date: 453.45 Million
                                            Baht
Total volume disbursed to date
                                            Actual Amount Provided in 1999: 560 Million Baht

Number and type of clients
                                            73 Clients from The Beginning of 2000
serviced to date

Conditions

                                            Being an SME according to the definition on MoI (see
                                            Chapter 1 of this study)



                                            General SME credit:

                                            Production Sector, Service Sector, Handicrafts, every
                                            kind of Export Business (Must Register with Thai
                                            Customs), Other kinds of Entrepreneurs as The
                                            Committee Approved, Agricultural Industries and Real
                                            Estate Businesses are excluded



                                            Policy based lending scheme:

Eligibility                                           SMEs located in the Industrial Estate or SMEs
                                                      Estate

                                                      SMEs with ISO certification

                                                      SMEs with a transparent accounting system

                                                      SMEs that joined in for the Sor-Or-Chor program
                                                      of the Department of Industrial Promotion

                                                      SMEs that joined in for the Energy Cost
                                                      Reduction Program with EGAT

                                                      SMEs with the export business and export
                                                      industry

                                                      SMEs that joined in for the Industrial
                                                      Restructuring Plan

    Financial Schemes and Facilities for SMI: Comprehensive Directory                          77
                                                      SMEs with business restructuring/risk factors
                                                      Project

                                                      SMEs that joined in for the research and
                                                      development program with NSTDA

                                            Maximum: 50 Million Baht for general SMEs, 30 Million
                                            Baht for Retail Sector SMEs
Loan amount (minimum and
                                            Minimum: 500,000 Thai Baht
maximum)
                                            Higher amounts possible per announcement of the
                                            Minister of Finance with the Cabinet’s Approval

Currency                                    Thai Baht



                                            MLR is currently 7%



                                             General SMEs                              MLR+1%

                                             SMEs located in the Industrial Estate     MLR+0,75%
                                             or SMEs Estate

                                             SMEs with ISO certification               MLR+0,75%

                                             SMEs with a transparent accounting        MLR+0,75%
                                             system

                                             SMEs that joined in for the Sor-Or-       MLR+0,75%
Interest rate                                Chor program of the Department of
                                             Industrial Promotion

                                             SMEs that joined in for the Energy        MLR+0,75%
                                             Cost Reduction Program with EGAT

                                             SMEs with the export business and         MLR+0,5%
                                             export industry

                                             SMEs that joined in for the Industrial    AVG.MLR 4
                                             Restructuring Plan                        banks –1%

                                             SMEs with business restructuring/risk     MLR+2%
                                             factors Project

                                             SMEs that joined in for the research      KTB fixed
                                             and development program with              deposit rate +
                                             NSTDA                                     2.25% / 2 but

    Financial Schemes and Facilities for SMI: Comprehensive Directory                        78
                                                                                       not exceeding
                                                                                       the saving
                                                                                       deposit
                                                                                       interest rate
                                                                                       on the date of
                                                                                       approval

Disbursement schedule                      According to the project requirements

Maximum payback and grace                  Maximum: 10 years (Grace Period not exceeding two
period                                     years)

                                           Repayment Divided in Two periods

                                           Monthly Interest during Grace Period
Repayment schedule
                                           Monthly Interest plus Loan Repayment after Grace
                                           Period

                                           Minimum equity requirement is 20% (commercial banks
                                           demand at least 40%)
Collateral and equity
                                           Collateral: Property (land and buildings)
requirements
                                           Machinery can be used as equity but has to be
                                           registered with the MoI first

                                           Copies of Identity Card, House Certificate, and Marriage
                                           Certificate

                                           Copies of Credit Guarantee Documents

                                           Copy of Industrial Authorization Document

                                           Copies of Company or Partnership Registration
                                           Document and Authority Certificate of Manager

                                           Balance Sheet and Statement
Application forms, supporting
documents, other input                     In Case of Debt Repayment, A Copy of Loan Contract
necessary                                  with other Banks and Current Owed Debt Statement

                                           See Example of Application Form in Appendix



                                           SMEs that joined in for the Sor-Or-Chor program of the
                                           Department of Industrial Promotion, the Energy Cost
                                           Reduction Program with EGAT, the Industrial
                                           Restructuring Plan of the MoI or the research and
                                           development program with NSTDA need to add a
                                           certification letter from the relevant program organization

   Financial Schemes and Facilities for SMI: Comprehensive Directory                        79
                                           to the application.


                                           1 Month If Applicants Bring All Required Documents,
Average processing time                    most important documents are the collateral and the
                                           project details

                                           SIFC Requires Annual Balance Sheet and Financial
                                           Statements from Risky debtors only. Also required is a
                                           bank account statement, as SIFC has no deposit
                                           account service.

                                           SIFC Will Send Inspectors to Monitor Debtors before
Reporting and monitoring                   New Financial Support Will Be Provided Annually.
requirements
                                           Usually SIFC’s clients don’t have an accounting system;
                                           therefore SIFC staff will update the client’s financial
                                           statements. There is a classification of customers only
                                           for monitoring purposes. High-risk customers are
                                           monitored every 3 months, normal risk ones every 6
                                           months and low risk ones every 12 months.

                                           Small Industry Finance Corporation, 475 Siripinyo
                                           Building, 9th Floor, Sri-Ayudhaya Road, Rajdhavee,
Contact for further details                Bangkok 10400

                                           Tel. 201-3700 Fax: 201-3723-24



Name of scheme/facility                    Short Term Loan As Promissory Note

Name in Thai language                                              (P/N)

Running number in this report              14

Name of service provider                   Small Industry Finance Corporation (SIFC)

Coverage                                   6 branches with the target of 11 as of end 2000

                                           To Establish, Expand and Improve Industrial
                                           Entrepreneurs by Supplying Loans for the Following
                                           Purposes (Apply for Every Kind of Candidates):

                                           Real Estates acquisition and development, Buildings,
Background                                 Machinery Acquisition, Vehicles Acquisition, Installation
                                           of Pollution Control/ Pollution Treatment and
                                           Infrastructures, Short Term and Long Term Working
                                           Capital, Debt Payment, Cost of Efficient Management
                                           Development and other Investment based on SIFC
                                           committee’s approval

   Financial Schemes and Facilities for SMI: Comprehensive Directory                      80
Basic characteristics

                                            1999 (only General SME loan)

                                            Target: 3,000 Million Baht
Total financial volume earmarked
                                 2000 (including policy based lending scheme)
for this scheme/facility
                                            Target: Maximum: 6000 Million Baht

                                            Minimum: 3000 Million Baht

Total financial volume of the
delivering organization’s credit            3 billion Baht
portfolio

Time limit of the scheme/facility           Unlimited

                                            Actual Amount Provided in 2000 to date: 453.45 Million
Total volume disbursed to date              Baht

                                            Actual Amount Provided in 1999: 560 Million Baht

Number and type of clients
                                            73 Clients from The Beginning of 2000
serviced to date

Conditions

                                            General SME credit:

                                            Production Sector, Service Sector, Handicrafts, every
                                            kind of Export Business (Must Register with Thai
                                            Customs), Other kinds of Entrepreneurs as The
                                            Committee Approved, Agricultural Industries and Real
                                            Estate Businesses are excluded

                                            Policy based lending scheme:

                                            SMEs located in the Industrial Estate or SMEs Estate
Eligibility
                                            SMEs with ISO certification

                                            SMEs with a transparent accounting system

                                            SMEs that joined in for the Sor-Or-Chor program of the
                                            Department of Industrial Promotion

                                            SMEs that joined in for the Energy Cost Reduction
                                            Program with EGAT

                                            SMEs with the export business and export industry

    Financial Schemes and Facilities for SMI: Comprehensive Directory                    81
                                            SMEs that joined in for the Industrial Restructuring Plan

                                            SMEs with business restructuring/risk factors Project

                                            Maximum: 50 Million Baht for general SMEs, 30 Million
                                            Baht for Retail Sector SMEs
Loan amount (minimum and
                                            Minimum: 500,000 Thai Baht
maximum)
                                            Higher amounts possible per announcement of the
                                            Minister of Finance with the Cabinet’s Approval

Currency                                    Thai Baht



                                            SIFC’s MLR is currently 7%, about 1% lower then
                                            commercial bank’s MLR



                                             General SMEs                             MLR+2%

                                             SMEs located in the Industrial Estate    MLR+2%
                                             or SMEs Estate

                                             SMEs with ISO certification              MLR+2%

                                             SMEs with a transparent accounting       MLR+2%
                                             system
Interest rate
                                             SMEs that joined in for the Sor-Or-      MLR+2%
                                             Chor program of the Department of
                                             Industrial Promotion

                                             SMEs that joined in for the Energy       MLR+2%
                                             Cost Reduction Program with EGAT

                                             SMEs with the export business and        MLR+2%
                                             export industry

                                             SMEs that joined in for the Industrial   MLR+2%
                                             Restructuring Plan

                                             SMEs with business restructuring/risk    MLR+3%
                                             factors Project

Disbursement schedule                       Lump sum (P/N)

Maximum payback and grace
                                            Maximum: 5 Years
period

    Financial Schemes and Facilities for SMI: Comprehensive Directory                      82
                                           Annual Renewal Review

                                           Interest Must Be Paid Monthly or on Maturity Date
Repayment schedule
                                           Principal is paid back on Maturity Date

                                           Minimum equity requirement is 20% (commercial banks
                                           demand at least 40%)
Collateral and equity
                                           Collateral: Property (land and buildings)
requirements
                                           Machinery can be used as equity but has to be
                                           registered with the MoI first

                                           Copies of Identity Card, House Certificate, and Marriage
                                           Certificate

                                           Copies of Credit Guarantee Documents

                                           Copy of Industrial Authorization Document

                                           Copies of Company or Partnership Registration
                                           Document and Authority Certificate of Manager

                                           Balance Sheet and Statement
Application forms, supporting              In Case of Debt Repayment, A Copy of Loan Contract
documents, other input                     with other Banks and Current Owed Debt Statement
necessary
                                           See Example of Application Form in Appendix



                                           SMEs that joined in for the Sor-Or-Chor program of the
                                           Department of Industrial Promotion, the Energy Cost
                                           Reduction Program with EGAT, the Industrial
                                           Restructuring Plan of the MoI or the research and
                                           development program with NSTDA need to add a
                                           certification letter from the relevant program organization
                                           to the application.

Average processing time                    1 Month If Applicants Bring All Required Documents

                                           SIFC Requires Annual Balance Sheet and Financial
                                           Statements from Risky debtors only. Also required is a
                                           bank account statement, as SIFC has no deposit
Reporting and monitoring                   account service.
requirements
                                           SIFC Will Send Inspectors to Monitor Debtors before
                                           New Financial Support Will Be Provided Annually.
                                           Usually SIFC’s clients don’t have an accounting system;

   Financial Schemes and Facilities for SMI: Comprehensive Directory                       83
                                           therefore SIFC staff will update the client’s financial
                                           statements. There is a classification of customers only
                                           for monitoring purposes. High-risk customers are
                                           monitored every 3 months, normal risk ones every 6
                                           months and low risk ones every 12 months.

                                           Small Industry Finance Corporation, 475 Siripinyo
                                           Building, 9th Floor, Sri-Ayudhaya Road, Rajdhavee,
Contact for further details                Bangkok 10400

                                           Tel. 201-3700 Fax: 201-3723-24




   Financial Schemes and Facilities for SMI: Comprehensive Directory                      84
4.3 Small Industry Credit Guarantee Corporation (SICGC)

4.3.1 Introduction

SICGC is established under the Small Industry Credit Guarantee Act B.E. 2534.
It has start-up capital of 400 million baht and operates as private organization.
SICGC's objective is to offer credit guarantee to SMEs entrepreneurs that do
not have enough assets or liquidity to receive loans from other financial
institutes. This enables SMEs entrepreneurs to gain more loans from financial
institutes as well. A major constraint facing SMEs in obtaining financing is a lack
of sufficient collateral. To alleviate this constraint, the SICGC provides credit
guarantees on the uncollateralized portion of SME loans. Usually the SME don’t
get in contact directly with SICGC. Current shareholders are Ministry of
Finance, Commercial banks, Government's saving Bank, The Industrial Finance
Corporation Of Thailand (IFCT), and Small Industry Finance Corporation
(SIFC). SICGC aims to "enable collateral short but viable industry to obtain
more loans form financial institutes to increase credit extension from financial
institute to small scale industry, strengthen the confidence of financial institutes
and accelerate the dispersal of loans to small scale industry." All commercial
banks and shareholder institutions are eligible to apply for a guarantee.

The SIC

 GC expects to guarantee four billion baht in loans from other financial
institutions to SMEs in 2000. However, the program is of to a slow start, with
guarantees totaling just 52.98 million baht in loans for projects in January and
February 2000. Last year the corporation extended credit guarantees on 77.35
million baht in loans for 29 projects.28 SMEs with assets of no more than 100
million baht qualify to apply for the guarantee scheme, with loans approved
subject to a servicing fee of 1.75% of the guaranteed amount. The maximum
amount for each guarantee is 20 million baht.29

The board of the SICGC has set aside two billion baht in loan guarantees for
small and medium-seized enterprises (SMEs). The move is to help businesses
undergoing restructuring. The corporation will extend guarantees not exceeding
75% of financial institutions loans to SMEs. Each loan is capped at 20 million
baht. Financial institutions will bear 25% of the risk, by paying a 1.75%
guarantee fee to the corporation. Interest on the corporation’s loans will be
charged at minimum lending rates or minimum overdraft rates. Companies
seeking to join the credit program must meet certain restrictions, including
complying with the central bank’s restructuring program, maintaining a viable
business operation and ensuring that the loans are used for cash flow to




28
     Bangkok Post, 11.3.2000, “Credit guarantees available for SMEs”.
29
     Bangkok Post, 21.3.2000, “SIFC accepts machinery as collateral for credit”.

Financial Schemes and Facilities for SMI: Comprehensive Directory                  85
expand businesses. The corporation has so far extended loan guarantees
totaling 1.45 billion baht to help 801 SMEs.30

In an effort to prevent an increase in the number of non-performing loans, the
Small Industrial Finance Corporation has tightened its regulations on loan
guarantees, raising the minimum asset size of loan applicants to Bt100 million
from Bt50 million, and upping the amount of the loan guarantee for each
borrower from Bt10 million to Bt20 million. It is also allowing financial institutions
which have no stake in the corporation to provide a guarantee service to loan
applicants, compared with the current position whereby only those institutions
holding equity in the corporation can do so. In return for the tougher rules, the
corporation has doubled the maximum amount of loans from Bt50 million to
Bt100 million.31

4.3.2 Restructuring of the Small Industry Credit Guarantee Corporation32

The ability of the SICGC to provide services needed by SMEs is hindered by
the scope of its guarantee operations, its fee structure, and its process of
paying compensation to financial institutions. For this reason, the Cabinet has
approved the restructuring of the SICGC in order to improve the effectiveness of
the credit guarantee process, encourage financial institutions to use SICGC
more, and improve financing for SMEs as follows:

(1) SICGC will be recapitalized by 4 billion baht in 1999 and by another 4 billion
baht in 2003. This recapitalization will allow SICGC to expand the scope of its
credit guarantee services to cover approximately 2 percent of the total amount
of credit extended to SMEs by the year 2008. The performance of the SICGC
will be carefully reviewed prior to the second round of capitalization. Further
business expansion following 2008 may warrant a further reconsideration of
SICGC’s capital needs.

 (2) The scope of services will be expanded to cover enterprises that own fixed
assets up to 100 million baht, up from the present ceiling of 50 million baht. The
maximum credit guarantee will also be enlarged from its current level of 10
million baht to 20 million baht. Services will also be provided to financial
institutions, which are not shareholders of SICGC as well, unlike current
practice.

(3) The internal operation of the SICGC, especially with regard to risk
evaluation, will be improved to increase the effectiveness of the credit




30
     Bangkok Post, “B2bn in loan guarantees”, 30.6.2000
31
     Nation, 28/10/1999
32
 Measures to Encourage Private Investment, Announcement by the Ministry of Finance,
No. 91/1999, 10 August 1999

Financial Schemes and Facilities for SMI: Comprehensive Directory                  86
   guarantee system. A credit guarantee evaluation committee and an internal
   auditing committee will be appointed to increase transparency and efficiency.

   (4) The initial credit guarantee fee will be reduced from 2.00-2.75 percent to
   1.75 percent. Subsequent fees will depend upon the quality of the customer and
   of the screening process of the associated bank.

   (5) A detailed plan for branch expansion, including the establishment of four
   regional branches by 2000, will be prepared. The management and staff will be
   improved to enhance the effectiveness of SICGC.

   (6) Guidelines for compensation will be revised to allow financial institutions to
   receive compensation from the SICGC much earlier than before. Financial
   institutions will be able to claim compensation when legal proceedings are
   initiated against a borrower as opposed to the current practice of requiring such
   cases to be settled prior to any compensation.

   4.3.3 Specific loan guarantees for SMEs

Name of scheme/facility                    Credit guarantee for SMEs

Name in Thai language                                            SMEs

Running number in this report              15

Name of service provider                   Small Industry Credit Guarantee Corporation (SICGC)

Coverage                                   HQ plus 4 regional branches to be established in 2000

                                           SICGC offers only credit guarantee service for SMEs

                                           For newly established enterprise or for expansion.
Background                                 Target enterprises cover manufacturing enterprises,
                                           cottage and handcraft, service enterprises, agricultural
                                           enterprises, retail, wholesale business, export and
                                           import business.

Basic characteristics

                                 4.000 million baht in funds for 2000 which can be used
Total financial volume earmarked
                                 to issue guarantees for credits up to 20.000 million baht
for this scheme/facility
                                 (5 times the capital of SICGC)

Total financial volume of the
                                           4.000 million baht in funds for 2000 which can be used
delivering organization’s credit
                                           to issue guarantees for credits up to 20.000 million baht
portfolio

Time limit of the scheme/facility          Unlimited


   Financial Schemes and Facilities for SMI: Comprehensive Directory                      87
                                            200 million baht in credit guarantees given from January
Total volume disbursed to date
                                            to July 2000

Number and type of clients
                                            85
serviced to date

Conditions

                                            Applicants must be either persons or legal entity such as
                                            company limited, partnership, or limited partnership with
                                            Thai nationality and must operate in Thailand.

                                            Must be SMEs only

                                            Must own total fixed assets under 100 million baht

                                             Land and buildings or factories located in that estate
Eligibility                                 must be used as credit guarantee to financial service
                                            providers that SICGC will supply credit guarantee.

                                            Good financial records with good credit and bright
                                            yielding opportunity.

                                            Loans are in need of credit guarantee

                                            Applicants must have at least 20% shares in total capital
                                            of the enterprises asked for credit guarantee

                                            SICGC will guarantee only new loans that do not have
                                            credit guarantee, but will not cover old loans that do not
                                            have credit guarantee. The granted loans from SICGC
                                            cannot be use as repayments for old loaners that
                                            entrepreneurs ask for credit guarantee.

                                            If entrepreneurs wish to use loans for repayment or
                                            redemption of the old loans, SICGC will grant loans for
                                            additional part that loaners give to debtors only.
Loan amount (minimum and
maximum)                                    SICGC offer every kind of credit guarantees, such as
                                            loan term loans, overdrafts and packing credits.

                                            Each success applicant will receive full amount of loans
                                            that do not have any credit guarantee, but not over 50%
                                            of total loans and the total amount of credit guarantee
                                            must not be over 20 million baht per a project.

                                            Guarantees are given for loans of minimum 200.000 and
                                            maximum 10 million baht

Currency                                    Thai Baht


    Financial Schemes and Facilities for SMI: Comprehensive Directory                       88
                                            SICGC request annual fee of total amount that it
                                            supplies credit guarantee. Loaners are responsible for
                                            collecting this fee from debtors and submit it to SICGC.
                                            Rates are listed below.

                                            2.00% per annum for under 1,000,000 baht credit
Interest rate                               guarantee

                                            2.50% per annum for 1, 000,001 - 5,000,000 baht credit
                                            guarantee

                                            2.75% per annum for 5, 000,001 - 10,000,000 baht
                                            credit guarantee

                                            Letter of guarantee is valid as long as a loaner submits
Disbursement schedule
                                            annual fee to ISCGC as indicate in the contract.

                                            Renewal of Credit Guarantee

                                            Annual renewal must be made, as SICGC reminder note
                                            will be sent to loaners, six weeks before due date. If the
Maximum payback and grace
                                            annual fee is not paid the second reminder not will be
period
                                            issued within two weeks before due date. If loaners fail
                                            to submit annual fee, credit guarantee will be void.

                                            Minimum renewal period is 3 months.

Repayment schedule                          Not applicable

                                            The success applicants must have guarantors of
                                            repayment for every project that SICGC grants credit
Collateral and equity
                                            guarantee. Guarantors of repayment can be the same
requirements
                                            as those who guarantee for original loaners or other
                                            persons that SICGC approves.

Application forms, supporting               The financial institute at which the SMEs applied for a
documents, other input                      loan files the application for credit guarantee. SMEs are
necessary                                   not directly in contact with SICGC

                                            SMEs entrepreneurs send credit request application to
                                            original loaners

                                            Loaners consider possibility of projects

Average processing time                     Loaners submit application and submit annual fee to
                                            SICGC

                                            SICGC grants Letter of Credit Guarantee.

                                            Loaners grant loans for SMEs entrepreneurs.


    Financial Schemes and Facilities for SMI: Comprehensive Directory                      89
                                           It takes 2 or 3 weeks up to the amount that debtor's
                                           request and loaners' cooperation.

                                           Borrowers will be responsible to report debtors'
                                           condition to SICGC on the following aspects

                                           Debt status to SICGC every month or every three
                                           months as indicated on contract.

                                           When any significant changes or any important events
                                           that will effect debtor's enterprises happen.
Reporting and monitoring
requirements                               If debtors wish to use assets that they have already
                                           used as asset guarantees for SICGC to mortgage or
                                           create any legal bond, loaners must report and as for
                                           SICGC's permission before.

                                           Borrowers will be liable for monitoring whether debtors'
                                           use of loans is according to purpose(s) indicated in
                                           contract.

                                           SICGC's Service is available at

                                           Thai commercial banks: Thai Farmer Bank, Ayudhaya
                                           Bank, Bangkok Bank, Krung Thai Bank, Thai
                                           Commercial Bank, DBS Thai Danu Bank, Bank Thai,
                                           Thai Military Bank, UOB Ratthanasin, Standard
                                           Chartered Nakornthon Bank, Nakorn Luang Thai Bank,
                                           Bangkok Metropolitan Bank, Bank of Asia
Contact for further details
                                           Government's Saving Bank

                                           The Industrial Finance Corporation of Thailand

                                           EXIM Bank

                                           Agriculture and Agricultural Cooperation Bank

                                           Small Industry Finance Corporation




   Financial Schemes and Facilities for SMI: Comprehensive Directory                       90
5. State-owned Banks

5.1 Government Savings Bank (GSB)

5.1.1 Introduction

The Government Savings Bank started operations on 1 April 1947 replacing the
former Savings Office, which was established by King Rama VI in 1913. Today,
GSB is a state enterprise which is also a juristic person guaranteed by the
Government. It is under the supervision of the Ministry of Finance, with 573
branches nationwide. GSB conducts its businesses independently under the
guidance of its Board of Directors who are appointed by the Minister of Finance.

GSB emphasizes that Thai people have good relationship and satisfaction with
and trust in GSB. This is exemplified by the more than 20 million deposit
accounts of the people from all walks of life held at GSB’s branches throughout
the country. “It can be proudly said that GSB is truly the bank of the people that
operates to the satisfaction of the people, communities and the whole society.”33

5.1.2 Services and conditions in general

The Government Savings Bank extends personal loans and loans for financing
income-generating activities in regional areas in an attempt to distribute
development results. The personal loans are made through GSB’s branches
with a view to improving the people’s quality of life. GSB currently offers a
variety of loans, taking into account the benefit to be obtained by the people.

There are the following types of loans offered to the bank’s customers:

          Requirement for Overdraft

          Housing Loan

          Welfare Loan

          Saithong Consumer Loan

          Credit for Business

          Loan for SMEs

          Credit to Savings Cooperatives

          Credit to Private Educational Institutions




33
     www.gsb.co.th

Financial Schemes and Facilities for SMI: Comprehensive Directory               91
           Credit for Development of Private Educational Institutions

           Credit Program for Rural Development

           Loans under Special Agreements34

   5.1.3 Financial assistance for small and medium-sized enterprises

   The SME loan of GSB is a subset of the so-called business loan, which has
   been provided since 1995. The business loan program was introduced due to a
   policy change at GSB. Before this time loans were only provided to state
   enterprises and not to smaller private businesses. The business loan program is
   therefore for an SME target group. However, as the Ministry of Finance
   demanded GSB to do a special SME loan, this facility was created as a split of
   from the business loan having the same conditions but just a new name.

   Press reports suggest that one reason why the GSB’s 1999 target for SME
   lending is behind plan, is that entrepreneurs do not realize that the bank may be
   a source of funds.35 The GSB is seen only as a bank that mobilizes savings
   from smaller customers.

   5.1.4 Specific loans for SMEs

Name of scheme/facility                    Loan for SMEs

Name in Thai language                                   SMEs

Running number in this report              16

Name of service provider                   Government Savings Bank (GSB)

                                           537 branches nationwide (but not all branches are ready
Coverage
                                           yet to consult customers on loans)

                                           To be used for acquiring fixed and current assets
Background
                                           Both O/D and long term loan for investment

Basic characteristics




   34
     Loans under Special Agreements are loan packages specially designed for government
   agencies, state enterprises and the private sector entering into an agreement with GSB that
   they will deduct the monthly salaries of their staffs who are GSB’s loan clients and make
   payments to GSB. Under each agreement, GSB will charge an interest at a discount rate.
   35
     Micro and Small Enterprise Development and Poverty Alleviation in Thailand Project,
   ILO/UNDP, Working Paper No.4, July 1999, S.34

   Financial Schemes and Facilities for SMI: Comprehensive Directory                       92
Total financial volume earmarked
                                 1 billion baht targeted for 2000
for this scheme/facility

Total financial volume of the
delivering organization’s credit            Around 25 billion Baht (credit only nor including P/N)
portfolio

                                            The SME loan is a part of the regular Business loan
Time limit of the scheme/facility           program of GSB, which is unlimited. However the
                                            lending target is received my MoF once a year.

Total volume disbursed to date              500 million baht

Number and type of clients
                                            About 500
serviced to date

Conditions

                                                     Be an individual not under 20 years of age or be
                                                     a juristic person.

                                                     Have Thai nationality or be registered under a
                                                     Thai law

                                                     Doing one of the following business operations:

                                                              Industries

                                                              Manufacturing Industry

                                                              Handicraft Industry
Eligibility
                                                              Service Industry

                                                              Agro-industry

                                                              General Commercial Businesses

                                                              Retail and Wholesale Business

                                                              Service Business

                                                              Import Business

                                                              Export Business

Loan amount (minimum and
                                            From 100.000 baht up to 50 million baht
maximum)

Currency                                    Baht


    Financial Schemes and Facilities for SMI: Comprehensive Directory                         93
                                            Between MLR/MOR and MLR/MOR+3,5% depending on
                                            the customer’s risk rating
Interest rate
                                            Actual Benchmarks: MLR 7,75% MOR 8,25%

Disbursement (Draw down)
schedule

Maximum payback and grace                   Max. 10 years pay back period, including a grace period
period                                      of max. 3 years.

                                            Overdraft with a maximum repayment term of 1 year
Repayment schedule
                                            Long-term loan with a maximum repayment term of 10
                                            years

                                            Collateral:

                                                      Deposit accounts with GSB or Premium Savings
                                                      Certificates
Collateral and equity
                                                      Land or a property or a condominium unit or a
requirements
                                                      commercial building or a plant

                                                      Government bonds and/or state enterprise bonds

                                            Equity: minimum 40%

Application forms, supporting               Supporting documents such as marketing plan,
documents, other input                      production plan, financial plan, a description of the
necessary                                   company’s history

                                            1 month after complete application is submitted

                                            When the application is submitted the credit officer will
                                            go through it together with the customer to check if any
                                            documents are missing. During the first week after
                                            complete application is received there will be a first
Average processing time                     meeting of GSB officers doing a preliminary analysis
                                            whether the project is feasible or not. If yes, there will be
                                            a detailed analysis of the project done by the credit
                                            analyst of GSB including an evaluation of the collateral.
                                            IF the analyst sees the project feasibility he will propose
                                            it to a decision committee for approval.

                                            No reporting from the customer required as the
Reporting and monitoring
                                            responsible branch office will conduct a review on their
requirements
                                            own.

                                            Government Savings Bank, 470 Phaholyotin Rd.,
Contact for further details
                                            Payathai, Bangkok 10400

    Financial Schemes and Facilities for SMI: Comprehensive Directory                         94
                                        Tel. 2998294-6, 299-8000

5.2 Export-Import Bank of Thailand (EXIM)

5.2.1 Introduction

The Export-Import Bank of Thailand was established by the Export-Import Bank
of Thailand Act, which came effective on September 7, 1993. The Bank officially
started its operation in February 1994. EXIM is a financial institution wholly
owned by the Royal Thai Government, under the supervision of the Ministry of
Finance. Its objectives are to provide financial services to support exports,
imports and investments related to the development of the Thai economy. The
financial business activities that EXIM Bank is empowered by the Act to engage
in are various. In financing, EXIM Bank can offer short-term as well as long-term
credit, either in domestic or overseas markets, being in Baht or any foreign
currency dominations. In mobilizing funds, EXIM Bank can also borrow from
local or overseas financial institutions together with issuing short-term and long-
term financial instruments to financial institutions and the public worldwide.
Apart from the aforementioned activities, EXIM Bank can engage in any
financial activities that commercial banks can, except for accepting deposit from
public.

EXIM Bank has a policy to offer financial services to strengthen the competitive
edge of Thai businessmen in their business doing in the world markets. EXIM
Bank provides not only financial services that directly promote export business,
but also those indirectly enhance export capability of Thailand together with
overseas investment of Thai investors. In promoting export, EXIM Bank avoids
overlapping any business already well served by commercial banks, EXIM Bank
puts the focus only on the area of services not presently provided such as long-
term credit for export of capital goods, Financing Facilities for overseas
contract, export insurance and export financing to small and new exporters. In
addition, EXIM Bank is committed to providing new services to help address
problems relating to balance of payment and the export sector such as
Merchant Marine Financing Facility, Team Loan for Machinery Upgrading and
Pre-Shipment Financing Facility in foreign currencies.

Due to an increasing number of Thai businessmen who have expanded their
businesses into other countries, EXIM Bank has introduced more financial
services to accommodate exporters in their business expansion especially into
emerging countries. To facilitate trade transaction with these countries, EXIM
Bank has established the direct correspondent relationship with prominent
banks in such countries as those in Indochina and Eastern Europe. Apart from
that, EXIM Bank also arranged various forms of credit facilities through such
banks for financing the purchase of product from Thailand. For Thai investors
abroad, EXIM Bank has a policy of supporting investment projects with medium
and long-term credit. Additionally, in order to provide investors with more
confidence, EXIM Bank also stands ready to participate in the equity of their
business.



Financial Schemes and Facilities for SMI: Comprehensive Directory                95
Loans provided by the Bank can be divided into two groups. The first group
consists of loans to which the asset classification and loan loss provisioning
rules do not apply, which totaled 12,852.3 million baht in 1998. They include
loans provided by the Bank in compliance with government policies or cabinet
resolutions which are protected by the Government under Section 23 of the
Export - Import Bank of Thailand Act B.E. 2536 as well as loans guaranteed by
the Ministry of Finance, loans provided to exporters through commercial banks
and loans provided to commercial banks. The latter two types of loans are not
subject to the asset classification and the Government guarantees loan loss-
provisioning standard as the depositors and creditors of financial institutions still
in business. The second group is the assets, which must be classified under the
asset classification, and loan loss provisioning rules, which was worth 27,006.2
million baht in 1998. Among these were non-performing loans (NPLs) or debt
overdue for longer than three months, worth 4,257.7 million baht. The Bank’s
total capital reached 8,102.8 million baht at the end of 1998, resulting in the
Bank’s capital adequacy ratio of 18.9% at the end of 1998.

5.2.2 Financial Schemes and Facilities for SMEs

Financing facilities provided through commercial banks:

        Packing Credit

        Special Packing Credit

        Export Liquidity Enhancement



Financing facilities provided directly to exporters:

        Pre-shipment Financing Facility (PSF)

        Direct Packing Credit Facility

        Export Credit Insurance Facility

        T/R Facility for          Importing      of   Raw      Material   for   Export-oriented
        Manufacturing

        Export Bills Negotiation Facility

        Financing Facility for Overseas Investment

        Merchant Marine Financing

About 80% of EXIM’s clients are SME. Credit approval at EXIM is more flexible
then at commercial banks, as EXIM exists only for 6 years and has not
developed a strict regulative framework. Interest rates are usually a little bit
(around 1%) higher then at commercial banks. For this reason large companies
usually apply for loans from commercial banks. However, as officials of the


Financial Schemes and Facilities for SMI: Comprehensive Directory                            96
bank confirmed, this is not an issue for SMEs, because for them the most
important question is that they are granted a loan at all, no matter the rate being
the market rate or slightly higher.

On February 3, 2000 the SME Financial Service Center and Export Advisory
Service was officially opened at EXIM’s head office. The New services were
launched to cater SME exporters’ demand for credit and provide them with
export-related information and advice on export documents. According to
EXIMs President, most of the Bank’s customers were SME exporters, who were
now playing an increasingly important role in Thailand’s business sector. To
further its existing support to SMEs, EXIM set up the SME Financial Service
Center. This center was part of the Business Promotion Department, focusing
on providing credit to SME exporters as well as those new to export business,
regardless of business type. Also, exporters could obtain general information
relating to export including EXIM’s services currently available.

Companies which an annual sales of less then 200 Mio. Baht are welcome to
use the services of the SME Financial Service Center. The center facilitates the
application and distribution of its banking products. Usually companies have to
contact one of the banks divisions depending on their business activity (i.e. the
machinery division, the furniture division, the jewelry division, etc.) They might
not get much attention there if the company size is rather small. The SME
Credit Service Center gives these companies a quicker service. Applications
can be filed directly in center and the approval will be done by the Business
Promotion Department. The center also has the mission to spread the word
about the banks assistance to SMEs, a considerable number of which is
thought of not being aware that they are eligible. However, the credits and loans
are the same both in the classical divisions and in the service center. There is
no special “SME loan” provided. However, among the traditional loans provided
by EXIM there is a facility called the “Packing Credit” which could be considered
as the most appealing towards SMEs, as the rate of about 5% is very low. This
facility will therefore be presented in detail below. In some newspaper sources
the packing credit is used synonym with the EXIM banks financial assistance for
SMEs. Another facility, which has a special status because it is the only
available at EXIM and therefore the bank’s strongest selling point, is the Export
Credit Insurance facility. In March 2000 an announcement of the Ministry of
Industry introduced a new loan facility for improving the production quality, for
moving the production base to industrial estates and for environmental
protection measures. This facility is provided jointly by EXIM and the IFCT.




Financial Schemes and Facilities for SMI: Comprehensive Directory                97
Differences between Direct Packing Credit and Pre-Shipment Financing Facility

           Direct Packing Credit                        Pre-Shipment Financing Facility

1. Interest rate is lower than market                 1. Interest rate is determined by
   rate.                                                 market rate.

2. A credit utilization report is required.           2. A credit utilization report is not
                                                         required.
3. Inspection of goods, stocks register
   or stock control records is                        3. No inspection of goods, stocks
   undertaken.                                           register or stock control records
                                                         is performed.
4. A penalty fee at the rate of 5.5%
   p.a. is charged for violation of credit            4. No penalty fee is charged
   utilization regulations.                              (except for that generally applied
                                                         for overdue payment.)



5.2.3 Export Credit Insurance Facility

Under this facility, EXIM Bank provides exporters with payment risk coverage
for the export of any kinds of products to export markets worldwide. In case
merchandise is shipped out in compliance with the contract but exporters do not
receive payment due to the fact that importers are not able or refuse to pay, or
due to any commercial or political disruptions, that obstruct the payment, EXIM
Bank will indemnify exporters for the damage. To provide exporters with
confidence in exploring and penetrating new markets as well as new customers
in familiar markets. Additionally, it enables Thai exporters to offer their
customers more favorable terms of payment.

The attentive exporters should start up by applying for the line, which states
maximum liabilities and buyer's credit limit, under export credit insurance
scheme. EXIM Bank will issue insurance policy thereupon the agreed credit
line. After each shipment, insured exporters are required to notify any shipment
to EXIM Bank and also pay the premium for that shipment. Then, exporters can
negotiate their insured export bills at any commercial banks or EXIM Bank
forthwith. In case insured exporters are not paid due to any incident under EXIM
Bank's export credit insurance coverage, EXIM Bank will compensate according
to the following condition.

Scope of Coverage, Rate of Indemnity, and Time Frame for Payment of Claims:

1. Commercial Risks

   1.1 Buyers go bankrupt/insolvency


Financial Schemes and Facilities for SMI: Comprehensive Directory                        98
          85% of loss realized

          Immediately upon receipt of evidence of bankruptcy, or insolvency

   1.2 Buyers refuse to pay

85% of loss realized

          Within 4 months after due date of export bill

   1.3 Buyers refuse to take delivery of merchandise

          85% of loss after proceeds from sale or auction of merchandise

          Within 1 month after sale or auction of merchandise

2. Political Risks

    2.1 Remittance of hard currency restricted or prohibited by authorities

          90% of loss realized

          Within 4 months after due date of export bill or 4 months after payment
          by buyer in local currency to buyer's bank, whichever is later.

   2.2 New regulation prohibiting importation of the merchandise, or revocation
      of import license of buyers

          90% of loss realized

          Within 4 months after the incident occurs, or within 4 months after due
          date of export bill, whichever is later

   2.3 Occurrence of war, revolution or riot that obstructs payment for the
      merchandise

          90% of loss realized

          Within 4 months after the incident occurs or within 4 months after due
          date of export bill, whichever is later




Financial Schemes and Facilities for SMI: Comprehensive Directory              99
    5.2.4 Specific Loans for SMEs

                                            Credit for adjusting the product efficiency,
Name of scheme/facility                     relocation to industrial estates and environmental
                                            protection

                                            "
Name in Thai language
                                                                                            "
Running number in this report               17

Name of service provider                    EXIM Bank (or IFCT)

Coverage                                    Head Office Bangkok plus 6 branch offices

                                            MoI joint facility with BOT, IFCT and EXIM. The money
                                            comes from all 4 institutions; applications by SMEs can
                                            be filed at EXIM or IFCT.

                                            To Provide Loan for Machinery Improvement,
Background
                                            Manufacturing Improvement, Relocation to Industry
                                            Estate, and Environmental Protection.

                                            Support 13 kinds of Industry on Industry Restructuring
                                            Program's List.

Basic characteristics

                                            MoI regulation of March 2000
Total financial volume earmarked
                                 Facility in operation since May 2000
for this scheme/facility
                                            Targeted: 12,500 Million Baht for 2000

Total financial volume of the
                                            The total credit line extended was 24,940 million baht in
delivering organization’s credit
                                            1998
portfolio

Time limit of the scheme/facility           Starting March 2000, unlimited

Total volume disbursed to date              Actual Loan Amount: 12,500 million Baht

Number and type of clients
                                            N/A
serviced to date

Conditions

Eligibility                                 SMEs Having Fewer Than 200 Million Baht Fixed Assets

    Financial Schemes and Facilities for SMI: Comprehensive Directory                     100
                                            Must Be 13 Kind of Enterprises on Industrial
                                            Restructuring Program

                                            Applicants Must Seek National Food Institute, Thai
                                            Textile Institute, Thai Automotive Institute or Thai
                                            German Institute's Assurance Letter before Applying for
                                            This Loan

                                            Must be Environmental Friendly Enterprises

                                            Having Intent to Improve Condition of Manufacturing
                                            Relocate to Industrial Estate and Environmental
                                            Protection

Loan amount (minimum and                    Maximum: 200 Million Baht per a project
maximum)
                                            Minimum: Not Indicated

Currency                                    Thai Baht

                                            Under MLR-1% interest rate (approximately 8-9% per
                                            annum, calculating from four major banks, Bangkok
Interest rate
                                            Bank, Krung Thai Bank, Thai Farmer Bank and Thai
                                            Commercial Bank)

Disbursement schedule                       According to project requirements

                                            5-7 years according to the joint facility. Expansion of
Maximum loan period                         lending period can be made (Interest rate will depend on
                                            the financial institution providing the loan)

Repayment schedule                          Case by case (cash-flow analysis)

Collateral and equity
                                            Based on Each Financial Institutions Criteria
requirements

                                            1. Assurance Letter from One o f The Following Institute:
                                            National Food Institute, Thai Textile Institute, Thai
                                            Automotive Institute or Thai German Institute

                                            2. Two Copies of Application Forms Submitted to
Application forms, supporting
documents, other input                               Provincial Office of the DIP in which the sites are
necessary                                            located

                                                     Financial Service Providers.

                                            3. Other Documents Required by Each Financial Service
                                            Provider.



    Financial Schemes and Facilities for SMI: Comprehensive Directory                        101
                                           Usually not over 2 weeks. However many times the
                                           applications are not submitted completely and can
Average processing time
                                           therefore not be proposed to the credit committee. The
                                           customer is than asked to provide missing information.

                                           No reporting required for the customer. EXIM conducts
Reporting and monitoring                   its own monitoring, goes to check the progress of the
requirements                               project on-site and checks if the loan repayment is on
                                           schedule.

                                           EXIM Bank, Business Promotion Department,

                                           EXIM Building, 1193 Phaholyotin Rd.
Contact for further details
                                           Phayathai, Bangkok 10400

                                           Tel.: 271-3700, 278-0047, 617-2111 Fax: 271-3204



Name of scheme/facility                    Direct Packing Credit Facility

Name in Thai language

Running number in this report              18

Name of service provider                   EXIM Bank

Coverage                                   Head Office Bangkok plus 6 branch offices

                                           The Facility is denominated in Baht and is available to
                                           exporters of all kinds of agricultural or industrial goods
                                           as well as export-oriented manufacturers to serve their
                                           pre- or post-shipment working capital needs. With an
Background                                 interest rate lower than that of the Pre-Shipment
                                           Financing Facility (Baht), Direct Packing Credit requires
                                           the exporters or export-oriented manufacturers to submit
                                           credit utilization reports similar to those required under
                                           Packing Credit obtained through commercial banks.

Basic characteristics

                                 Early in 1998 when the banking system was severely
                                 short of liquidity, although Packing Credit utilization
                                 continued to increase, the Facility was underutilized. To
Total financial volume earmarked
                                 make full use of Packing Credit and help enhance
for this scheme/facility
                                 liquidity in the export sector, the Bank proposed to the
                                 Bank of Thailand to allow the Bank to provide Packing
                                 Credit directly to exporters in the same manner as

   Financial Schemes and Facilities for SMI: Comprehensive Directory                     102
                                            commercial banks. Accordingly, the Bank of Thailand
                                            allocated to the Bank a packing credit line of 5,000
                                            million baht with the condition that the Bank applied the
                                            same contribution ratio and maintained interest rates at
                                            a level similar to those offered by commercial banks.

Total financial volume of the
                                            The total credit line extended was 24,940 million baht in
delivering organization’s credit
                                            1998
portfolio

                                            The Bank started providing the Direct Packing Credit in
Time limit of the scheme/facility
                                            April 1998

                                            By the end of 1998, the total credit line of Direct Packing
Total volume disbursed to date
                                            Credit granted to exporters was 5,759.0 million baht.

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            The facility is provided to exporters and export-oriented
                                            manufacturers according to regulations outlined by
Eligibility                                 EXIM Bank. Applications for credit lines should be
                                            directed to EXIM Bank's Business Promotion
                                            Department.

Loan amount (minimum and                    No minimum and maximum amount, Loan amount
maximum)                                    depends on the needs of the customer

Currency                                    Thai Baht

                                            Not over 8%
Interest rate
                                            Penalty 5,5% on the P/N amount

                                            Once a credit line is established and the credit
                                            agreement signed, exporters can use letters of credit
                                            (L/C), contracts or purchase orders, or in the case of
                                            export-oriented manufacturers, domestic L/C, local sales
                                            contracts or purchase orders, as documents against
Disbursement schedule
                                            loan draw down. To make a draw down, exporters or
                                            export-oriented manufacturers are required to issue a
                                            Baht-denominated promissory note to EXIM Bank in an
                                            amount proportionate with that under the L/C, contract
                                            or P/O.

Maximum payback and grace                   The term of payment varies according to the type of
period                                      product but not exceeding 180 days.

Repayment schedule                          After the goods are shipped, exporters or export-

    Financial Schemes and Facilities for SMI: Comprehensive Directory                      103
                                           oriented manufacturers can negotiate their export bills
                                           with EXIM Bank using the Baht proceeds to repay the
                                           debt under their promissory notes. The balance of the
                                           proceeds is returned to the exporters or manufacturers.

                                           The facility is a revolving credit line. Any amount repaid
                                           will be available for draw down against other purchasing
                                           documents.

                                           Case by case. Usually the credit line extended is based
Collateral and equity
                                           in the company performance, for the evaluation of which
requirements
                                           there might be a check of the collateral too.

                                           Documents required for Credit Line Application

                                           1. Copies or photos of the certified Commercial
                                           Registration from the Ministry of Commerce*

                                           2. Copies or photos of the latest shareholders’ list

                                           3. Copies or photos of Value Added Tax Registration

                                           4. Copies or photos of the latest and of the past 2 years
                                           certified audited financial statements such as Balance
                                           Sheet and Profit & Loss Statement

                                           5. List of all loans with other financial institutions

                                           6. Bank statement (past 6 months)

                                           7. Records of exportation such as L/C, purchase order,
Application forms, supporting              sales contract, Credit notes
documents, other input
necessary                                  8. Copy of BOI Promotion Certificate (if available)

                                           9. Copies or photos of owner certificate of collateral
                                           securities

                                           * When the credit is approved, a new one, not older than
                                           30 days, must be submitted before signing the contract

                                           Additional Documents Required for Contractual Process

                                           1. Copies of Identification Card or Passport, Residential
                                           Registration, and Work Permit of all authorized directors

                                           2. Copies of the certified company’s stamp registration

                                           3. Copies or photos of Memorandum of Association

                                           4. Minutes of the Board meeting stating the company’s
                                           policy to acquire financial support from EXIM Bank


   Financial Schemes and Facilities for SMI: Comprehensive Directory                          104
                                           5. Copies of Identification Card, Residential Registration,
                                           and Marriage Certificate (if available) of guarantors (and
                                           spouse)

                                           6. Copies of business licenses certified by the Thai
                                           Governmental Agencies such as Factory license,
                                           Licenses from the Ministry of Public Health or the Royal
                                           Forestry Department

Average processing time                    2 weeks

                                           Reporting: Customer has to provide the export
Reporting and monitoring
                                           documents to EXIM. Monitoring: EXIM checks if the
requirements
                                           export takes place.

                                           EXIM Bank, Business Promotion Department,

                                           EXIM Building, 1193 Phaholyotin Rd.
Contact for further details
                                           Phayathai, Bangkok 10400

                                           Tel.: 271-3700, 278-0047, 617-2111 Fax: 271-3204



                                           Pre-Shipment Financing Facility (“Export
Name of scheme/facility
                                           Preparation Credit”)

Name in Thai language

Running number in this report              19

Name of service provider                   EXIM Bank

Coverage                                   Head Office Bangkok plus 6 branch offices

                                           A revolving line of credit for financing the preparation of
                                           all kinds of export. This facility is provided in Baht, US
                                           Dollar or Yen directly from EXIM Bank to exporters and
                                           covering all kinds of products. The Yen - denominated
                                           facility is available to exporters possessing L/C,
                                           contracts or purchase orders in Yen only.
Background
                                           The foreign currency part of the facility aims to lessen
                                           the financial cost for exporters due to the fact that the
                                           US Dollar or Yen interest rates are generally less than
                                           that of Thai Baht. It also aims to eliminate foreign
                                           exchange risk since exporters could pay back the loan in
                                           US Dollar or Yen proceeded from exports.

   Financial Schemes and Facilities for SMI: Comprehensive Directory                       105
Basic characteristics

                                 At the beginning of 1998, the Bank secured a 40,000
                                 million yen or approximately 12,000 million baht loan
Total financial volume earmarked from Export-Import Bank of Japan (JEXIM), which was
for this scheme/facility         used to supplement financing for the Pre-shipment
                                 Financing Facility. Exporters responded well to this
                                 service, resulting in steadily increasing credit lines.

Total financial volume of the
                                            The total credit line extended was 24,940 million baht in
delivering organization’s credit
                                            1998
portfolio

Time limit of the scheme/facility           Since EXIM’s start of operations

                                            By the end of 1998, the Bank allocated to exporters the
                                            total line of credit for PSF of 31,232.6 million baht,
Total volume disbursed to date
                                            increasing by 47.1% from 21,232.9 million baht by the
                                            end of 1997. More recent numbers are not yet disclosed.

Number and type of clients
                                            N/A
serviced to date

Conditions

Eligibility                                 Exporters of all kinds of products

Loan amount (minimum and                    No minimum and maximum amount, Loan amount
maximum)                                    depends on the needs of the customer

Currency                                    Baht, US Dollar or Yen

                                            EXIM Prime Rate + 1,5% for Baht loan

Interest rate                               LIBOR +3,5% for US Dollar

                                            Fixed rate 5% for Yen

                                            Once the credit line is set up and the agreement is
                                            signed, exporters are able to use letters of credit (L/C) or
                                            contracts or purchasing orders (P/O) obtained as
                                            evidences to support the loan draw down.
Disbursement schedule
                                            For each draw down, exporters must have promissory
                                            note in Baht, Dollar or Yen issued to EXIM Bank in
                                            proportion to the values of L/C or contracts or
                                            purchasing orders.

Maximum payback and grace                   The term of financing would be determined by the type
period                                      of product but no longer than 120 days.

    Financial Schemes and Facilities for SMI: Comprehensive Directory                       106
                                           After goods are shipped out, exporters can negotiate
                                           export bills at EXIM Bank and use the Baht proceeds for
                                           paying back the loan. The remaining amount is for
                                           possession of exporters.
Repayment schedule
                                           This is a revolving facility; therefore, any amount repaid
                                           will be available for draw down against other purchasing
                                           documents.

                                           Case by case. Usually the credit line extended is based
Collateral and equity
                                           in the company performance, for the evaluation of which
requirements
                                           there might be a check of the collateral too.

                                           Documents required for Credit Line Application

                                           1. Copies or photos of the certified Commercial
                                           Registration from the Ministry of Commerce*

                                           2. Copies or photos of the latest shareholders’ list

                                           3. Copies or photos of Value Added Tax Registration

                                           4. Copies or photos of the latest and of the past 2 years
                                           certified audited financial statements such as Balance
                                           Sheet and Profit & Loss Statement

                                           5. List of all loans with other financial institutions

                                           6. Bank statement (past 6 months)

                                           7. Records of exportation such as L/C, purchase order,
Application forms, supporting
                                           sales contract, Credit notes
documents, other input
necessary                                  8. Copy of BOI Promotion Certificate (if available)

                                           9. Copies or photos of owner certificate of collateral
                                           securities

                                           * When the credit is approved, a new one, not older than
                                           30 days, must be submitted before signing the contract

                                           Additional Documents Required for Contractual Process

                                           1. Copies of Identification Card or Passport, Residential
                                           Registration, and Work Permit of all authorized directors

                                           2. Copies of the certified company’s stamp registration

                                           3. Copies or photos of Memorandum of Association

                                           4. Minutes of the Board meeting stating the company’s


   Financial Schemes and Facilities for SMI: Comprehensive Directory                          107
                                           policy to acquire financial support from EXIM Bank

                                           5. Copies of Identification Card, Residential Registration,
                                           and Marriage Certificate (if available) of guarantors (and
                                           spouse)

                                           6. Copies of business licenses certified by the Thai
                                           Governmental Agencies such as Factory license,
                                           Licenses from the Ministry of Public Health or the Royal
                                           Forestry Department

Average processing time                    2 weeks

                                           Reporting: Customer has to provide the export
Reporting and monitoring
                                           documents to EXIM. Monitoring: EXIM checks if the
requirements
                                           export takes place.

                                           EXIM Bank, Business Promotion Department,

                                           EXIM Building, 1193 Phaholyotin Rd.
Contact for further details
                                           Phayathai, Bangkok 10400

                                           Tel.: 271-3700, 278-0047, 617-2111 Fax: 271-3204



Name of scheme/facility                    Term Loan for business expansion

Name in Thai language

Running number in this report              20

Name of service provider                   EXIM Bank

Coverage                                   Head Office Bangkok plus 6 branch offices

                                           A loan to support the expansion of exporters' production
                                           capacities for export, for instance, in factory expansion,
                                           in the purchase of additional machinery and also other
Background
                                           additional fixed asset investment. This loan is also
                                           available for the investment in new additional plant,
                                           provided that this investment is for export.

Basic characteristics

Total financial volume earmarked
                                 N/A
for this scheme/facility

Total financial volume of the              The total credit line extended was 24,940 million baht in

   Financial Schemes and Facilities for SMI: Comprehensive Directory                      108
delivering organization’s credit            1998
portfolio

Time limit of the scheme/facility           Since EXIM’s start of operations

Total volume disbursed to date              N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            Exporters who plan to do a factory expansion, the
                                            purchase of additional machinery and also other
Eligibility                                 additional fixed asset investments. This loan is also
                                            available for the investment in additional manufacturing
                                            plant, provided that this investment is for export.

Loan amount (minimum and                    No minimum and maximum amount, Loan amount
maximum)                                    depends on the needs of the customer

Currency                                    Baht or US Dollar

                                            Baht: EXIM Prime Rate + 1,5%
Interest rate
                                            US Dollar: LIBOR + 3.5%

                                            Depends on the type and the requirements of each
Disbursement schedule
                                            project

Maximum payback and grace                   It varies from 2-5 years subject to the ability in
period                                      generating incomes of each project.

                                            Interest is to be paid monthly, principal to be paid
Repayment schedule                          according to individual repayment schedule depending
                                            on cash flow; however there might be exceptions.

Collateral and equity
                                            The general requirements of any commercial bank.
requirements

                                            Documents required for Credit Line Application

                                            1. Copies or photos of the certified Commercial
                                            Registration from the Ministry of Commerce*
Application forms, supporting
documents, other input                      2. Copies or photos of the latest shareholders’ list
necessary
                                            3. Copies or photos of Value Added Tax Registration

                                            4. Copies or photos of the latest and of the past 2 years
                                            certified audited financial statements such as Balance

    Financial Schemes and Facilities for SMI: Comprehensive Directory                        109
                                           Sheet and Profit & Loss Statement

                                           5. List of all loans with other financial institutions

                                           6. Bank statement (past 6 months)

                                           7. Records of exportation such as L/C, purchase order,
                                           sales contract, Credit notes

                                           8. Copy of BOI Promotion Certificate (if available)

                                           9. Copies or photos of owner certificate of collateral
                                           securities

                                           * When the credit is approved, a new one, not older than
                                           30 days, must be submitted before signing the contract

                                           Additional Documents Required for Contractual Process

                                           1. Copies of Identification Card or Passport, Residential
                                           Registration, and Work Permit of all authorized directors

                                           2. Copies of the certified company’s stamp registration

                                           3. Copies or photos of Memorandum of Association

                                           4. Minutes of the Board meeting stating the company’s
                                           policy to acquire financial support from EXIM Bank

                                           5. Copies of Identification Card, Residential Registration,
                                           and Marriage Certificate (if available) of guarantors (and
                                           spouse)

                                           6. Copies of business licenses certified by the Thai
                                           Governmental Agencies such as Factory license,
                                           Licenses from the Ministry of Public Health or the Royal
                                           Forestry Department

                                           Usually not over 2 weeks. However many times the
                                           applications are not submitted completely and can
Average processing time
                                           therefore not be proposed to the credit committee. The
                                           customer is than asked to provide missing information.

                                           No reporting required for the customer. EXIM conducts
Reporting and monitoring                   its own monitoring, goes to check the progress of the
requirements                               project on-site and checks if the loan repayment is on
                                           schedule.

                                           EXIM Bank, Business Promotion Department,
Contact for further details
                                           EXIM Building, 1193 Phaholyotin Rd.


   Financial Schemes and Facilities for SMI: Comprehensive Directory                          110
                                            Phayathai, Bangkok 10400

                                            Tel.: 271-3700, 278-0047, 617-2111 Fax: 271-3204



Name of scheme/facility                     Term Loan for Machinery Upgrading

Name in Thai language

Running number in this report               21

Name of service provider                    EXIM Bank

Coverage                                    Head Office Bangkok plus 6 branch offices

                                            A term loan denominated in Baht and US Dollar
Background                                  provided to exporters for the upgrading or replacement
                                            of used machinery.

Basic characteristics

Total financial volume earmarked
                                 N/A
for this scheme/facility

Total financial volume of the
                                            The total credit line extended was 24,940 million baht in
delivering organization’s credit
                                            1998
portfolio

Time limit of the scheme/facility           Since EXIM’s start of operations

                                            By the end of 1998, the total line of credit granted to
                                            export manufacturers for machinery replacement and
Total volume disbursed to date
                                            upgrade was 674.7 million baht, doubling from 331.6
                                            million baht by the end of 1997.

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            The loan is divided into two portions. The first 25%
                                            portion is in Baht and is derived from the Bank of
                                            Thailand's Fund. The remaining 75% is provided in US
Eligibility                                 Dollar or Baht according to the exporter's preference.

                                            The exporter utilizing this facility is required to possess a
                                            machinery replacement certificate issued by the Ministry
                                            of Industry or relevant agencies authorized by the

    Financial Schemes and Facilities for SMI: Comprehensive Directory                        111
                                            Ministry of Industry. For textile industry, a certificate from
                                            the Thailand Textile Institute is required.

Loan amount (minimum and                    No minimum and maximum amount, Loan amount
maximum)                                    depends on the needs of the customer

Currency                                    Baht or US Dollar

                                            Baht: EXIM Prime Rate + 1,5%
Interest rate
                                            US Dollar: LIBOR + 3.5%

                                            Depends on the type and the requirements of each
Disbursement schedule
                                            project

Maximum payback and grace                   Varies according to the exporter's repayment ability but
period                                      not exceeding 7 years.

                                            Interest is to be paid monthly, principal to be paid
Repayment schedule                          according to individual repayment schedule depending
                                            on cash flow; however there might be exceptions.

Collateral and equity
                                            The general requirements of any commercial bank.
requirements

                                            Documents required for Credit Line Application

                                            1. Copies or photos of the certified Commercial
                                            Registration from the Ministry of Commerce*

                                            2. Copies or photos of the latest shareholders’ list

                                            3. Copies or photos of Value Added Tax Registration

                                            4. Copies or photos of the latest and of the past 2 years
                                            certified audited financial statements such as Balance
                                            Sheet and Profit & Loss Statement
Application forms, supporting
documents, other input                      5. List of all loans with other financial institutions
necessary
                                            6. Bank statement (past 6 months)

                                            7. Records of exportation such as L/C, purchase order,
                                            sales contract, Credit notes

                                            8. Copy of BOI Promotion Certificate (if available)

                                            9. Copies or photos of owner certificate of collateral
                                            securities

                                            * When the credit is approved, a new one, not older than
                                            30 days, must be submitted before signing the contract

    Financial Schemes and Facilities for SMI: Comprehensive Directory                          112
                                           Additional Documents Required for Contractual Process

                                           1. Copies of Identification Card or Passport, Residential
                                           Registration, and Work Permit of all authorized directors

                                           2. Copies of the certified company’s stamp registration

                                           3. Copies or photos of Memorandum of Association

                                           4. Minutes of the Board meeting stating the company’s
                                           policy to acquire financial support from EXIM Bank

                                           5. Copies of Identification Card, Residential Registration,
                                           and Marriage Certificate (if available) of guarantors (and
                                           spouse)

                                           6. Copies of business licenses certified by the Thai
                                           Governmental Agencies such as Factory license,
                                           Licenses from the Ministry of Public Health or the Royal
                                           Forestry Department

                                           Usually not over 2 weeks. However many times the
                                           applications are not submitted completely and can
Average processing time
                                           therefore not be proposed to the credit committee. The
                                           customer is than asked to provide missing information.

                                           No reporting required for the customer. EXIM conducts
Reporting and monitoring
                                           its own monitoring, goes to check the upgrading on-site
requirements
                                           and checks if the loan repayment is on schedule.

                                           EXIM Bank, Business Promotion Department,

                                           EXIM Building, 1193 Phaholyotin Rd.
Contact for further details
                                           Phayathai, Bangkok 10400

                                           Tel.: 271-3700, 278-0047, 617-2111 Fax: 271-3204




   Financial Schemes and Facilities for SMI: Comprehensive Directory                      113
5.3 Bank of Agriculture and Agricultural Cooperatives (BAAC)

5.3.1 Introduction

In 1966 the Thai government established the Bank for Agriculture and
Agricultural Cooperatives (BAAC) as a state enterprise under the jurisdiction of
the Ministry of Finance. The bank’s mission was to extend credit more widely,
directly to individual farmers as well as through farmer institutions. The objective
of BAAC is to provide financial assistance in order to promote agriculture as an
occupation for farmers and farmer institutions, to help farmers and farmer
institutions increase their productivity and incomes and to offer deposit services
to farmers throughout the country similar to those offered by commercial banks.
The BAAC extends financial assistance to farmers and farmer institutions
through loans for investment in agriculture and in farm-related activities to earn
additional family income. It was established in 1966. Loans are based on a
group guarantee principle. BAAC is quite successful in applying the group
guarantee principle in its traditional lending business. In the past 6 years the
ratio of repayment to principal matured-a measure of the recovery rate- has
averaged 86,5% The BAAC has some 4.5 million farm clients, 85% of
Thailand’s farm population, in some 200.000 groups, and it has trained 400.000
group leaders who are elected by members.

BAAC has a decentralized structure of authority, function and responsibility. The
Bank has a large network of Branches including 72 Provincial Offices, 431
District Offices, 64 Mini Branches, 91 Sub Branches, 795 District Field Offices
and 2 Agricultural Central Markets. Credit services provide loans directly to
individual farmers. The borrowing farmers have to be registered as BAAC
clients. They submit their loan proposals to a BAAC credit officer at their local
branch or field office. The credit officer helps and advises farmers on the client
registration procedures. Operating loans are based on the crop or livestock
cycle but longer-term loans are made to finance equipment – medium term 3-5
years and longer term up to 10 years. The BAAC takes collateral over
equipment being purchased with loan proceeds and requires land collateral for
loans over 60.000 Baht.

5.3.2 General services

Short Term Loans for Agricultural Production The objective of this type of
loan is to meet production costs during a given production season, such as
costs of land preparation, seeds, fertilizers and labor hiring. This type of loan
must be repaid within twelve months, except in extraordinary cases where the
repayment may be made within a period of eighteen months.

Loans for the Postponement of the Sale of Farm Produce The objective of
this type of loan is to help farmers meet their household expenses while they
postpone the sale of produce in order to avoid selling during periods of over-
supply and low prices. This type of loan must normally be repaid within six
months.



Financial Schemes and Facilities for SMI: Comprehensive Directory                114
Medium Term Loans Medium term loans are intended for investments in
agricultural assets that can be used for more than one year, for example loans
for investment in agricultural land reclamation or improvement or the purchase
of agricultural machinery or livestock. The repayment of this type of loan is
normally required within three years, except in extraordinary cases where the
repayment may be extended to five years.

Cash Credit Loans A cash credit line is a kind of short-term loan for crop
production, which provides great convenience for farmer clients. Once a farmer
has entered into a cash credit agreement he or she can make several
withdrawals up to the loan ceiling and within the period of the agreement, which
will not exceed five years.

Long Tern Loans for Refinancing Old Debts This type of loan is for the
redemption and repurchase of agricultural land that originally belonged to the
farmers, their married partners, children or parents. These loans are intended to
maintain the farmers' land ownership. They are also provided for agricultural
expenses of the first planting season, investment in necessary farm assets and
expenses involved with mortgage of immovable property.

Long Term Loans for Agricultural Investment This type of loan is intended
for investments in fixed agricultural assets to improve existing production
enterprises or introduce new ones. These investments are relatively expensive
and require a long period of time before the enterprises can be expected to
break even. Repayments of this type of loan are normally required within fifteen
years, or within twenty years in extraordinary cases. A grace period for the
repayment of principal and/or the payment of interest may be allowed but
normally not for more than the first five years. This type of loan can be available
to individual borrowers and to farmers in special projects.

Loans for Farm-Related Activities This type of loan is intended to meet
expenses and/or investment costs for activities related to agriculture. These
activities use agricultural produce, either from farmers themselves or provided
from other sources, as raw materials for processing as finished of semi-finished
goods for sale. Qualifying activities may be for either production or services
related to agriculture. This type of loan may be classified into two types:

Short-term loans for production are intended to meet the production costs of
farm-related activities. Repayment of these loans is normally required within
twelve months.

Long-term loans for investment in assets are used in farm-related activities.
Repayment of these loans is normally required within fifteen years, or in twenty
years in extraordinary cases.

Credit for Environmental Preservation. This is a scheme financially
supported by the Asian Development Bank (ADB) and the Overseas Economic
Cooperation Fund (OECF). The scheme intends to boost production and
income of rural farm households by promoting farm and farm-related activities;
supporting farmers to participate in environmental preservation; and
encouraging investments for environmental preservation. ADB has also

Financial Schemes and Facilities for SMI: Comprehensive Directory               115
supported training organized for working personnel and farmers to improve their
working knowledge and ability

Long-term loans for investment in assets. Investment in forest planting,
including land preparation, planting seedling, supplies for forest planting and
necessary costs of investment (excluding investments in land purchase and
eucalyptus planting). Investment in farm-related activities intended to raise farm
household income. The activities must conform with environmental preservation
laws, and must not damage natural resources or the environment. Excluded are
activities involving land purchase, tobacco, forest cutting, refinancing old debts,
trucks not used for farm-related activities and agricultural trade without value
added. Investments in the construction of biogas ponds and supplies and
equipment involved with biogas ponds

5.3.3 Financial assistance for small and medium-sized enterprises

Financial assistance towards SMEs from BAAC focuses on small and micro
scale enterprises. This is similar to the GSB and different from other
government agencies such as IFCT and the commercial banks that focus more
on the medium scale sector within the SME scope. Due to BAAC supporting
mostly small and micro scale enterprises the internal terminology used is not
SME but MSE. However, officially the bank uses the term SME. Support is
given mainly to farmers and their families’ upcountry. Only since November
1999 BAAC started to give loans to projects, which are not directly related to
farming activities. This new scheme aims at SMEs. (Activities in the farming
sector are not interpreted as SME by BAAC) However, the condition that
applicants must be farmers still exists. The application can only be made by a
private person (or a cooperative). Juristic persons cannot apply for loans under
any financial scheme of BAAC, including the SME scheme.

Statistics of SME financial support by BAAC

      Month/year                  Number of                   Amount of loans
                                  companies                   granted (million Bt.)

                                  Actual         Total        Actual      Total
                                  month                       month

1     November 1999               2300           2300         561         561

2     December 1999               1333           3633         623         1184

3     January 2000                925            4558         507         1691

4     February 2000               945            5503         518         2209

5     March 2000                  -              5503         642         2851

6     April 2000                  -              5503         270         3121

7     May 2000                    55             5558         11          3132


Financial Schemes and Facilities for SMI: Comprehensive Directory                     116
   5.3.4 Specific loans for SMEs

                                           SME loan program (Credit for activities outside the
Name of scheme/facility
                                           agricultural sector)

Name in Thai language

Running number in this report              22

                                           Bank for Agriculture and Agricultural Cooperatives
Name of service provider
                                           (BAAC)

Coverage                                   Around 580 branches all over Thailand

                                           Existing customers of the BAAC may receive credit for
                                           activities in industry, trade or service field. These
                                           activities must me made by the customer himself or
                                           family members (spouse, children, grandparents), which
                                           live under the support of the farmer. There are two main
Background                                 objectives for the loan:

                                                   2.1 Loan for working capital (expenses) for
                                           activities in the industrial, trade or service field.

                                                  2.2 Loan for investment in activities in the
                                           industrial, trade or service field.

Basic characteristics

Total financial volume earmarked
                                 4 billion Baht for 2000
for this scheme/facility

Total financial volume of the
delivering organization’s credit           140 billion Baht
portfolio

Time limit of the scheme/facility          Started in November 1999, unlimited duration

Total volume disbursed to date             3.132 million Baht as of May 2000

                                           1999: 10.000
Number and type of clients
                                           Target for 2000: 20.000
serviced to date
                                           As of May 2000 5.553 SME clients have been served

Conditions


   Financial Schemes and Facilities for SMI: Comprehensive Directory                       117
                                            Must have Thai nationality;

                                            Must be at least twenty years of age;

                                            Must be genuine farmers as defined in BAAC
                                            regulations;

                                            Must have sufficient farm experience or training in the
                                            field of agriculture;

                                            Must be permanent residents and undertake major
                                            agricultural activities within the operating area of the
                                            BAAC branch where client registration will be made, for
                                            a period of not less than one year;
Eligibility                                 Must produce a reasonable annual marketable surplus
                                            of farm produce or be able to improve their agricultural
                                            activities to increase their incomes enough to repay their
                                            loans;

                                            Must be honest, well known, industrious and thrifty;

                                            Must not be of unsound mind or mentally infirm;

                                            Must not be bankrupt or insolvent;

                                            Must not have been expelled by any BAAC branch, and
                                            must not currently have an outstanding loan with any
                                            agricultural cooperative, farmer association or other
                                            institution providing agricultural credit.

Loan amount (minimum and                    Average is 200.000, no minimum, maximum 5 million
maximum)                                    Baht

Currency                                    Thai Baht

                                            Depends on the customers rating from MLR up to MLR
Interest rate
                                            + 3% (MLR=9%)

Disbursement (Draw down)
                                            Depending on the progress of the project
schedule

Maximum payback and grace                   Max. 15 years (including grace period max. 2 years). In
period                                      special cases the loan period may be 20 years

                                            Depending on the cash flow of the project, Principal and
Repayment schedule
                                            Interest are always paid together (Installment).

Collateral and equity                       Land mortgage, Joint liability (2 guarantors for one
requirements                                borrower), Long-term bank deposit (80%)


    Financial Schemes and Facilities for SMI: Comprehensive Directory                     118
                                           ID Card of borrower

                                           House registration
Application forms, supporting
documents, other input                     Wedding certificate
necessary
                                           Land ownership certificates

                                           Bank account (savings book)

                                           Depending on loan amount and customer relationship.
                                           Loans fewer than 200.000 Baht for old customers take
Average processing time                    an average of 5 days processing time. Loans over
                                           200.000 take 1 month after the application documents
                                           are complete.

Reporting and monitoring                   No reporting necessary. BAAC will monitor the project
requirements                               every 3 months by doing an on-site visit.

                                           Bank for Agriculture and Agricultural Cooperatives
                                           (BAAC), 469 Nakornsawan Rd., Bangkok 10300,
Contact for further details                Thailand

                                           Tel. 2800180 Fax: 2821339



   5.4 Krung Thai Bank (KTB)

   5.4.1 Introduction

   Krung Thai Bank is the largest state-owned bank in Thailand under the Ministry
   of Finance. The bank recognized the urgent need to change to remain
   competitive came in the early 1990s as Thailand became increasingly
   integrated with the regional and global economy and liberalization of
   international trade and financial services loomed large. The Bank's legacy from
   being state-owned included both positive and negative factors. On the positive
   side, the Bank had developed a large, nation-wide branch network; it had blue
   chip shareholders and a secure source of deposits from government agencies.
   On the other side of the balance sheet, the Bank suffered from a bureaucratic,
   risk averse corporate culture and was under invested in human resource
   development and modern information technology systems.

   The Bank is in the process of a fundamental redesign of its risk management
   processes to suit each type of customer. This redesign covers the management
   of individual loans, from application and analysis to approval, monitoring and
   collection, and portfolio management. It also includes basic credit skills and
   business credit training for all related staff. At the retail level, which includes
   individual customers and small-scale businesses, Rule Based Lending has
   been widely introduced with very positive results. For medium-size businesses
   and larger corporate customers a new range of credit analysis tools have been

   Financial Schemes and Facilities for SMI: Comprehensive Directory                    119
developed and successfully introduced. Customer response has been excellent,
due to a significant reduction in the loan approval time, while the Bank's risk
management has improved significantly.

Collection activities have also been reorganized and intensified. In-branch debt
collection systems have been refined and introduced nation-wide with good
results. A Small Loan Collection Center has been established to focus on
outstanding loans to small customers, and particularly individuals, utilizing new
technologies. For medium-size business customers and corporates new
medium and corporate workout procedures have been developed and are
gradually being introduced. To better serve the Bank's medium-size business
customer’s seven new one-stop Business Centers are already in operation with
10 more planned for 1998. These Business Centers act as support centers for a
cluster of nearby retail branches. The centers will oversee credit extension and
provide marketing and credit services. A pilot Corporate Banking Center is now
in operation to service large-scale corporate customers. This Center offers a
complete range of corporate banking services.

5.4.2 KTB’s loan services in general

Commercial Loans

Refer to loans made to wholesale and retail traders of chemical products and all
kinds of miscellaneous goods.

Industrial Loans

Refer to loans made to all groups of industrial entrepreneurs.

Service Business Loans

Are made to all groups of service business entrepreneurs such as hotels,
hospitals, condominiums and apartments etc.

Agriculture and Agro-industry Loans

Loan services provided for entrepreneurs dealing with agricultural products and
agro-industrial products of all kinds.

Construction and Real Estate Loans

Loan services provided for entrepreneurs dealing with construction work and
real estate development for commercial purposes. Project under KTB's Support

Furthermore, the bank provides its customers/importers with the following
services and credit:

         Service of Advising Letter of Credit

         Foreign Bills Purchased under Letter of Credit

         Foreign Bills for Collection Purchased

Financial Schemes and Facilities for SMI: Comprehensive Directory             120
           Transfer of Letter of Credit

           Confirmation of Letter of Credit

           Packing Credit

5.4.3 Financial assistance for small and medium-sized enterprises

Krung Thai Bank Plc in cooperation with Industrial Ministry jointly extended 10
billion baht loan for Small and Medium Enterprise in 1999 in order to increase
liquidity and upgrade manufacturing and management in SMEs. The support
also aimed at 120,000 jobs in rural areas. KTB was provided 60% of the loan
amount from the Bank Of Thailand. According to KTB's chairman the 10 billion
baht program is the part of Bt 50 billion baht credit in SMEs program that the
bank will lend this year, a six percent of credit growth.36

At the end of June 2000 KTB signed agreements with the Small Industry Credit
Guarantee Corporation to extend up to one billion baht in loans to small and
medium-sized enterprises. Under the agreement, KTB will screen applications
from small companies seeking loans but lacking sufficient collateral. If the loans
are approved, the guarantee corporation will endorse the loans, making credit
available to companies that might otherwise have been rejected by the bank.
Eligible companies must have assets below 200 million baht. The corporation
will cover up to half the difference between the collateral available and the total
loan amount, with a maximum of 10 million baht per project. KTB will pay the
corporation a service fee of 1,75% per year of the amount guaranteed.37

KTB offers loans to SMEs from the following groups:

           Participants in Industrial Restructuring Plan

           SMEs in Rural Development Support Program (Sor-Or-Chor)

           SMEs Industrial Entrepreneur Development Program (Kor-Por-Or)

           Other SMEs investment in Rural Area, participating in Regional
           /Provincial Industry Office's support.

           General SMEs in Bangkok and upcountry area.




36
     SMEs get new Bt 10 bn credit line, Tne Nation, 01/26/1999
37
     “In brief. KTB expanding loans to SMEs”, Bangkok Post, 27.6.00

Financial Schemes and Facilities for SMI: Comprehensive Directory               121
   5.4.4 Specific Loans for SMEs


                                           SME promotion program (MoI joint facility with
Name of scheme/facility
                                           Krung Thai Bank)

Name in Thai language                                       …          SMEs

Running number in this report              23

Name of service provider                   Krung Thai Bank (joint facility with the MoI)

Coverage                                   623 branches (as of March 2000)

                                                    To Support Environmental Friendly SMEs in Up
                                                    Country Areas to Have Sustainable Growth.

                                                    To Upgrade Income and Quality of Life for People
                                                    in Up Country Areas

                                                    To Create More Employment, Receive Labor to
                                                    the Market and to receive Unemployment Labor
Background
                                                    from Economic Crisis.

                                                    Long Time Loan for Setting Up New Factories in
                                                    Up Country Area, for Building and Machinery for
                                                    Local People or Group of People

                                                    Working Capital Loans for Buying Materials and
                                                    Cost of Legations

Basic characteristics

                                           Target for 1999: 4,5 Billion Baht

                                           Target for 2000: 5,5 Billion Baht

                                           Total: 10 Billion Baht

                                           425 SMEs in Rural Area Program: 1.15 Billion Baht
Total financial volume earmarked
for this scheme/facility         250 SMEs in Industrial Manufacturer Development
                                 Program: 1.25 Billion Baht

                                           500 SMEs to Improve efficiency, manufacturing,
                                           management and marketing: 100 Million Baht

                                           Establishment and Expansion of Potential SMEs: 7.5
                                           Billion Baht


   Financial Schemes and Facilities for SMI: Comprehensive Directory                       122
Total financial volume of the
delivering organization’s credit
portfolio

Time limit of the scheme/facility           1999-2000

                                            Expected: 9,997.5 million baht (total number of all SMEs
Total volume disbursed to date
                                            projects from 1999-2000)

Number and type of clients                  Expected: 2,675 SMEs nationwide (total number of all
serviced to date                            SMEs projects from 1999-2000)

Conditions

                                            Manufacturing Factor Categories under Industrial Restructuring
                                            Plan.

                                            Cottage and Hand craft

                                            Retail and Wholesale Business from Agricultural Sector,
                                            Restaurants, Jewelry or Garment Retailers.

                                            Service Sectors

                                            Must Belong to One of The Following Categories under Industrial
                                            Restructuring Plan Viz.: Food and Animal Food, Textile and
                                            Garments, Automotive and Auto Parts, Electricity and Electronics
                                            and Parts, Ceramics and Glass, Rubber and Rubber's products,
                                            Shoes and Leathery, Drugs and Chemical Substances, Gems and
                                            Jewelry, Woods and Furniture, and Plastic Products.

                                            SMEs Under The Following Projects: SMEs in Rural Development
                                            Support Program (Sor Or Chor), SMEs Industrial Entrepreneur
                                            Development Program (Kor Por Or.) and new investment program
Eligibility                                 SMEs and other Investors Who Want to Expand or Establish
                                            Enterprises in Up Country Area Who Ask for Advice and Support
                                            Information in Setting Up Business from DIP or ask for permission
                                            to Set Up New Factory of Factory

                                            Expansion from Regional /Provincial Industry Office

                                            Cottage and Handcraft Is Preferred

                                            Must have under 200 million Baht Fixed Assets (Small Enterprises
                                            must have under 50 Million Baht Fixed Assets, Medium Enterprises
                                            must have 50 - 200 million fixed assets.)

                                            Applicants' Enterprise Must Be Environmental Friendly

                                            Applicants' Enterprises must have Ministry of Industry's support,
                                            help or promotion on the following fields such as, Administration,
                                            Management, Technical, Knowledge, Manufacturing, Marketing,
                                            Finance, Human Resource Development or others.

                                            Manufacturing SME Enterprises must have a valid factory permit

    Financial Schemes and Facilities for SMI: Comprehensive Directory                               123
                                            Eligible Candidate Can Be from All Province in Thailand


Loan amount (minimum and
                                            Maximum: 50 Million Baht
maximum)

Currency                                    Thai Baht

                                            MRR rate (currently 9.25% per annum)
Interest rate
                                            Interest Rate Will Be Revised Every Six Months of
                                            Projects' processing time

Disbursement schedule                       Depend on type of business

                                            Loan repayment within 5-10 Years with two year grace
Maximum loan period
                                            period

Repayment schedule                          Monthly interest and principal payment

Collateral and equity
                                            Depending on Bank's Protocol
requirements

                                            Private Persons

                                            Copy of House Certificate

                                            Copy of Marriage/ Divorce/Death Certificate of Spouse

                                            Copy of commercial registration (Ror Ngor 4) if Applicants Is
                                            Manufacturing Enterprise.

                                            Statement (Six Month Before Sending Application)

                                            Saving Account Passbook, Fixed Saving Account Passbook of
                                            Banks Financial Institutions (If Applicants are Banks of Financial
                                            Institutions' Customer)
Application forms, supporting
                                            Copy of the Tax ID card
documents, other input
necessary                                   Other documents that will be beneficial for Applying for Loans or
                                            Give Good Credit Support to Applicants

                                            Legal Entities

                                            Shareholder Meeting Protocol Indicating the decision to Apply for
                                            Loans

                                            Commercial Registration Documents

                                            Copy of the shareholder memorandum

                                            Copy of Shareholder list

                                            Copy of House Certificate and Identity Card of Authorized Person

    Financial Schemes and Facilities for SMI: Comprehensive Directory                               124
                                           Copy of the factory permit

                                           Copy of Statement, Loan Contract and Mortgage Contract

                                           Copy of Balance Sheet up to Three Years before Application

                                           Copy of Saving Account Passbook from Financial Institute

                                           History of Enterprises or Business

                                           Executives' Profile

                                           Project Details

                                           Marketing Plan

                                           Copy of Assets (in Full)


                                           Applicants Send Request to DIP DIP process potential
                                           SMEs project for KTB's Approval  KTB Loan Protocol
Average processing time                      Loan Granted for Successful Applicants

                                           Processing time is depending on Bank's Protocol and
                                           DIP's Processing Time

Reporting and monitoring                   A credit officer is responsible for monitoring the business
requirements                               three times per year.

                                           Department of Industrial Promotion, 4th Floor DIP
                                           Building, Rama VI Road, Ratchathewi, Bangkok 10400

                                           And every Provincial Branch of the DIP
Contact for further details
                                           Krung Thai Bank, 35 Sukumwit Road, Soi 3, North
                                           Klongtoey, Wattana, Bangkok 10110, Tel.: 653-2333

                                           And every Local Krung Thai Branches



Name of scheme/facility                    Promissory Note Project

Name in Thai language

Running number in this report              24

Name of service provider                   Krung Thai Bank

Coverage                                   623 branches (as of March 2000)



   Financial Schemes and Facilities for SMI: Comprehensive Directory                           125
Background

Basic characteristics

Total financial volume earmarked 10,000 Million Baht 60% of loan comes from BOT and
for this scheme/facility
                                 40% of loan comes from Krung Thai Bank

Total financial volume of the
delivering organization’s credit
portfolio

Time limit of the scheme/facility           2 year period (1999-2001)

                                            Expected: 9,997.5 million baht (total number of all SMEs
Total volume disbursed to date
                                            projects from 1999-2000)

Number and type of clients                  Expected: 2,675 SMEs nationwide (total number of all
serviced to date                            SMEs projects from 1999-2000)

Conditions

                                            Not necessary to be a bank’s customer before

                                            Fixed assets not more than 200 million baht in
                                            Manufacturing business and service business
Eligibility
                                            Fixed assets not more than 100 million baht in
                                            wholesales business

                                            Fixed assets not more than 60 million baht in retail
                                            business

Loan amount (minimum and
                                            Maximum: 25 million baht
maximum)

Currency                                    Baht

Interest rate                               MLR-1% (MLR Rate 8.75%)

                                            Loan is given in form of a promissory note, the maturity
Disbursement schedule                       is up to the approval of the bank (usually not more than
                                            120 days)

Maximum payback and grace
                                            5 Years with Annual Contract Renewal
period

Repayment schedule                          Interest must be paid on Maturity Date



    Financial Schemes and Facilities for SMI: Comprehensive Directory                     126
                                           Blank Estate

Collateral and equity                      Estate with Buildings
requirements
                                           Factories

                                           Machinery

                                           Copy of commercial registration

                                           Copy of certificate of incorporation

                                           Bank Statement (six month period)

                                           Copy of the shareholders register

                                           Copy of the latest shareholders’ list
Application forms, supporting
                                           Copy of House Certificate and Identity Card of
documents, other input
                                           Authorized Person
necessary
                                           Copy of the factory permit

                                           Copy of Statement, Loan Contract and Mortgage
                                           Contract

                                           Copy of financial statement (Three Years period)

                                           Other documents that will be beneficial for Applying for
                                           Loans

                                           1 month (both BOT and Krung Thai Bank evaluate the
Average processing time
                                           application)

Reporting and monitoring                   A review is performed on the maturity of the promissory
requirements                               note by BOT and Krung Thai bank.

                                           Krung Thai Bank, 35 Sukhumvit Road, Soi 3, North
Contact for further details                Klongtoey, Wattana, Bangkok 10110, Tel.: 653-2333

                                           And every Local Krung Thai Branches




   Financial Schemes and Facilities for SMI: Comprehensive Directory                     127
                                            Credit Guarantee for SMEs between Krung Thai
Name of scheme/facility                     Bank and Small Industry Credit Guarantee
                                            Corporation (SICGC)


Name in Thai language
                                                                                       (    )
Running number in this report               25

Name of service provider                    Krung Thai Bank

Coverage                                    623 branches (as of March 2000)

Background

Basic characteristics

Total financial volume earmarked
                                 1,000 Million Baht
for this scheme/facility

Total financial volume of the
delivering organization’s credit
portfolio

Time limit of the scheme/facility           Unlimited (start since June 26, 2000)

Total volume disbursed to date              N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            Applicants must be either Thai nationality or legal entity
                                            that operate in Thailand.

                                            Must be SMEs only and own total fixed assets under
                                            100 million baht.
Eligibility
                                            Land and buildings or factories located in that estate
                                            must be used as credit guarantee.

                                            Applicants must have at least 20% shares in total capital
                                            of the enterprises asked for credit guarantee.

Loan amount (minimum and                    Not more than half of the total previous loan and not
maximum)                                    more than 20 million baht


    Financial Schemes and Facilities for SMI: Comprehensive Directory                      128
Currency                                    Thai Baht

                                            Credit guarantee fee is 1.75% per year calculated from
Interest rate                               the guaranteed loan. The fee has to be prepaid every
                                            year.

Disbursement schedule                       Depend on each projects

Maximum payback and grace
                                            Full Loan Amount with Interest within 5 years
period

Repayment schedule                          Follow the regular bank rules

                                            Personal Guarantee

                                            Blank Estate
Collateral and equity
                                            Estate with Buildings
requirements
                                            Factories

                                            Machinery

                                            The form that notifies the status of guarantee persons to
                                            SICGC

                                            Copy of commercial registration

                                            Copy of certificate of incorporation

                                            Bank Statement (six month period)

                                            Copy of the shareholders register

Application forms, supporting               Copy of the latest shareholders’ list
documents, other input
necessary                                   Copy of House Certificate and Identity Card of
                                            Authorized Person

                                            Copy of the factory permit

                                            Copy of Statement, Loan Contract and Mortgage
                                            Contract

                                            Copy of financial statement (Three Years period)

                                            Other documents that will be beneficial for applying for
                                            loans

Average processing time                     1-2 months


    Financial Schemes and Facilities for SMI: Comprehensive Directory                       129
Reporting and monitoring                   A credit officer is responsible for monitoring the business
requirements                               three times per year.

                                           Krung Thai Bank, 35 Sukhumvit Road, Soi 3, North
                                           Klongtoey, Wattana, Bangkok 10110, Tel.: 653-2333
Contact for further details
                                           And every Local Krung Thai Branches




   Financial Schemes and Facilities for SMI: Comprehensive Directory                      130
6. Commercial Banks

With the exception of a few joint facilities with state institutions the SME loan
schemes of all Thai commercial banks are very similar. For example the
Promissory note program from BOT and the packing credit facility from EXIM
can be applied to at any commercial bank. Differences in the banks own
facilities are quite small, such as the interest rate. As a large amount of the
banks clients actually are SMEs (In case of BBL 40%) most of the banking
products offered are suitable for SMEs. To present all of them would not meet
the purpose of this directory. Therefore only the specific facilities set up in
course of the recent SME promotion activities of the state are presented here.

6.1 Bangkok Bank (BBL)

6.1.1 Introduction

From the humble beginning in December 1944, Bangkok Bank has grown by
leaps and bounds and is today, not only the largest Thai commercial bank, but
also one of the largest in South East Asia. Total assets stand at approximately
US$ 40.00 billion, and the present workforce numbers about 25,000 persons.
The Banks present domestic network exceeds 450 branches, all on-line.
Bangkok Banks vision in its overseas operations is reflected by the
concentration of its branch network in the Asian region, which has proven to be
the world’s highest growth area during the past 2 decades. Of the Banks 27
branches and representative offices worldwide, 23 are located in East and
Southeast Asia. Bangkok Bank now has a presence in all ASEAN countries
except Brunei, as well as in the 3 Indo-China countries, and in Myanmar.
Special attention is being given to China, where the Bank already has 2
branches and 2 representative branches, with 2-3 more branches being
planned in the near future.

6.1.2 Financial assistance for small and medium-sized enterprises

Bangkok Bank currently lends about 40% of its credit to SMEs, with the balance
lent to large corporations. The bank intends to reverse this breakdown within
five years, and hopes to raise its new lending to SMEs by 10% this year.
However applicants first have to complete debt restructuring before they can
request new loans. 38 Bangkok Bank has a program to extend up to 15 million
baht in loans to SMEs, with interest rates charged at minimum retail rates,
currently 8,5%. Since January, the bank has received applications under the
program for loans totaling about two billion baht. 39 The Bank signed an
agreement with the MoI in June 2000 to set up a 10-billion-baht financial




38
     Bangkok Post, “Bangkok Bank to increase loans”, June 2000.
39
     Bangkok Post, “Bangkok Bank to increase loans”, June 2000.

Financial Schemes and Facilities for SMI: Comprehensive Directory             131
   support program for SMEs. Applicants can either qualify for loans charged at
   minimum retail rates for two years, or participate in a program with the Bank of
   Thailand where rates are charged at minimum lending rates, minus one
   percentage point for 5 years.



Bangkok Bank Public Company                Loan Rate effective 11.Jan 2000
Limited

Minimum Loan Rate (MLR)                    8.00

Minimum Overdraft Rate (MOR)               8.50

Minimum Retail Rate (MRR)                  8.50

Ceiling Rate                               MRR + 3.25

Ceiling Default Rate                       14.50



   6.1.3 Specific Loans for SMEs

                                           Credit for SMEs Program (MoI joint facility with
Name of scheme/facility
                                           Bangkok Bank)

Name in Thai language                                  “               SMEs”
Running number in this report              26

Name of service provider                   Bangkok Bank

Coverage                                   547 branches nationwide

                                           To invest in new projects, expand business and increase
                                           the liquidity of SMEs that are approved by MoI

                                           Short and Long Term Loans
Background
                                           For Manufacturing Purposes Only Such as, Raw
                                           Material, Machinery, Employees' Salary and
                                           Transportation Fare.

Basic characteristics

Total financial volume
earmarked for this                         10,000 Million Baht (For 2000-2001)
scheme/facility



   Financial Schemes and Facilities for SMI: Comprehensive Directory                   132
Total financial volume of the
delivering organization’s credit           930 billion baht
portfolio

Time limit of the scheme/facility          2 years (February 2000-December 2001)

Total volume disbursed to date             2,000 million baht

Number and type of clients
                                           N/A
serviced to date

Conditions

                                           General Manufacturing SMEs Enterprises

                                           Manufacturing Enterprises

                                           Retail - Wholesales Business

                                           Import - Export Business
Eligibility                                Agricultural Industries

                                           Not more than 200 million baht in fixed assets

                                           Potential to pay back the loan

                                           The business activity is not covered by EXIM banks
                                           support

                                           Minimum: 30,000 baht
Loan amount (minimum and
maximum)                                   Maximum: 100 million baht

Currency                                   Thai Baht

                                           MRR (from present to December 31, 2001) and normal
Interest rate
                                           rates thereafter.

Disbursement (Draw down)
                                           Depend on the completion of each projects
schedule

Maximum payback and grace
                                           Full Loan Amount with Interest within 5 years
period

Repayment schedule                         Follow the regular bank rules

                                           Blank Estate
Collateral and equity
requirements
                                           Estate with Buildings


   Financial Schemes and Facilities for SMI: Comprehensive Directory                       133
                                          Factories

                                          Machinery

                                          Private Persons

                                          Copy of House Certificate

                                          Copy of Marriage/ Divorce/Death Certificate of Spouse

                                          Copy of commercial registration (Ror Ngor 4) if Applicants Is
                                          Manufacturing Enterprise.

                                          Statement (Six Month Before Sending Application)

                                          Saving Account Passbook, Fixed Saving Account Passbook of
                                          Banks Financial Institutions (If Applicants are Banks of Financial
                                          Institutions' Customer)

                                          Copy of the Tax ID card

                                          Other documents that will be beneficial for Applying for Loans or
                                          Give Good Credit Support to Applicants

                                          Legal Entities

                                          Shareholder Meeting Protocol Indicating the decision to Apply for
                                          Loans
Application forms, supporting
documents, other input                    Commercial Registration Documents
necessary
                                          Copy of the shareholder memorandum

                                          Copy of Shareholder list

                                          Copy of House Certificate and Identity Card of Authorized Person

                                          Copy of the factory permit

                                          Copy of Statement, Loan Contract and Mortgage Contract

                                          Copy of Balance Sheet up to Three Years before Application

                                          Copy of Saving Account Passbook from Financial Institute

                                          History of Enterprises or Business

                                          Executives' Profile

                                          Project Details

                                          Marketing Plan

                                          Copy of Assets (in Full)

Average processing time                   Average 1-2 months


  Financial Schemes and Facilities for SMI: Comprehensive Directory                               134
Reporting and monitoring
                                            Every 3 months
requirements

                                            Bangkok Bank Head Quarters, 333 Silom Road,
Contact for further details
                                            Bangkok 10500, Tel.: 231-4333, 626-3629



                                            “RUAM JAI PATTANA SMEs” Privileged Loans
Name of scheme/facility
                                            available to SMEs

Name in Thai language                                          “          SMEs ”
Running number in this report               27

Name of service provider                    Bangkok Bank

Coverage                                    547 branch nationwide

                                            To help support and promote small and medium
Background                                  enterprises (SMEs), the backbone of our country’s
                                            economy

Basic characteristics

Total financial volume earmarked
                                 15,000 Million Baht
for this scheme/facility

Total financial volume of the
delivering organization’s credit            930 billion Baht
portfolio

Time limit of the scheme/facility           Until December 2000

Total volume disbursed to date              10,000 million baht

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            Bangkok Bank is extending credit facilities with special
                                            rate offer to SMEs in the following sectors.

                                            Production Sector
Eligibility
                                            Eligibility: Net fixed assets less than Baht 200 million.

                                            Types: Food & Animal feeds, Garments, Plastic

    Financial Schemes and Facilities for SMI: Comprehensive Directory                       135
                                            products, Electrical & Electronic appliance, Automobile
                                            parts, Canned food, Leather products & Footwear,
                                            Wood products & Furniture, Rubber & Rubber products,
                                            Ceramics & Glass, Gems & Jewelry, Publishing Etc.

                                            Service Sector

                                            Eligibility: Net fixed assets less than Baht 200 million.

                                            Photo fast, Car care & Car repairing, Beauty parlor, Hair
                                            dressing, Clinic, Cold storage, Laundry, VDO rental, Etc.

                                            Wholesale Sector

                                            Eligibility: Net fixed assets less than Baht 100 million.

                                            Types: Wholesale trade Jobber, Etc.

                                            Retail Sector

                                            Eligibility: Net fixed assets less than Baht 60 million.

                                            Types: Retail shop, Convenience store, Ice-cream shop,
                                            Book stand / store

                                            Both new and existing customers are eligible to apply.

Loan amount (minimum and                    New or additional credit can be extended by as high as
maximum)                                    Baht 100 million.

Currency                                    Thai Baht

                                            MRR rate for “cash” loan for the first two years, and
                                            normal rates thereafter.
Interest rate
                                            Regular fee apply to non-cash loans.

Disbursement schedule                       Depend on the completion of each projects

Maximum payback and grace
                                            Full Loan Amount with Interest within 5 years
period

Repayment schedule                          Follow the regular bank rules

                                            Blank Estate

Collateral and equity                       Estate with Buildings
requirements
                                            Factories

                                            Machinery


    Financial Schemes and Facilities for SMI: Comprehensive Directory                        136
                                           Copy of commercial registration

                                           Copy of certificate of incorporation

                                           Bank Statement (six month period)

                                           Copy of the shareholders register

                                           Copy of the latest shareholders’ list
Application forms, supporting
                                           Copy of House Certificate and Identity Card of
documents, other input
                                           Authorized Person
necessary
                                           Copy of the factory permit

                                           Copy of Statement, Loan Contract and Mortgage
                                           Contract

                                           Copy of financial statement (Three Years period)

                                           Other documents that will be beneficial for Applying for
                                           Loans

Average processing time                    1-2 months

Reporting and monitoring
                                           Every 3 months
requirements

                                           Bangkok Bank Head Quarters, 333 Silom Road,
Contact for further details
                                           Bangkok 10500, Tel.: 231-4333, 626-3629



Name of scheme/facility                    Promissory Note Project (P/N Re-BOT)


Name in Thai language
                                                                       (           .)
Running number in this report              28

Name of service provider                   Bangkok Bank




   Financial Schemes and Facilities for SMI: Comprehensive Directory                     137
Coverage                                    547 branches nationwide

                                            To increase the liquidity of SMEs by providing revolving
Background
                                            fund with low interest rate

Basic characteristics

                                 10,000 Million Baht
Total financial volume earmarked
for this scheme/facility         60% of Fund comes from Bank Of Thailand, The Rest is
                                 Replenished by Bangkok Bank

Total financial volume of the
delivering organization’s credit            930 billion baht
portfolio

Time limit of the scheme/facility           2 year period (2000-2001)

Total volume disbursed to date              N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            Not necessary to be a bank’s customer before

                                            Fixed assets not more than 200 million baht in
                                            Manufacturing business and service business
Eligibility                                 Fixed assets not more than 100 million baht in
                                            wholesales business

                                            Fixed assets not more than 60 million baht in retail
                                            business

Loan amount (minimum and                    Maximum: 100 million baht ( each promissory notes
maximum)                                    must have face value at least 10,000 baht )

Currency                                    Baht

Interest rate                               MLR-1% (MLR Rate 8.75%)

Disbursement (Draw down)                    Loan is given in form of a promissory note, the maturity
schedule                                    is up to the approval of the bank (usually 120 days)

Maximum payback and grace
                                            Interest must be paid on Maturity Date
period

Repayment schedule                          5 Years with Annual Contract Renewal

    Financial Schemes and Facilities for SMI: Comprehensive Directory                     138
                                           Blank Estate

Collateral and equity                      Estate with Buildings
requirements
                                           Factories

                                           Machinery



                                           Copy of commercial registration

                                           Copy of certificate of incorporation

                                           Bank Statement (six month period)

                                           Copy of the shareholders register

                                           Copy of the latest shareholders’ list
Application forms, supporting              Copy of House Certificate and Identity Card of
documents, other input                     Authorized Person
necessary
                                           Copy of the factory permit

                                           Copy of Statement, Loan Contract and Mortgage
                                           Contract

                                           Copy of financial statement (Three Years period)

                                           Other documents that will be beneficial for Applying for
                                           Loans



Average processing time                    According to BOT's Approval Process

                                           No reporting required from the customer. A review is
Reporting and monitoring                   performed on the maturity of the promissory note.
requirements
                                           The penalty fee is 6.5% per year.

                                           Bangkok Bank Head Quarters, 333 Silom Road,
Contact for further details
                                           Bangkok 10500, Tel.: 231-4333, 626-3629



Name of scheme/facility                    Cost Reduction Project for SMEs

Name in Thai language                                            SMEs

   Financial Schemes and Facilities for SMI: Comprehensive Directory                     139
Running number in this report               29

Name of service provider                    Bangkok Bank

Coverage                                    547 branch nationwide

                                            To reduce the cost of small and medium enterprises
Background                                  (SMEs) in purchasing the equipment and devices that
                                            save energy

Basic characteristics

Total financial volume earmarked
                                 N/A
for this scheme/facility

Total financial volume of the
delivering organization’s credit            930 billion Baht
portfolio

Time limit of the scheme/facility           Unlimited

Total volume disbursed to date              N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            Must apply and get the approval from the Department of
Eligibility                                 Industrial Promotion (DIP)

                                            Both new and existing customers are eligible to apply.

Loan amount (minimum and                    Not more than 80% of the capital investment and not
maximum)                                    more than 5 million baht

Currency                                    Thai Baht

Interest rate                               MRR

Disbursement (Draw down)
                                            Lump sum or depend on the completion of each projects
schedule

Maximum payback and grace
                                            Full Loan Amount with Interest within 5 years
period

Repayment schedule                          No more than 5 year (without the grace period)

Collateral and equity                       Blank Estate

    Financial Schemes and Facilities for SMI: Comprehensive Directory                       140
requirements
                                           Estate with Buildings

                                           Factories

                                           Machinery

                                           Copy of commercial registration

                                           Copy of certificate of incorporation

                                           Bank Statement (six month period)

                                           Copy of the shareholders register

                                           Copy of the latest shareholders’ list
Application forms, supporting
                                           Copy of House Certificate and Identity Card of
documents, other input                     Authorized Person
necessary
                                           Copy of the factory permit

                                           Copy of Statement, Loan Contract and Mortgage
                                           Contract

                                           Copy of financial statement (Three Years period)

                                           Other documents that will be beneficial for Applying for
                                           Loans

Average processing time                    Average 1-2 months

Reporting and monitoring
                                           Every 3-4 months
requirements

                                           Bangkok Bank Head Quarters, 333 Silom Road,
Contact for further details
                                           Bangkok 10500, Tel.: 231-4333, 626-3629

   6.2 Siam Commercial Bank

   6.2.1 Introduction

   As the first and oldest Thai commercial bank, the Siam Commercial Bank has a
   history dated back as early as the reign of King Rama V, when the country's
   banking system was served only by foreign banks. Siam Commercial Bank
   Company Capital Limited was set up as a full-fledged commercial bank on
   January 30, 1906. Its founder, HRH Prince Mahisorn is revered as " The Father
   of Thai Banking".

   SCB’s total assets at the end of 1999 stood at 685,017 million baht as against
   702,843 million baht in 1998. The total outstanding loans before deduction of
   loan loss reserve was 488,498 million baht, which represented a decrease from

   Financial Schemes and Facilities for SMI: Comprehensive Directory                     141
   the preceding year by 55,770 million baht. With prudent management of the
   SCB’s liquidity, deposits in 1999 totaled 562,641 million baht, representing a
   decline of 28,509 million baht or 4.8% from December 1998. SCB’s
   shareholder’s equity stood at 57,595 million baht with the legal capital fund (tier
   1 and tier 2) of 74,172 million baht. SCB’s legal capital fund was 15% of risk
   assets of which the tier 1 was 9.8%.

   Siam Commercial Bank has provided new loans totaling 20 billion baht in the
   first five months of 2000 and plans to grant further loans in the second half of
   the year. According to SCBs president, the lending growth of the bank is still low
   although the bank’s new lending would sharply increase in the first five months
   since the new loans were offset by huge debt repayments fueled by low interest
   rates.



    Effective since January 14, 2000

                                                      INTEREST
    LENDING FOR:
                                                      RATE (%)

    MINIMUM LOAN RATE (MLR)                           8.25

    MINIMUM OVERDRAFT RATE
                                                      8.75
    (MOR)

    GENERAL LENDING RATE (GLR)                         9.00

    CEILING RATE (General Customers)                   12.00

    CEILING DEFAULT RATE (Farmers)                     14.75

    CEILING DEFAULT RATE (General
                                                      15.00
    Customers)

    CEILING (Credit Card)                             19.00



   6.2.2 Specific loans for SMEs

Name of scheme/facility                    SMEs loan

Name in Thai language

Running number in this report              30

Name of service provider                   Siam Commercial Bank

Coverage                                   494 branches


   Financial Schemes and Facilities for SMI: Comprehensive Directory               142
Background

Basic characteristics

Total financial volume earmarked
                                 N/A
for this scheme/facility

Total financial volume of the
delivering organization’s credit            N/A
portfolio

Time limit of the scheme/facility           Unlimited

Total volume disbursed to date              N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            Private person age between 30-50 years

                                            SMEs with 100 million baht in fixed asset

                                            Operate businesses more than three years
Eligibility
                                            No NPL with other financial institution

                                            Must be agricultural industries, general manufacturing
                                            and services

Loan amount (minimum and
                                            Maximum 8 million baht
maximum)

Currency                                    Thai baht

                                            7.5% for the first 2 years and general loan rate (GLR)
Interest rate
                                            thereafter

Disbursement (Draw down)
                                            Lump sum or depending on the business type
schedule

Maximum payback and grace
                                            Monthly payment (interest plus principle repayment)
period

Repayment schedule                          7 years including grace period

                                            Blank Estate/Estate with Buildings/Factories/
Collateral and equity
requirements
                                            Resident of the business owner within 1 kilometer from

    Financial Schemes and Facilities for SMI: Comprehensive Directory                       143
                                           the nearest bank branch


                                           Private Person

                                           Copy of House Certificate and Identity Card of
                                           Authorized Person Bank Statement (six month period)

                                           Copies or photos of owner certificate of collateral
                                           securities

                                           The letter that guarantees personal income

                                           Legal Entities

                                           Copies or photos of the certified Commercial
Application forms, supporting              Registration from the Ministry of Commerce
documents, other input
necessary                                  Copies or photos of the latest shareholders’ list

                                           Copy of certificate of incorporation

                                           Copy of the shareholders register

                                           Copy of Financial Statement (3 years period)

                                           Copy of BOI Promotion Certificate (if available)

                                           Copies or photos of owner certificate of collateral
                                           securities

                                           Copies of the certified company’s stamp registration

Average processing time                    Two weeks after completing all documents

Reporting and monitoring
                                           Average 3-4 months
requirements

                                           Khun Pannee D. or Khun Muntana (SMEs department)

                                           Siam Commercial Bank

Contact for further details                9 Ratchadapisek Rd.

                                           Jatujak, Bangkok 10900

                                           Tel 544-3132




   Financial Schemes and Facilities for SMI: Comprehensive Directory                      144
Name of scheme/facility                     SBE loan

Name in Thai language

Running number in this report               31

Name of service provider                    Siam Commercial Bank

Coverage                                    494 branches

Background

Basic characteristics

Total financial volume earmarked
                                 N/A
for this scheme/facility

Total financial volume of the
delivering organization’s credit            N/A
portfolio

Time limit of the scheme/facility           Unlimited

Total volume disbursed to date              N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            Private person age between 30-50 years

                                            SMEs with 100 million baht in fixed asset

                                            Operate businesses more than one year
Eligibility
                                            No NPL with other financial institution

                                            Must be agricultural industries, general manufacturing
                                            and services

Loan amount (minimum and
                                            Maximum 3 million baht
maximum)

Currency                                    Thai baht

                                            8% for the first 2 years and general loan rate (GLR)+1%
Interest rate
                                            thereafter


    Financial Schemes and Facilities for SMI: Comprehensive Directory                    145
Disbursement schedule                      Lump sum or depending on the business type

Repayment schedule                         Monthly payment (interest plus principle repayment)

Maximum payback and grace
                                           7 years including grace period
period

                                           Blank Estate/Estate with Buildings/Factories/
Collateral and equity
requirements                               Resident of the business owner within 1 kilometer from
                                           the nearest bank branch

                                           Private Person

                                           Copy of House Certificate and Identity Card of
                                           Authorized Person Bank Statement (six month period)

                                           Copies or photos of owner certificate of collateral
                                           securities

                                           The letter that guarantees personal income

                                           Legal Entities

                                           Copies or photos of the certified Commercial
Application forms, supporting              Registration from the Ministry of Commerce
documents, other input
necessary                                  Copies or photos of the latest shareholders’ list

                                           Copy of certificate of incorporation

                                           Copy of the shareholders register

                                           Copy of Financial Statement (3 years period)

                                           Copy of BOI Promotion Certificate (if available)

                                           Copies or photos of owner certificate of collateral
                                           securities

                                           Copies of the certified company’s stamp registration

Average processing time                    7 days after completing all documents

Reporting and monitoring
                                           Average 3-4 months
requirements

                                           Khun Pannee D. or Khun Muntana (SMEs department)
Contact for further details
                                           Siam Commercial Bank


   Financial Schemes and Facilities for SMI: Comprehensive Directory                       146
                                        9 Ratchadapisek Rd.

                                        Jatujak, Bangkok 10900

                                        Tel 544-3132

6.3 Other commercial banks

6.3.1 Introduction

                              Branch networks of Thai banks

                                                 Full  Sub-              Total
                                              branch branch

                      BBL                          483              43    526

                      KTB                          551              63    614

                      TFB                          447              85    532

                      SCB                          385         109        494

                      BAY                          334              84    418

                      TMB                          325              36    361

                      SCIB                         170              41    211

                      BMB                          156              21    177

                      BOA                            95             29    124

                      DTBS                           83             12     95

                      SCNB                           65              2     67

                      BT                           101              15    116

                      UOBR                           57             11     68

                      Foreign                        21              -     21
                      Banks

                      Total                      3.273         551 3.824

Source: Bank of Thailand, Bank branches as of March 31, 2000. Printed in the
Bangkok Post, 11.7.2000.




Financial Schemes and Facilities for SMI: Comprehensive Directory                147
    6.3.2 Specific loans for SMEs

Name of scheme/facility                     Asia Business Link for SMEs

Name in Thai language

Running number in this report               32

Name of service provider                    Bank of Asia (BOA)

Coverage                                    124 branches

Background

Basic characteristics

Total financial volume earmarked
                                 N/A
for this scheme/facility

Total financial volume of the
delivering organization’s credit            N/A
portfolio

Time limit of the scheme/facility           N/A

Total volume disbursed to date              N/A N/A

Number and type of clients
                                            N/A
serviced to date

Conditions

                                            All SMEs that want to purchase goods, expand business
Eligibility
                                            utility or buy machines/equipment/devices

Loan amount (minimum and
                                            250,000 to 1 million baht
maximum)

Currency                                    Thai Baht

                                            MLR or MOR (this rate is changed depend on the past
Interest rate
                                            payment; it may be reduced by 2% per year

Disbursement (Draw down)
                                            Depend on each projects
schedule

Maximum payback and grace
                                            Maximum 7 years
period



    Financial Schemes and Facilities for SMI: Comprehensive Directory                 148
Repayment schedule                         Monthly interest plus principle

Collateral and equity                      Fixed deposit account, factories, house, condominium,
requirements                               blank estate

                                           Only three supporting documents out of five listed
                                           documents are required

                                           Tax filing form
Application forms, supporting
                                           Tax refund documents for the past 6 months
documents, other input
necessary                                  Bank statement (past six months)

                                           Copy of invoice from at least 3 suppliers

                                           Financial statement (3 years period)

Average processing time                    3 weeks

Reporting and monitoring
                                           Average 3-4 months
requirements

Contact for further details                http://www.boa.co.th




   Financial Schemes and Facilities for SMI: Comprehensive Directory                    149
7. Capital Market

7.1 Market for Alternative Investment (MAI)

The Market for Alternative Investment (MAI), the new secondary market and
funding venue for small and medium-sized enterprises, was officially launched
on Monday, June 21, 1999. Companies wishing to list in the new secondary
market are required to have a minimum paid-up capital of Bt140 million, and the
amount of shares on offer must be more than 10 per cent of the total
outstanding shares. Minority shareholders of at least 10 parties have to hold a
combined stake of at least 20 per cent of paid up capital, or a minimum of 10
million shares. Moreover, the management team must have been in place for
more than two years. According to SET executives there are currently eight to
10 companies ready to list in the new secondary market. Four companies are
expected to be traded in the MAI this year, with a further four listing their shares
in the new market by the first quarter of next year.

The MAI be independently funded. The admission process will take only five
days after the exchange receives all necessary documentation. Shares of the
SMEs will also be tradable within two days after the initial public offering (IPO).
''Allowing the trading of shares within a two-day period after the IPO will help
reduce the risk of fluctuation in the share price''. Under existing SET practice,
the exchange takes about 15 days after the IPO in allowing new shares to be
traded, and there are price fluctuation risks for investors in cases where there
are problems in the stock market, as well problems within the companies
themselves.

SME listings on the stock market will be subject to strict transparency rules.
Listing requirements will be lowered from the current level for the main board
with registered capital down to a minimum of Bt40 million from Bt100 million
while minimum capital base would be lower than the current Bt750 million.
Thirdly, record of profitability will be less stringent. 40 In order to support the
continuous development of such companies, a special unit to provide advisory
and support services prior to listing has been established, while training and
seminar programs will also be hosted for interested companies, on topics
including financial information disclosure, accounting standards, internal
monitoring and management, both prior to and following the company’s listing
on the MAI. Such services will be provided free of charge. The MAI, in addition
to supporting SMEs and providing an additional funding channel with lower
funding costs, when compared with loans from financial institutions, will also
promote investment in the form of venture capital and debt restructuring of
SMEs, which will alleviate the SMEs liquidity problems and enhance their
competitiveness over the long-run.




40
     SET to open capital link for ailing SMEs, Nation, 02/02/1999

Financial Schemes and Facilities for SMI: Comprehensive Directory                150
THE Stock Exchange of Thailand (SET) might offer small- and medium-sized
enterprises (SMEs) flexibility in fixing their par value, a privilege that companies
listed on the main board are not entitled to, in a move to boost liquidity in the
new secondary market. The privilege will be offered to SMEs listed on the
Market for Alternative Investment (MAI). With concerns on liquidity in the new
secondary market, the financial authorities are considering a revision of the
existing commercial rules and regulations. The Commerce Ministry currently
stipulates that the par value of listed companies must be Bt10. However, the
MAI might work out a solution by which listed SMEs can register a value lower
than Bt10, possibly as low as Bt1 per share. The MAI is planning to have
individual discussions with potential listed companies over their par value, and a
decision will be based on the amount of new shares issued for sale to the public
by each company.

At the MAI launch, Finance Minister Tarrin Nimmanahaeminda stressed that all
relevant government agencies were working on promulgating the laws, which
will allow the establishment of venture capital businesses, a revamp in the credit
system for SMEs, and the establishment of an educational network. ''Due to the
recent collapse of the country's domestic credit system, the revamp of the credit
system is a must for the successful development of SMEs, which will be the
main drive for long-term economic recovery,'' the finance minister said. Tarrin
added that the government needed to help SMEs as part of measures to
stimulate the economy ahead of an expected recovery later this year. ''After the
economic crisis, the lending market for trade [financing] collapsed. Small- and
medium-sized enterprises can no longer rely on their own capital or from loans
alone. That's why the MAI is necessary,'' he said. Tarrin said the new stock
market would also provide small and medium-sized industries with the means
and the time to upgrade their capital stock and other standards, allowing them
to meet the higher requirements of the main SET.

7.2 Venture Capital Providers

One of the first VC-companies in Thailand established 10 years ago is H+Q
(Thailand) Co., Ltd., who are also the contact address of the Thai Venture
Capital Association. A list of the member firms is provided in the appendix.
Usually every VC firms has different strategies concerning the type of
businesses they invest in. In the case of H+Q there is a clear focus on
technology companies (computer, Internet) with healthcare and branded
consumer products be the two other fields of investment.

Investment can take place in different phases of a company’s development,
ranging from small start-ups to well-established companies who need capital to
expand and increase the production. However, the ultimate goal of a VC firm is
always the listing of the respective company at the stock exchange. The VC
firms in Thailand usually invest by buying equity of a company for the period of
3-5 years. After that time the equity would either be sold through the stock
market after the listing of the company or be sold to a strategic partner.

Usually Thai companies who look for investors in their companies would try to
find a VC company, which is interested. In case of very promising projects, the
VC Company would make the first approach. Presently, H+Q has around 100

Financial Schemes and Facilities for SMI: Comprehensive Directory                151
Mio US$ invested in Thailand. According to the company, more could be
invested easily if suitable projects where found and the principle of good
governance be implemented.

During the first contact between the VC firm and the company, the VC company
would explain the VC concept. It is seen as crucial that the company
understands this concept and prepares itself well. Sometimes there are
misunderstandings like the fear of loosing control over the operation. In fact the
VC Company will not take any management function but just provide some
guidance. On a later stage the company would have to provide a detailed
business plan in order to convince the VC firm of investing in it. The VC firm
would hire an auditor to exercise a due diligence process.

7.3 Leasing and factoring firms

Factoring is an arrangement whereby you as the client agree to sell your
account receivables to TFH on a continual basis. Your customers are informed
of this arrangement and are requested to make payments to TFH directly.
Factoring is suitable for companies spanning all three sectors of business
manufacturing, distribution and services that sell on credit. By factoring your
debts, it will effectively convert your own current assets into cash. There is no
need for collateral. To obtain a factoring facility, you simply provide TFH with
your business information for assessment.

Factoring essentially involves three functions:

         Initial Cash Payment: After delivering goods or services to your
         customers, you submit commercial invoices accepted by your customers
         to TFH for initial cash payment up to the prior agreed percentage e.g.
         80%. The balance will be refunded upon full payments from your
         customers.

         Sales Accounting: TFH will provide you with up-to-date reports on
         debtor’s status e.g. ageing and payment reports

         Collection: TFH will monitor your receivables and undertake the bill
         collection task.

Benefits of Factoring

         Improve working capital.

         Sharpen competitive edge, as clients are able to offer better credit terms
         to their customers without worrying over availability of fund.

         Stabilize the timing of cash flows and thus enabling clients to make more
         accurate planning.

         Save costly investment and time spent in credit administration and
         collection and thus freeing companies to concentrate on sales and
         business development.

Financial Schemes and Facilities for SMI: Comprehensive Directory               152
           Obtain fund without collateral. The factoring facility will increases with
           your higher sales volume to quality customers.

           Gain better bargaining power with own suppliers as a result of prompt
           payments or bulk purchases.

On July 4, 2000, the cabinet approved a draft of a law supporting factoring
services. Factoring is a quick way for companies to raise funds by selling
receivables at a discount to another party, which then takes responsibility for
collecting claims once due. Interest charges for factoring services are relatively
high, ranging up to 25% compared with 9-10% for a bank overdraft. But for
many companies with little collateral or earnings history, factoring can help
smooth out cash flow problems. The lack of laws related to factoring has limited
development of the industry due to uncertainties over the ownership and
transfer of claims and obligations. Companies offering factoring services will be
required to register, and maintain a minimum paid-up capital of 30 million baht.
The law sets out definitions for contracts and transfers of rights to trade
receivables to factoring services.41

Leasing

The leasing of equipment to MSEs is being increasingly used in many countries.
This approach offers a number of benefits for the SMEs, including: avoiding
loans in order to acquire a piece of equipment and having to deal with banks,
which usually require collateral; normally, the leasing firm should provide repair
and maintenance services, something often neglected by the entrepreneur; the
leasing contract may include terms which will induce the entrepreneur not to
misuse the equipment; the equipment can be given back to the leasing firm in
the event the business must close down, without the need fro the entrepreneur
to continue paying back the loan; and the regular payment of a lease fee will
ensure that the entrepreneur tales due account of the cost involved in the use of
the equipment when pricing various outputs – a cost otherwise often neglected
by the entrepreneur.42

A list of Leasing companies is provided in the Appendix.

7.4 Equity investment through funds

The Government has continuously supported business-restructuring efforts,
including the crucial debt restructuring process. To further support such
restructuring efforts, the Government recognizes the need to provide equity
investment to support new investments as well as assist the recapitalization of
restructuring companies. To this end, the Cabinet has approved the




41
     New law to support factoring services, Bangkok Post, 5.7.2000
42
  Micro and Small Enterprise Development and Poverty Alleviation in Thailand Project,
ILO/UNDP, Working Paper No.1, July 1999, S.70

Financial Schemes and Facilities for SMI: Comprehensive Directory                 153
establishment of three new funds: the Equity Fund, the Thailand Recovery
Fund, and the Fund for Venture Capital Investment in SMEs. By helping to
lower the debt to equity ratio of Thai businesses, investments by these funds
will lower costs and reduce risks to both the real and financial sectors. 43

Equity Fund

The Ministry of Finance has mandated the International Finance Corporation
(IFC) to establish an Equity Fund to invest in large-scale enterprises in Thailand
which are competitive, including those which have already completed or are in
the process of debt restructuring. The fund will have initial start up capital of 500
million US dollars or approximately 18,500 million baht, which may
subsequently be increased to 1 billion US dollars or approximately 37 billion
baht. Fifty-five percent of the fund will come from investors who are nationals or
residents of Thailand, consisting of the public sector (20 percent), the Thai
private sector (20 percent), and IFC (15 percent). The remaining 45 percent will
come from international private investors to be selected by IFC. The Mutual
Fund Plc has been picked to manage the Thai government's Equity Fund, the
entity set up to invest in local business ventures. The company is partly owned
by the government and will get 1 per cent as its management fee per year.

Thailand Recovery Fund

The Ministry of Finance and the Ministry of Industry has mandated the Asian
Development Bank (ADB) to establish the Thailand Recovery Fund to invest in
competitive, medium-scale enterprises in Thailand. The Oversea Economic
Cooperation Fund (OECF) has also expressed strong interest in jointly investing
in the fund. The fund will have an initial start up capital of 100 million US dollars
or approximately 3.7 billion baht. Both the Thailand Recovery Fund and the
Equity Fund will be professionally and privately managed on a commercial
basis.

Fund for Venture Capital Investment in SMEs (“SME Fund”)

According to the SME Promotion Act, sources of the SME Promotion Fund may
include seed money and annual budget contribution from the government,
donations, interest earnings, etc. The fund can be used for lending to SMEs or
groups of SMEs and for funding projects of government departments, other
government agencies, state enterprises, and private sector organizations, as
approved under the SME Promotion Action Plan. There is also provision for the
fund to be used for investment in SMEs, as approved by the SME Promotion
Committee. The SME fund is investing in enterprises with high commercial
potential, aiming to boost the SMEs' competitiveness and management
efficiency. The Finance Ministry will set aside Bt1 billion to form the fund and
other interested parties can also join forces. This fund will be closed end, with




43
 Measures to Encourage Private Investment, Announcement by the Ministry of Finance,
No. 91/1999, 10 August 1999

Financial Schemes and Facilities for SMI: Comprehensive Directory                154
10year maturity44 and will invest in competitive SMEs. The primary objectives of
the fund are to strengthen the competitiveness, management, and financing
capability of SMEs. At the appropriate time, the fund will recoup its investment
by selling its shares in the new stock market for SMEs, to the proprietor of the
SME, or to other investors. A committee will be established to set out the
investment policy of the fund. The fund will seek the cooperation of private
sector bodies such as the Federation of Thai Industries and the Thai Chamber
of Commerce in proposing commercially viable investments.

The Finance and Industry ministries signed contracts appointing One Asset
Management to oversee a 10-year, one billion-baht SME venture capital fund
on June 30, 2000. Establishment of the fund was one of several investment
stimulus measures the government announced last year. The fund will provide
long-term capital support and technical advice to help SMEs improve
competitiveness. Funds are expected to be fully disbursed within two years.
Officials expect many companies receiving support to eventually list on the
Stock Exchange of Thailand. One Asset Management will invest up to 25 million
baht per company to take stakes ranging from 10%-50%. Fund managers can
also take executive or directors’ positions at participating firms to help
strengthen operations. The president of One Asset Management said six
companies in manufacturing services and e-commerce had already expressed
interest in applying for assistance. The fund plans to focus on supporting
industries in both upstream and downstream production. Once participating
firms have strengthened their competitive position, likely within three to five
years, the capital fund will sell its stake either to former shareholders or to new
strategic partners. The fund would be flexible in evaluating investment
applications, accepting even companies in default on other loans so long as
they had future potential. Once the fund matures in 10 years, the company
would sell units to the public and list the fund on the SET.

The Minister of Finance said in an interview that the government was preparing
to launch a separate $100-million fund to further assist SMEs.45 He confirmed
that the government is ready to launch additional equity funds to support small
and medium-sized enterprises.46

SME Restructuring Fund

State Street Corp. of Boston will manage a fund for the Asian Development
Bank that is intended to help Thai companies hurt by the 1998 financial
downturn in East Asia. The SME Restructuring Fund will be seeded with $100
million to help companies with expansion plans that include raising capital.
State Street will take an undisclosed stake in the fund, and Asian Development




44
     “Mutual to manage Equity Fund”, Nation, 28.3.2000
45
     More state equity funds could help small firms, Bangkok Post, 30.6.2000
46
     More state equity funds could help small firms, Bangkok Post, 30.6.2000

Financial Schemes and Facilities for SMI: Comprehensive Directory               155
Bank will commit $25 million. The rest will be raised from pension funds and
other institutional investors.

7.5 Subcontracting

There are various types of subcontracting arrangements.47 The only one, which
does not involve any financial services, concerns subcontractors who produce
the orders with their own equipment and materials they buy with their own funds
before being paid by the contractor (also called the principal in subcontracting
arrangements) This type is generally less prevalent than subcontracting
arrangements which involve financial services. Subcontractors are generally
financially weak and cannot afford to wait until they have finished processing
orders before they can be paid. Many principals take advantage of the situation
by imposing very low prices for the goods.

Financial services may take various forms, depending on the subcontracting
arrangement. The contractor may provide the materials needed for producing
the goods. He may also provide some advance payments to cover labor costs,
or provide both the materials and the advance payments. In “labor
subcontracts”, the contractor is in full control of the production, providing the
technology, the designs, the tools and equipment as well as the materials.
Subcontractors are used in these cases mostly because the cost of labor is
lower than if the contractor were to use his own workers at his own production
facilities.

7.6. Supplier’s credit

Many MSEs are able to establish a credit line with suppliers of materials.
However, the price of the materials in this case is relatively higher than if they
were able to pay on delivery.

7.7 Franchising

Franchising is a relatively new phenomenon when related to MSEs. For
example, Coca Cola has funded the cost of the cart of food street vendors in
Manila who agree to only sell Coca Cola along with their own snacks, and to put
a Coca Cola sign on the cart. There are many other types of franchising
involving government agencies and associations.48




47
  Micro and Small Enterprise Development and Poverty Alleviation in Thailand Project,
ILO/UNDP, Working Paper No.1, July 1999, S.68f.
48
  Micro and Small Enterprise Development and Poverty Alleviation in Thailand Project,
ILO/UNDP, Working Paper No.1, July 1999, S.70

Financial Schemes and Facilities for SMI: Comprehensive Directory                156
8. Other institutions providing financial assistance

8.1 Credit Unions

8.1.1 Introduction

A Credit Union is composed of a group of people who commit to working
together by following the principles and values of cooperation for socioeconomic
development activities involving savings and credit. A Credit Union can be
organized based on a common bond between members who reside, work, or
meet together. Members benefit by gaining access to Credit Union services.
Membership is open to anyone regardless of religion, economic status, ethnic or
political affiliations. A Credit Union encourages members to save while also
providing loan services to them. Its mission is three-fold - to encourage
economic, social, and political development that promotes democracy, financial
stability and social values.

Credit Unions originated in the 1860s in Germany with Friederich Raiffeisen and
Herman Schulze-Delitzsch. The credit cooperative was the first member
organization devoted to the provision of rural and urban financing. It provided an
organization for common people to work together on the basis of self-help and
mutual-help. It is a community-based financial institution that inculcates the
habit of saving and provides credit based on peer trust; thereby doing away with
complicated legal documentation and security. The modern incarnation of the
Credit Union is as a viable alternative to commercial banks. As demand grows,
Credit Unions introduce new services and products that are competitive in the
marketplace, but with the added bonus that they are owned and run by
members so profits and rewards are reaped by members. This fact that Credit
Unions are unique makes them appealing to both current and prospective
members. They have a strong foundation that is built on cooperative values and
principles, thus possessing adaptability and inner strength that enables them to
endure conditions ranging from prosperity to poverty. Rapid economic changes
in the financial market and transformation of technology demands that people
have access to quality products and services. Globalization and increased
market competition have forced CU leaders and management to seek effective
alternative strategies by developing products and services that will enable them
to remain competitive in the global market.

The benefits of Credit Unions and Cooperatives in Asia were validated during
the financial crisis of 1997. While some commercial banks were forced to close,
members of Credit Unions experienced relative stability due to their intimate
relationship with the community itself. The importance of savings mobilization
has proven very effective in times of economic crisis. The sound financial
management of CUs generated not only increased savings - the same
principles of thrift used during the crisis have also been integrated in the
community's financial services. Credit Unions have a history of 30 years in
Thailand and were engaged in micro finance before the phrase was commonly
used. It could also be argued that credit unions pioneered the concept of
combining savings and credit – one must be a shareowner and depositor in

Financial Schemes and Facilities for SMI: Comprehensive Directory              157
order to qualify for loans. Since member’s savings and share purchases are
usually the only source of funding for loans, credit unions are designed to be
self-sustaining, although credit unions sometimes fail due to weak management
or adverse economic conditions in the community where the credit union is
based.

There are no minimum loan sizes and the maximum loan depends on each
credit union’s policy. Current interest rates are 12-15 % p.a., and the maximum
term is usually 3 years. Borrowers, who must me members of a credit union for
six months before being eligible for a loan, are required to pledge their share
capital and provide at least 2 guarantors. Loans are made to individual
members only.

There are some 1,293 credit unions in Thailand grouped in two organizations:

             The Credit Union League of Thailand (CULT) with 667 member
             unions having 202,461 members, Savings Deposits of 75 Mio.US$,
             Outstanding Loans of 72 Mio.US$, Reserves of 7 Mio.US$, and
             Assets of 96 Mio.US$. The Credit Union League of Thailand Ltd
             Association is a member of the Asian Confederation of Credit
             Unions.

             The Federation of Savings and Credit Cooperatives or Thailand Ltd.
             (FSCT) with 625 member unions

8.2 National Science and Technology Development Agency (NSTDA)

8.2.1 Introduction

The National Science and Technology Development Agency (NSTDA) is a
funding and research organization established under the Science and
Technology Development Act, of B.E. 2534 (1991) on December 30, 1991.
NSTDA is an autonomous organization operating under policy guidance of its
own board, chaired by the Minister of Science, Technology and Environment.
This special organization outside the normal framework of state-enterprise and
civil service enables NSTDA to undertake a broad-based systematic approach
towards enhancing the entire S&T system of Thailand in support of national
economic and social development.

A major role of the National Science & Technology Development Agency since
its establishment in 1991 has been to spur on that development even more
through funding and research. Funding goes to support research and
development in both private and public companies and institutions, and to
provide scholarships for study, locally and abroad, for human resource
development. In-house research is also carried out at NSTDA in our 3 National
Research Centers: National Center for Genetic Engineering and Biotechnology
(BIOTEC), National Metal and Materials Technology Center (MTEC), and the
National Electronics and Computer Technology Center (NECTEC). The
Technical Information Access Center (TIAC) makes available worldwide
databases for information searches.


Financial Schemes and Facilities for SMI: Comprehensive Directory           158
   8.2.2 Specific Loans for SMEs

Name of scheme/facility                    Loan for research and development (RD & E)

                                                                                                    -
Name in Thai language


Running number in this report              33

                                           National Science and Technology Development Agency
Name of service provider
                                           (NSTDA)

Coverage                                   Only one branch (Bangkok)

                                           For low interest rate loan:

                                           To research and develop new commercial products

                                           To improve technology in production process or product
                                           quality.
Background
                                           To establish/renovate laboratory

                                           For grant: To perform a research and development in
                                           order to improve products and production process that
                                           have high risk

Basic characteristics                      From Jan to June 2000

Total financial volume earmarked
                                 267.74 million Baht
for this scheme/facility

Total financial volume of the
delivering organization’s credit           N/A
portfolio

Time limit of the scheme/facility          N/A

                                           -58.25 million Baht for low interest rate loan and 3.1
                                           million Baht for grant from NSTDA
Total volume disbursed to date
                                           -87.37 million Baht for low interest rate loan and 8.57
                                           million Baht for grant from NSTDA and other financial
                                           institutions

                                           -7 projects for low interest rate loan
Number and type of clients
serviced to date
                                           -2 projects for grant



   Financial Schemes and Facilities for SMI: Comprehensive Directory                      159
Conditions

                                            Supported Areas:

                                            1.Genetic Engineering and Biotechnology

                                            2. Metallic and material

                                            3. Electronic and computer

                                            4. Other areas that lead to an advancement in science
                                            and technology

                                            Thai juristic person

Eligibility                                 At least 51% of shares hold by Thai nationals

                                            Must be a small or medium sized firm (not over 200
                                            employees)

                                            Have expertise in financial, technology and
                                            management fields

                                            Have never received financial support for research,
                                            development and engineering purposes from other
                                            institutions under the same project

                                            No legal issues pending that could effect the firms ability
                                            of successful completion of the project

                                            Low interest loan: not over 20 million baht
Loan amount (minimum and
maximum)                                    Grant: not over 3 million baht per project

Currency                                    Thai Baht

Interest rate                               Average deposit rate (for 1 year deposits) + 2.25%

Disbursement schedule                       Depend on type of projects

                                            Not over 7 years (including grace period not over 2
Maximum payback and grace
                                            years) starting on the day when the first installment has
period
                                            been received

Repayment schedule                          N/A

                                            1. Low interest rate loan: depend on the agreement
                                            between financial institution and the borrower
Collateral and equity
requirements
                                            2. Grant: no specific requirement but need personal
                                            guarantee or L/G in some special cases

    Financial Schemes and Facilities for SMI: Comprehensive Directory                       160
                                           Application form: two application forms (see appendix)

                                           Supporting documents:

                                           Copy of certificate of incorporation

                                           Copies of balance sheet, income statement (3 year
                                           period) and bank statement

                                           Copy of certificate of authorization of directors or
                                           managers
Application forms, supporting
documents, other input                     Copy of shareholders register
necessary
                                           Profile of business and key persons in management and
                                           factory

                                           Copy of project's land title deed

                                           Copy of factory permit

                                           Factory layout and details of construction and machinery
                                           equipment

                                           Report on market survey or distribution channel

Average processing time                    3-6 months

Reporting and monitoring
                                           Progressing report every 3-6 months
requirements

                                           Khun Chumpunuth Anusansidtikit

                                           National Science and Technology Development Agency

                                           539/2 Gypsum Metropolitan Tower 18th Floor

Contact for further details                Sri-Ayudhya Rd. Rajdhevee

                                           Bangkok 10400

                                           Tel 248-7541-8 ext 112-114, 144

                                           Fax 248-7549

   8.3 Energy- and environment-related funds

   8.3.1 Fund to support the implementation of the Energy Conservation Act

   Since the Royal Degree on Energy Conservation in Buildings was signed in
   1995, the owners of large buildings with an energy demand over 1 Megawatt
   are effected and have to conduct energy saving work. This is one major step in

   Financial Schemes and Facilities for SMI: Comprehensive Directory                       161
the implementation of the 1992 Energy Conservation Act for which the
Department of Energy Development and Promotion (DEDP) is responsible. The
DEDP receives support from the Thai-German Energy Efficiency Promotion
Project (ENEP) in operating the Energy Conservation Program for Designated
Buildings and Factories.

The Government of Thailand has set up a Fund to support the implementation
of the Energy Conservation Act. The scheme supports the owners of buildings
and factories, which fall under the Act.

Besides from complimentary consulting measures, there are grants available for
companies in general, and therefore also for SMEs falling under the above
group. Owners will get grants of up to 100.000 Baht to hire consultants, who will
survey energy consumption patterns and losses and analyze energy saving
opportunities. Additional support of up to 50% of the planning cost (but not
exceeding 500.000 Baht) is given for the detailed energy analysis of the
building. The analysis will help to map out the energy conservation plan and
shape its related projects. If requested, projects implemented under the
approved energy conservation plan will be subsidized up to a maximum amount
of 10 million baht per measure, depending on the size of the project investment
(see table below for details). The projects must meet the required criteria for
funding – that is, the real economic internal rate of return (EIRR) must not be
less than 9%.




Size of the Investment             Maximum Subsidy                  Max. Percentage of Total
                                                                    Investment to be
(Million Baht)                     (Million Baht)                   provided

0-2                                1.20                             60

> 2-5                              2.55                             45

> 5-10                             4.15                             32

> 10-20                            6.35                             22

> 20-50                            9.95                             12

More than 50                       10.00                            -

Table: Maximum subsidy for each energy saving measure

8.3.2 The Environmental Fund

The 'Enhancement and Conservation of National Environmental Quality Act'
becoming effective in April 1992 as has created three environmental

Financial Schemes and Facilities for SMI: Comprehensive Directory                        162
organizations, namely the Office of Environmental Policy and Planning (OEPP),
Pollution Control Department (PCD) and Department of Environmental Quality
Promotion (DEQP). It is envisaged that these three new organizations will
promote effective implementation of policies, plans and strategies at both
national and local levels as well as enforcement of laws and regulations. The
creation of these new organizations has caused the Ministry of Science,
Technology and Energy to change its name to the Ministry of Science,
Technology and Environment (MOSTE).

The Office of Environmental Policy and Planning (OEPP) is the key leader and
center of the coordination in natural resources and environmental administration
and management of country in order to encourage the national sustainable
development. It creates the economic utilization based on conservation, social
equity and better quality of life of people, as well as encourage the efficiency of
integrated system for environmental quality administration and management by
administrative and management decentralization from central government to
local authority.

The Environmental fund has been set up on 11 January 1993 in accordance
with the stipulations of the Enhancement of National Environmental Quality Act
of 1992. It is managed by the Office of the Environmental Fund under the
OEPP, having 12 Regional Environmental Offices The Regulations of the
Environmental Fund (“Regulations of the Environmental Fund Committee
Concerning the Management of the Environmental Fund B.E.2536”) foresee
that financial support from the Fund can be provided in form of a grant as well
as a loan. However the Regulations reserve grants for Public Agencies, the
Local Administration, NGOs registered with MOSTE and generally “any other
activity concerning the promotion and protection of the quality of the
environment, as deemed appropriate by the Committee”.49

Individuals or private companies which manage polluted air, wastewater or solid
waste treatment or other facilities for control, treatment or reduction of pollution
which arises from activities of individual business, can apply for support in form
of loans. The ceiling of the loan will not exceed 20% of the investment in total
fixed assets, but the total amount should not exceed the total investment cost
into wastewater, air pollution treatment or solid waste treatment systems, or
other equipment for the treatment or disposal of pollution caused by activities of
the entity.

Dismantling or Relocation of Private Enterprises located in an unsuitable area,
to relocate in the Industrial Estate, industrial area, or other suitable area
equipped with a wastewater treatment system and/or solid waste treatment
facilities is also an eligible project under the Fund. The ceiling of the loan should
not exceed the dismantling or relocation costs. Moreover, activities of a private
organization in possession of a permit to render services on wastewater



49
 Regulations of the Environmental Fund Committee Concerning the Management of the
Environmental Fund B.E.2536, Section 1, Article 6.1.3

Financial Schemes and Facilities for SMI: Comprehensive Directory                163
treatment or solid waste treatment, in order to set up a central wastewater
treatment system, central solid waste treatment system or any other equipment
for the control and treatment of pollution can be supported by loans. In these
cases the ceiling of the loan will not exceed 60% of the investment in fixed
assets.

The interest rate of the loans to the Private Sector has been set 8% with a bank
guarantee or 8.5% with fixed assets guarantee. The repayment period should
not be over 7 years, including a grace period of not more than 2 years from the
date of signing the loan contract.50Loan support initially focused on small and
medium-scale businesses, which have total fixed assets not exceeding 160
million Baht. 51 This was later revised to include SMEs with assets up to 400
million Baht. 52

Documents to support the request for a loan must include the following details
(the request form is included in the Appendix)53:

             Objectives and goals

             Details of the project

             Implementation plan and duration

             The amount of the grant or loan and the disbursement plan

             Benefits expected to accrue from the project

             Other evidence or documents as stipulated by the office

Moreover, copies of the commercial registration documents of the legal entity
and the VAT registration have to be filed with the Fund manager. The fund
manager will carry out an analysis of the project’s feasibility and submit the
result to the Committee for consideration. The Committee has to inform the




50
  The Provisions of the Environmental Fund Committee. The Principles and Conditions
for Considering a Request for Support from the Environmental Fund, declared by
MOSTE on October 13, 1994. Article 3.3 Section 3)
51
  The Provisions of the Environmental Fund Committee. The Principles and Conditions
for Considering a Request for Support from the Environmental Fund, declared by
MOSTE on October 13, 1994. Article 3.3 Section 1)
52
  The Provisions of the Environmental Fund Committee. The Principles and Conditions
for Considering a Request for Support from the Environmental Fund Volume 2
(B.E.2540), declared by MOSTE on February 11, 1997. Article 3.3 Section 1)
53
 Regulations of the Environmental Fund Committee Concerning the Management of the
Environmental Fund B.E.2536, Section 1, Article 8.1 a-f

Financial Schemes and Facilities for SMI: Comprehensive Directory               164
Fund Manager within 3 working days whether the project is approved or not.
The Fund manager then has to prepare the loan contract within 15 days.

8.3.3 Revolving Fund for Technology Research and Development

The Revolving Fund (“Soft loan”) for Technology Research and Development is
managed by the Office of the Permanent Secretary of MOSTE. It was set up by
the cabinet in April 1985 with the aim to allow the private sector to borrow
money at low interest rates for research and development purposes. Up to
present, the government has allocated a budget of 355 million Baht through
MOSTE. The fund is available to 15 fields of industries and is designed to
support four different activities:

        Technology research and development

        Building up or improving laboratories

        Improvement of manufacturing process

        Investment from research and development results

The maximum loan per company is 30 million Baht with a maximum of 10
million Baht (interest rate 4% p.a., 2 years grace period, 8 years payback
period) for research and development, building and upgrading laboratories or
testing and a maximum of 20 million Baht (interest rate 6% p.a., 2 years grace
period, 5 years payback period) for Developing or upgrading the production
process and for investments in production resulting from research and
development.

Required Collateral includes land, buildings, machinery registered with MoI,
bank guarantees and other assets. Applicants can be private persons or legal
entities. In the later case, there must be at least 51% of the shares held by Thai
nationals and there must not be any legal case pending against any member of
the company’s management.

The consideration process will take about 90 days and includes the following
steps:

    1. The Technical sub-committee will study and analyse the project proposal

    2. Krung Thai Bank assesses the financial status and collateral security of
       the project

    3. The sub-committee will consider the proposal

    4. Final consideration and approval of the committee of the revolving fund

    5. The borrowers and Krung Thai Bank will be informed about the result of
       the consideration

Since 1988 private sector companies in various field of industry had proposed
153 projects to submit for soft loans amounting 1.699 million baht. 44 Project

Financial Schemes and Facilities for SMI: Comprehensive Directory              165
have been from small and medium enterprises with a total loan amount of 419
million baht.

8.4 Urban Community Development Office (UCDO)

8.4.1 Introduction

The Urban Community Development Office (UCDO) was established 1992
under the National Housing Authority to implement an urban poor development
program. UCDO seeks to work with the estimated 1.4 million urban poor
residing in more than 2.00 low-income communities. The major issues faced by
the urban poor are a lack of security in housing, and the lack of opportunities
and financial resources. UCDO’s mandate can be summarized as follows:

        To encourage development of savings groups, cooperatives and savings
        group networks

        To support group development through skills training and training in
        savings group mechanism

        To support income generation within the community

        To provide loans for development to savings groups

        To support communities in preparing a sustainable development plan

UCDO funds the urban poor through providing four types of loans to groups,
which in turn lend to their members. These loans are reported in detail in the
next chapter.

As of 31 March 1999, there were 822 member communities/organizations (out
of the total of 2000 urban communities in Thailand) in UCDO; 436 in Bangkok.
Some 534 members reported savings activity with deposits totaling 459.62
million baht. Since its inception the UCDO has approved loans totaling 787.78
million baht, and reports a loan recovery rate of 91,5% and non-performing
loans of 25.59 million baht. By category, loans for housing projects accounted
for 53.8 % of approvals, and loans for income generation – the probable SME
(micro enterprise) component – accounted for 23,4% and constituted the
second-largest category.

In UCDO’s experience there are significant differences in developing the group
concept in urban settings, as compared to rural settings where micro finance
institutions such as the Grameen Bank have been successful. As UCDO sees it,
the common bond is much stronger in a rural village where group members are
likely to be engaged in production of the same crop or engaged in the same
activity. Rural communities are quite stable and members have common needs,
such as marketing support and training in the same skills. Urban groups on the
other hand are more fluid. Members move out in response to job opportunities
or loss of jobs. The common bond is not strong; income-generating activities
can be quite varied and there is no long history of relationships to draw on. The
kind of support services needed may not be common among groups, since

Financial Schemes and Facilities for SMI: Comprehensive Directory             166
    group activities may be quite different and in some cases members may even
    be in competition.54

    8.4.2 Specific Loans

Name of scheme/facility                     Revolving Loan

Name in Thai language

Running number in this report               34

Name of service provider                    Urban Community Development Office (UCDO)

Coverage                                    Only one office

                                            Establish a community revolving fund for on-lending to
Background                                  individual members in need of credit for school fees,
                                            debt repayment, etc.

Basic characteristics

Total financial volume earmarked
                                 1,600 million Baht for all 4 facilities
for this scheme/facility

Total financial volume of the
delivering organization’s credit            1,600 million Baht (from 1993 to present)
portfolio

Time limit of the scheme/facility           Unlimited (since 1993)

Total volume disbursed to date              79.95 million baht (from 1993 to present)

Number and type of clients
                                            247 savings groups have been approved since 1993
serviced to date

Conditions

                                            Only for the member which is the savings group that has
Eligibility
                                            been established not less than 6 months

                                            Amount of loan does not exceed three times the amount
Loan amount (minimum and                    saved for the savings group established less than 1 year
maximum)
                                            Amount of loan does not exceed five times the amount



    54
       Micro and Small Enterprise Development and Poverty Alleviation in Thailand
    Project, ILO/UNDP, Working Paper No.4, July 1999, S.13

    Financial Schemes and Facilities for SMI: Comprehensive Directory                    167
                                            saved for the savings group established between 1 and
                                            3 years

                                            Amount of loan does not exceed seven times the
                                            amount saved for the savings group established
                                            between 3 and 5 years

                                            Amount of loan does not exceed ten times the amount
                                            saved for the savings group established more than 5
                                            years

Currency                                    Thai Baht

Interest rate                               10%

Disbursement schedule                       Depend on the agreement on each projects

Maximum payback and grace
                                            Within 3 years
period

Repayment schedule                          Regular repayments not less than once every month

Collateral and equity
                                            Personal guarantee
requirements

                                            Copy of Personal Identification
Application forms, supporting
documents, other input                      Copy of House Certificate
necessary
                                            Bank statement on the account of savings group

                                            Collect and screen the relevant information for 1 month
Average processing time                     and then UCDO Board will consider the new case every
                                            1 month

Reporting and monitoring
                                            Randomly survey every 3 months
requirements

                                            Khun Udomsri Sirilucksanaporn

                                            The Urban Community Development Office (UCDO)

                                            National Housing Authority
Contact for further details
                                            2044/28-33 New Petburi Road.

                                            Huay Khwang, Bangkok 10320

                                            Tel: 718-0911 Fax: 718-0987




    Financial Schemes and Facilities for SMI: Comprehensive Directory                   168
Name of scheme/facility                     Loan for Income generation

Name in Thai language

Running number in this report               35

Name of service provider                    Urban Community Development Organization (UCDO)

Coverage                                    Only one office

Background                                  For individual or group business investment

Basic characteristics

Total financial volume earmarked
                                 1,600 million Baht for all 4 facilities
for this scheme/facility

Total financial volume of the
delivering organization’s credit            1,600 million Baht (from 1993 to present)
portfolio

Time limit of the scheme/facility           Unlimited (since 1993)

Total volume disbursed to date              200.86 million Baht (from 1993to present)

Number and type of clients
                                            247 savings groups have been approved since 1993
serviced to date

Conditions

                                            Only for the member which is the savings group that has
Eligibility
                                            been established not less than 6 months

                                            Amount of loan does not exceed three times the amount
                                            saved for the savings group established less than 1 year

                                            Amount of loan does not exceed five times the amount
                                            saved for the savings group established between 1 and
                                            3 years
Loan amount (minimum and
maximum)                                    Amount of loan does not exceed seven times the
                                            amount saved for the savings group established
                                            between 3 and 5 years

                                            Amount of loan does not exceed ten times the amount
                                            saved for the savings group established more than 5
                                            years



    Financial Schemes and Facilities for SMI: Comprehensive Directory                     169
Currency                                    Thai Baht

Interest rate                               8%

Disbursement schedule                       Depend on the agreement on each projects

Maximum payback and grace
                                            Within 5 years
period

Repayment schedule                          Regular repayments not less than once every month

Collateral and equity
                                            Personal guarantee
requirements

                                            Copy of Personal Identification
Application forms, supporting
documents, other input                      Copy of House Certificate
necessary
                                            Bank statement on the account of savings group

                                            Collect and screen the relevant information for 1 month
Average processing time                     and then UCDO Board will consider the new case every
                                            1 month

Reporting and monitoring
                                            Randomly survey every 3 months
requirements

                                            Khun Udomsri Sirilucksanaporn

                                            The Urban Community Development Office (UCDO)

                                            National Housing Authority
Contact for further details
                                            2044/28-33 New Petchburi Road.

                                            Huay Khwang, Bangkok 10320

                                            Tel: 718-0911 Fax: 718-0987



Name of scheme/facility                     Loan for Housing projects

Name in Thai language

Running number in this report               36

Name of service provider                    Urban Community Development Organization (UCDO)



    Financial Schemes and Facilities for SMI: Comprehensive Directory                   170
Coverage                                    Only one office

                                            Purchase of land and construction of housing for
Background
                                            communities facing eviction

Basic characteristics

Total financial volume earmarked
                                 1,600 million Baht for all 4 facilities
for this scheme/facility

Total financial volume of the
delivering organization’s credit            1,600 million Baht (from 1993 to present)
portfolio

Time limit of the scheme/facility           Unlimited (since 1993)

Total volume disbursed to date              470.32 million baht

Number and type of clients
                                            247 savings groups have been approved since 1993
serviced to date

Conditions

                                            Only for the member which is the savings group that has
Eligibility
                                            been established not less than 6 months

Loan amount (minimum and                    Amount of loan does not exceed ten times the amount
maximum)                                    saved

Currency                                    Thai Baht

                                            3% per year if loan less than or equal to 150,000 Baht
Interest rate
                                            8% per year if loan more than 150,000 Baht

Disbursement schedule                       Depend on the agreement on each projects

Maximum payback and grace
                                            With in 15 years
period

Repayment schedule                          Regular repayments not less than once every month

Collateral and equity
                                            House, building or personal guarantee
requirements

                                            Copy of Personal Identification
Application forms, supporting
documents, other input                      Copy of House Certificate
necessary
                                            Bank statement on the account of savings group

    Financial Schemes and Facilities for SMI: Comprehensive Directory                    171
                                           Collect and screen the relevant information for 1 month
Average processing time                    and then UCDO Board will consider the new case every
                                           1 month

Reporting and monitoring
                                           Randomly survey every 3 months
requirements

                                           Khun Udomsri Sirilucksanaporn

                                           The Urban Community Development Office (UCDO)

                                           National Housing Authority
Contact for further details
                                           2044/28-33 New Petchburi Road.

                                           Huay Khwang, Bangkok 10320

                                           Tel: 718-0911 Fax: 718-0987



Name of scheme/facility                    Loan for housing renovation

Name in Thai language

Running number in this report              37

Name of service provider                   Urban Community Development Organization (UCDO)

Coverage                                   Only one office

Background                                 Repair and extension of house and utilities

Basic characteristics

Total financial volume earmarked
                                 1,600 million Baht for all 4 facilities
for this scheme/facility

Total financial volume of the
delivering organization’s credit           1,600 million Baht (from 1993 to present)
portfolio

Time limit of the scheme/facility          Unlimited (since 1993)

Total volume disbursed to date             109.91 million baht

Number and type of clients
                                           247 savings groups have been approved since 1993
serviced to date


   Financial Schemes and Facilities for SMI: Comprehensive Directory                     172
Conditions

                                            Only for the member which is the savings group that has
Eligibility
                                            been established not less than 6 months

Loan amount (minimum and                    Amount of loan does not exceed ten times the amount
maximum)                                    saved

Currency                                    Thai Baht

Interest rate                               10%

Disbursement schedule                       Depend on the agreement on each projects

Maximum payback and grace
                                            Within fifteen years
period

Repayment schedule                          Regular repayments not less than once every month

Collateral and equity
                                            House, building or personal guarantee
requirements

                                            Copy of Personal Identification
Application forms, supporting
documents, other input                      Copy of House Certificate
necessary
                                            Bank statement on the account of savings group

                                            Collect and screen the relevant information for 1 month
Average processing time                     and then UCDO Board will consider the new case every
                                            1 month

Reporting and monitoring
                                            Randomly survey every 3 months
requirements

                                            Khun Udomsri Sirilucksanaporn

                                            The Urban Community Development Office (UCDO)

                                            National Housing Authority
Contact for further details
                                            2044/28-33 New Petchburi Road.

                                            Huay Khwang, Bangkok 10320

                                            Tel: 718-0911 Fax: 718-0987




    Financial Schemes and Facilities for SMI: Comprehensive Directory                   173
Name of scheme/facility                     Loan for network fund

Name in Thai language

Running number in this report               38

Name of service provider                    Urban Community Development Office (UCDO)

                                            Only one office

                                            The Urban Community Development Office (UCDO)

                                            National Housing Authority

Coverage                                    2044/28-33 New Petchburi Road.

                                            Huay Khwang, Bangkok 10320

                                            Tel: 718-0911 Fax: 718-0987



Background / Utilization                    To strengthen and develop the savings group

Basic characteristics

Total financial volume earmarked
                                 No specific amount assigned to this scheme
for this scheme/facility

Total financial volume of the
delivering organization’s credit            1,600 million Baht (from 2536 to present)
portfolio

Time limit of the scheme/facility           Unlimited

Total volume disbursed to date              17.12 million baht (from 2536 to present)

Number and type of clients
                                            247 savings groups have been approved since 2536
serviced to date

Conditions

                                            Only for the member which is the savings group that has
Eligibility
                                            been established not less than 6 months

                                            Amount of loan does not exceed three times the amount
Loan amount (minimum and                    saved for the savings group established less than 1 year
maximum)
                                            Amount of loan does not exceed five times the amount

    Financial Schemes and Facilities for SMI: Comprehensive Directory                     174
                                            saved for the savings group established between 1 and
                                            3 years

                                            Amount of loan does not exceed seven times the
                                            amount saved for the savings group established
                                            between 3 and 5 years

                                            Amount of loan does not exceed ten times the amount
                                            saved for the savings group established more than 5
                                            years

Currency                                    Thai Baht

Interest rate                               4%

Disbursement (Draw down)
                                            Depend on the agreement on each projects
schedule

Maximum payback and grace
                                            Within 5 years
period

Repayment schedule                          Regular repayments not less than once every month

Collateral and equity
                                            Personal guarantee
requirements

                                            Copy of Personal Identification
Application forms, supporting
documents, other input                      Copy of House Certificate
necessary
                                            Bank statement on the account of savings group

                                            Collect and screen the relevant information for 1 month
Average processing time                     and then UCDO Board will consider the new case every
                                            1 month

Reporting and monitoring
                                            Randomly survey every 3 months
requirements

                                            Khun Udomsri Sirilucksanaporn

                                            The Urban Community Development Office (UCDO)

                                            National Housing Authority

Contact for further details                 2044/28-33 New Petchburi Road.

                                            Huay Khwang, Bangkok 10320

                                            Tel: 718-0911 Fax: 718-0987



    Financial Schemes and Facilities for SMI: Comprehensive Directory                   175
Name of scheme/facility                     Miyazawa Loan

Name in Thai language

Running number in this report               39

Name of service provider                    Urban Community Development Office (UCDO)

                                            Only one office

                                            The Urban Community Development Office (UCDO)

                                            National Housing Authority

Coverage                                    2044/28-33 New Petburi Road.

                                            Huay Khwang, Bangkok 10320

                                            Tel: 718-0911 Fax: 718-0987



                                            To strengthen and support the savings group in the
Background / Utilization
                                            urban communities nationwide

Basic characteristics

                                            250 million baht
Total financial volume earmarked
                                 -10 million for grant
for this scheme/facility
                                            -240 million for loan

Total financial volume of the
                                            Special program that is separated from the
delivering organization’s credit
                                            organization’s credit portfolio
portfolio

Time limit of the scheme/facility           Every year has a new budget

Total volume disbursed to date              18.98 million baht for loan only

Number and type of clients
                                            35 projects
serviced to date

Conditions

                                            The savings group that has been established not less
Eligibility
                                            than 6 months.


    Financial Schemes and Facilities for SMI: Comprehensive Directory                    176
                                            Grant: Maximum 15,000 baht per group

Loan amount (minimum and                             Maximum 150,000 baht per network group
maximum)
                                            Loan: Maximum 500,000 baht per group

                                                     Maximum 5,000,000 baht per network group

Currency                                    Thai Baht

                                            1% for network group
Interest rate
                                            2% for group

Disbursement (Draw down)
                                            Depend on the agreement on each projects
schedule

Maximum payback and grace
                                            Within 5 years
period

Repayment schedule                          Regular repayments not less than once every month

Collateral and equity
                                            Personal guarantee
requirements

                                            Copy of Personal Identification
Application forms, supporting
documents, other input                      Copy of House Certificate
necessary
                                            Bank statement on the account of savings group

                                            Collect and screen the relevant information for 1 month
Average processing time                     and then UCDO Board will consider the new case every
                                            1 month

Reporting and monitoring
                                            Randomly survey every 3 months
requirements

                                            Khun Udomsri Sirilucksanaporn

                                            The Urban Community Development Office (UCDO)

                                            National Housing Authority

Contact for further details                 2044/28-33 New Petchburi Road.

                                            Huay Khwang, Bangkok 10320

                                            Tel: 718-0911 Fax: 718-0987




    Financial Schemes and Facilities for SMI: Comprehensive Directory                   177
   8.5 Department of Public Welfare (DPW)

   8.5.1. Introduction

   The Department of Public Welfare offers five different loan and grant schemes
   for small enterprises. They are designed to alleviate poverty and to empower
   the poor and disadvantaged. Although funds are often given as non-repayable
   grants or interest-free loans, the DPW monitors repayment and even takes
   guarantees in some cases in an effort to encourage a business-like approach
   by recipients.55

   In addition to its existing programs DIP proposed early 1999 to set up a “Bank
   for the poor”. This bank should offer long-term loans with lower rates that those
   charged by commercial banks and clients would also be offered financial
   advise. This idea has later been shelved.56 Instead, the DPW’s Fund for
   Mitigating the Impact of Lay-Off and Unemployment has been expanded by 2
   billion Baht and the maximum individual loan has been doubled from the former
   15.000 Baht.

   Ministry of Finance officials subsequently advised that as an alternative to the
   Bank for the Poor, legislation has been drafted to establish a Community
   Organizations Development Institute, which is to be modeled on the Grameen
   Bank concept. The Grameen Bank is a non-governmental organization
   established in Bangladesh in 1976, which focuses on lending small amounts of
   money to women in rural villages.

   8.5.2 Specific Loans and Grants

Name of scheme/facility                    Thais Help Thais Vocational Groups Project

Name in Thai language

Running number in this report              40

Name of service provider                   Department of Public Welfare (DPW)

                                           -Headquarter and 7 districts: Huay Kwang, Klong Jann,
Coverage
                                            Klong Toey, Din Dang, Pomparb, Talinchan




   55
      Micro and Small Enterprise Development and Poverty Alleviation in Thailand
   Project, ILO/UNDP, Working Paper No.4, July 1999, S.9
   56
      Micro and Small Enterprise Development and Poverty Alleviation in Thailand
   Project, ILO/UNDP, Working Paper No.4, July 1999, S.9

   Financial Schemes and Facilities for SMI: Comprehensive Directory                   178
                                            -Office of Public Welfare in 75 provinces

                                            This program started in 1998, was recently expanded to
                                            include group lending. The maximum individual loans
                                            can be pooled to operate a group business where profits
Background
                                            are shared. Activities that groups have begun to date
                                            include: hawker trade, flower making and food
                                            processing.

Basic characteristics

Total financial volume earmarked 242 million baht (budget in 2000; 2001 budget
for this scheme/facility         expansion to 260 million)

Total financial volume of the
delivering organization’s credit            Approximately 1500 million baht (total of 5 loans)
portfolio

Time limit of the scheme/facility           Unlimited (Start since 1998)

Total volume disbursed to date              As of June2000, the amount is 154,935,020 Baht

Number and type of clients
                                            72.610 projects have been serviced in 2000
serviced to date

Conditions

                                            Laid-off workers and unemployed; people adversely
                                            affected by economic conditions whose income is less
                                            than 20,000 baht per year.
Eligibility
                                            Set up own business as a group consisting of 5-10
                                            persons

Loan amount (minimum and                    Up to 2,000-4,000 baht per person by way of grant.
maximum)                                    Between 20,000-40,000 baht per group

Currency                                    Thai baht

Interest rate                               Interest free

Disbursement schedule                       Lump sum or depend on each groups’ objective

Maximum payback and grace
                                            Grant
period

Repayment schedule                          Not applicable

Collateral and equity                       None (only personal guarantee)

    Financial Schemes and Facilities for SMI: Comprehensive Directory                     179
requirements


Application forms, supporting              Copy of Identity Card, House and Marriage Certificate
documents, other input
necessary                                  Evidence of doing business

Average processing time                    Two weeks

Reporting and monitoring
                                           3 times per year
requirements

                                           Department of Public Welfare (DPW)

                                           Saphankaw, Pomparb
Contact for further details
                                           Bangkok 10100

                                           Tel 281-0969, 281-3199



Name of scheme/facility                    Occupational Assistance Revolving Fund

Name in Thai language

Running number in this report              41

Name of service provider                   Department of Public Welfare (DPW)

                                           -Headquarter and 7 districts: Huay Kwang, Klong Jann,
                                           Klong Toey, Din Dang, Pomparb, Talinchan
Coverage
                                           -Office of Public Welfare in 75 provinces

                                           The fund is designed for investment in small enterprises,
                                           although a borrower can use the funds to repay previous
Background                                 debts caused by a business loss. To date, typical
                                           investments have been in selling foods or snacks, small
                                           grocery outlets and lottery ticket sales.

Basic characteristics

Total financial volume earmarked
                                 230 million Baht (since 1993)
for this scheme/facility

Total financial volume of the
delivering organization’s credit           Approximately 1500 million baht (total of 5 loans)
portfolio


   Financial Schemes and Facilities for SMI: Comprehensive Directory                     180
Time limit of the scheme/facility           Unlimited since 1993

Total volume disbursed to date              163 million Baht (January – July 2000)

Number and type of clients
                                            16907 clients since 1993
serviced to date

Conditions

                                            Low income individuals who are caring for a child or
                                            other person, who have the capacity to repay from the
Eligibility
                                            investment, who are unemployed, and who have repaid
                                            any other loans from the DPW

Loan amount (minimum and
                                            Up to 15.000 Baht
maximum)

Currency                                    Thai baht

Interest rate                               Interest free

Disbursement schedule                       Lump sum or depend on each group’s objective

Maximum payback and grace
                                            Not more than 5 years
period

Repayment schedule                          Principal paid back monthly (not very strict)

Collateral and equity
                                            Personal Guarantors only (must have social status)
requirements

                                            Loan Application Form
Application forms, supporting
                                            Guarantee Form
documents, other input
necessary                                   ID Card, Map of Residence Address, Housing
                                            Registration

Average processing time                     1-7 months

Reporting and monitoring
                                            Have the DPW officers to monitor the group activities
requirements

                                            Department of Public Welfare (DPW)

                                            Saphankaw, Pomparb
Contact for further details
                                            Bangkok 10100

                                            Tel 281-0969, 281-3199

    Financial Schemes and Facilities for SMI: Comprehensive Directory                       181
Name of scheme/facility                     Revolving Fund for Job Creation for Women

Name in Thai language

Running number in this report               42

Name of service provider                    Department of Public Welfare (DPW)

                                            -Headquarter and 7 districts: Huay Kwang, Klong Jann,
                                            Klong Toey, Din Dang, Pomparb, Talinchan
Coverage
                                            -Office of Public Welfare in 75 provinces

                                            The intent is to encourage women who have completed
                                            DPW’s vocational training to group together in their
                                            communities and borrow money to invest in a home-
                                            based business. Business started to date include:
                                            gemstones, dressmaking, leather products, traditional
Background                                  weaving and trading.

                                            DPW reports that the demand for products made by the
                                            groups is too small although the government has
                                            directed State Enterprises to purchase fabrics made by
                                            the groups.

Basic characteristics

Total financial volume earmarked
                                 50 million baht
for this scheme/facility

Total financial volume of the
delivering organization’s credit            Approximately 1500 million baht (total of 5 loans)
portfolio

Time limit of the scheme/facility           Unlimited (start since 1995)

Total volume disbursed to date              54 million baht in 2000

                                            6012 clients served in 2000
Number and type of clients                  Since August 1998, an average of 150-200 people per
serviced to date
                                            day have applied for loans under this program (Data
                                            from July 1999)

Conditions

Eligibility                                 Women who meet the following conditions:


    Financial Schemes and Facilities for SMI: Comprehensive Directory                     182
                                            Are members of a group who have taken DPW
                                            vocational training

                                            Have low income and no savings for investment

                                            Intend to apply their vocational skills in their
                                            communities

                                            Agree to follow the DPW’s loan conditions the group has
                                            received an order for their production

Loan amount (minimum and
                                            Up to 15.000 Baht
maximum)

Currency                                    Baht

Interest rate                               Interest free

Disbursement schedule                       Lump sum

Maximum payback and grace
                                            Payback within 2 years
period

Repayment schedule                          To be repaid monthly in identical installments

Collateral and equity
                                            Personal Guarantors only (must have social status)
requirements

                                            Loan Application Form
Application forms, supporting
                                            Guarantee Form
documents, other input
necessary                                   ID Card, Map of Residence Address, Housing
                                            Registration

Average processing time                     1-7 months

Reporting and monitoring
                                            Have the DPW officers to monitor the group activities
requirements

                                            Juree Sunethornrotphatana

                                            Department of Public Welfare (DPW)

Contact for further details                 Saphankaw, Pomparb

                                            Bangkok 10100

                                            Tel 281-0969, 281-3199



    Financial Schemes and Facilities for SMI: Comprehensive Directory                          183
                                            Loans for Self-Employed Business Investment
Name of scheme/facility
                                            Projects for People with Disabilities

Name in Thai language

Running number in this report               43

Name of service provider                    Department of Public Welfare (DPW)

                                            -Headquarter and 7 districts: Huay Kwang, Klong Jann,

Coverage                                      Klong Toey, Din Dang, Pomparb, Talinchan

                                            -Office of Public Welfare in 75 provinces

                                            Experience to date indicates that the income-generating
                                            activities considered by the target group are as
Background
                                            described for the other projects, with the addition of
                                            farming and animal raising.

Basic characteristics

Total financial volume earmarked 322,1 million baht (120 million Baht from the
for this scheme/facility         government, 180 million Baht from the private sector)

Total financial volume of the
delivering organization’s credit            Approximately 1500 million baht (total of 5 loans)
portfolio

Time limit of the scheme/facility           Unlimited since 1994

Total volume disbursed to date              312,81 million baht in 2000

Number and type of clients
                                            16101 clients
serviced to date

Conditions

Eligibility                                 Registered disabled persons over 15 years old

Loan amount (minimum and
                                            Up to 20.000 Baht
maximum)

Currency                                    Baht

Interest rate                               Interest free

Disbursement schedule                       Lump sum or depend on each group’s objective


    Financial Schemes and Facilities for SMI: Comprehensive Directory                     184
Maximum payback and grace
                                           Not more than 5 years
period

Repayment schedule                         Principal paid back monthly (not very strict)

Collateral and equity
                                           Personal Guarantors only (must have social status)
requirements

                                           Loan Application Form
Application forms, supporting
                                           Guarantee Form
documents, other input
necessary                                  ID Card, Map of Residence Address, Housing
                                           Registration

Average processing time                    1-7 months

Reporting and monitoring
                                           Have the DPW officers to monitor the group activities
requirements

                                           Yuree Janchum

                                           Department of Public Welfare (DPW)

Contact for further details                Saphankaw, Pomparb

                                           Bangkok 10100

                                           Tel 281-0969, 281-3199



   8.6. The Thailand Research Fund (TRF)

   8.6.1 Introduction

   The TRF was established in response to the 1992 Research Development
   Endowment Act. It is a juristic body that enjoys being part of the government
   system but outside the government administrative bureaucracy. TRF Objectives
   are as follows:

            Build up professional researchers and strengthen the research
            community.

            Support research that is significant to national development, both for
            basic research and research where results can be used directly.

            Promote the dissemination and use of research findings.

            Raise funds for the national research and development system.


   Financial Schemes and Facilities for SMI: Comprehensive Directory                       185
TRF consists of an administrative division, which looks after all office works and
seven divisions handle research granting activities. Also in order to promote
research in regional parts of Thailand, TRF has set up its first regional office in
Chiang Mai. It is called “TRF Northern Regional Office”. This office started its
operation in October 1998. The seven divisions and the TRF Northern Regional
office have the following research:

1. Program on Transnational Relations and Development Options (Division1)

This program’s primary focuses are to development a strong base for various
social institutions; understand the situation of the country in relation to
worldwide economic, political, and cultural changes; and find new options for
national unity and stability.

2. Program on Science and Technology for Production, Marketing and Services
(Division 2)

This program’s primary focuses are to promote scientific and technological
research which will increase the capabilities of the producers or service
providers in order to maintain and increase Thailand’s competitiveness, with
due consideration to possible effects on the environment.

3. Program on Science and Technology for Natural Resources Management,
Environmental Balance, and Human Welfare (Division 3)

This program’s focus is on multidisciplinary research in the areas of natural
resources an on solving environmental, energy, social welfare, and health
problems.

4. Program on Community Research (Division 4)

This program’s focus is to promote and coordinate research and development,
which will strengthen community. Various aspects of social and economic
research programs on community development are under the responsibilities of
this division.

5. Program on Research in Industrial Sector (Division 5)

This program’s focus is to promote research and development in industrial
sector. In the beginning, emphasis will be on development of necessary
technologies for small and medium enterprises (SME). This will include
improvement of processes, development of new products and quality
improvement of existing products. Recently a program to develop researchers
for the industry, similar to the Teaching Company Scheme (TCS) in United
Kingdom, has been launched by this division. The ultimate goal of this division
is to make Thai industry more competitive in the world market.

6. Program on Academic Research

This program’s focus is to support basic research in every academic field and to
develop high-quality researchers in the areas of science, technology, social
sciences, and the humanities. Presently, emphasis is on directed or targeted

Financial Schemes and Facilities for SMI: Comprehensive Directory               186
basic research, which will serve as a basis for research development in other
program.

7. Royal Golden Jubilee Ph.D. Program

This program’s aim is to tackle the severe shortages of highly qualified
researchers in the country. The objectives of the program are to support the
production of 25,000 international quality research work and Ph.D. graduates in
the next 25 year. Due to its highly significant and far reaching nature, the
government had approved the program in 1996 as a program to commemorate.
His Majesty the King’s Golden Jubilee year of reign, as well as a budget of 1.32
billion baht for the first phase (1997-2011) where 5,000-research work and
Ph.D. graduates would be produced.

8. TRF Northern Regional Office

This office’s role is to promote area-based research to solve local problems and
serve the need of the community. Its responsibility covers 8 provinces in the
upper northern Thailand. They are Chiang Mai, Chiang Rai, Payao, Lampoon,
Lampang, Prae, Nan and Maehongson. The office supports small projects,
which are of mainly development or action-research types. If this office works
successfully, TRF will establish a similar kind of offices in other regions of
Thailand.

Research Funding

To date research funding has been allocated for individual projects and for
research programs in equal measure. In the case of academic research almost
all funding has been in the form of individual projects, whereas for research and
development most funding has been granted in the form of programs. Starting
from 1995 TRF has increased the amount of funding for research, increase the
number of research programs, and begin funding more mission-oriented
programs. Mission-oriented funding means setting several broad missions,
having a long-term agreement, and establishing clear, measurable research
goals every year. In such a program, the recipient of the grant will be
responsible for funding individual projects. In developing research projects to
receive funding as a research program or as a mission-oriented program, TRF
must work closely with researchers and institutions to establish clarity and
management of the programs.

Application forms for TRF programs are available on the website at
www.trf.or.th




Financial Schemes and Facilities for SMI: Comprehensive Directory             187
9. Resume and Outlook

One result of the present study is, that there is considerable amount of funding
for SMEs available in Thailand. There are a large number of different schemes
and facilities available through various organizations, which have a sufficient
network of branches and offices. SME loan schemes mostly focus on the
manufacturing sector, i.e. small and mediums sized industries (SMIs). However,
there are also facilities for which SMEs of the service sector can apply.

The financial services mentioned above are hardly known by its target group.
Financial assistance available to SMEs is not extensively publicized.57
Sometimes during the research phase it seemed that even those who are
administrating the financial support programs are confused about the various
schemes and existing synergies and cross-linkages.

A survey conducted by ILO about the lending to micro and small enterprises
shows, that lack of finance is not the main reason why micro and small
enterprises fail. Training and information needs may be more important. The
results of this survey also show that very few micro enterprises obtained finance
through established commercial financial institutions. The funds came from
Government programs, as well as their own resources and from private
moneylenders.58 The study makes a strong case that credit for SMEs is best
linked in some way to business training.




57
  One example is the Government Savings Bank, which is known by the public only for its
savings deposits of small individual customers but not for providing loans to SMEs.
58
  Micro and Small Enterprise Development and Poverty Alleviation in Thailand Project,
ILO/UNDP, Working Paper No.4, July 1999, S.35

Financial Schemes and Facilities for SMI: Comprehensive Directory                  188
Appendix

A. Abbreviations

BAAC Bank of Agriculture and Agricultural Cooperatives

BBL              Bangkok Bank Limited

BOA              Bank of Asia

BOT              Bank of Thailand

DIP              Department of Industrial Promotion

DPW              Department of Public Welfare

EXIM             Export Import Bank of Thailand

GHB              Government Housing Bank

GLR              General Lending Rate

GSB              Government Savings Bank

IFCT             Industrial Finance Corporation of Thailand

KTB              Krung Thai Bank

LIBOR            London Interbank Offer Rate (around 6% in June 2000)

MLR              Minimum Lending Rate

MoF              Ministry of Finance

MoI              Ministry of Industry

MOR              Minimum Overdraft Rate

MRR              Minimum Retail Rate

MSE              Micro and Small Enterprise

NSTDA            National Science and Technology Development Agency

O/D              Overdraft

P/N              Promissory Note

SCB              Siam Commercial Bank

SICGC            Small Industry Credit Guarantee Corporation

Financial Schemes and Facilities for SMI: Comprehensive Directory       189
SIFC             Small Industry Finance Corporation

SME              Small and Medium Sized Enterprise

SMI              Small and Medium Sized Industry

TFB              Thai Farmers Bank

TMB              Thai Military Bank

UCDO Urban Community Development Office

W/C              Working Capital




Financial Schemes and Facilities for SMI: Comprehensive Directory   190
B. Addresses and contact persons


Major Service Providers:

The Industrial Finance Corporation of Thailand

Khun Viwan Khunpasee

1770 New Petchburi Rd.

Bangkok 10320

Tel. 253-7111 Ext. 1120

Fax: 253-7018



The Small Industry Credit Guarantee Corporation

Khun Jirachai Sae-djia

18th floor Chan Issara Tower 2

2922/243 New Petchburi Rd.

Bangkok 10320

Tel. 308-2741, Fax: 308-2749



EXIM Bank

Khun Tuangphak Klaimanee

EXIM Building, 1193 Phaholyotin Rd.

Phayathai

Bangkok 10400

Tel.: 271-3700, 278-0047, 617-2111

Fax: 271-3204



Department of Industrial Promotion

Ministry of Industry


Financial Schemes and Facilities for SMI: Comprehensive Directory   191
Public Relations, Khun Kedmanee

Rama VI Road, Ratchathewi

Bangkok 10400

Tel. (02) 202-4575-6



Small Industry Finance Corporation

Khun Woramit Krutto

475 Siripinyo Building, 9th Floor

Sri-Ayudhaya Road, Rajdhavee

Bangkok 10400

Tel. 201-3700

Fax: 201-3723-24



Government Savings Bank

Khun Suchindana Hongtong

470 Phaholyotin Rd.

Payathai

Bangkok 10400

Tel. 2998294-6, 299-8000



Bank for Agriculture and Agricultural Cooperatives (BAAC)

Khun Pradit Kanjanasingha/ Khun Chab Kongmon

469 Nakornsawan Rd.

Bangkok 10300

Tel. 2800180

Fax: 2821339




Financial Schemes and Facilities for SMI: Comprehensive Directory   192
Krung Thai Bank

35 Sukumwit Road Soi 3

North Klongtoey, Wattana

Bangkok 10110

Tel.: 653-2333



Bangkok Bank

333 Silom Road

Bangkok 10500

Tel.: 231-4333, 626-3629



Siam Commercial Bank

Khun Pannee/ Khun Muntana (SMEs department)

9 Ratchadapisek Rd., Jatujak

Bangkok 10900

Tel 544-3132



National Science and Technology Development Agency

Khun Chumpunuth Anusansidtikit

539/2 Gypsum Metropolitan Tower 18th Floor

Sri-Ayudhya Rd., Rajdhevee

Bangkok 10400

Tel 248-7541-8 ext 112-114, 144

Fax 248-7549

Market for Alternative Investment

Khun Pitchayanun Wachara-Arpa

The Stock Exchange of Thailand Building (Fl.15)


Financial Schemes and Facilities for SMI: Comprehensive Directory   193
62 Rachadapisek Rd., Klongtoey

Bangkok 10110

Tel. 229-2020-8, Direct 229-2022

Fax: 654-5596



The Urban Community Development Office (UCDO)

Khun Udomsri Sirilucksanaporn

National Housing Authority

2044/28-33 New Petburi Road.

Huay Khwang, Bangkok 10320

Tel: 718-0911

Fax: 718-0987



Department of Public Welfare (DPW)

Khun Juree Sunethornrotphatana

Saphankaw, Pomparb

Bangkok 10100

Tel 281-0969, 281-3199



Credit Union League of Thailand Ltd. (CULT)

56/2 Moo 3 Ramkhamhaeng Road,

Saphansoong, Bungkum, P.O. Box 24-65, Bangkok 10240

Telephone: 373-0020-1, 373-0150-1

Fax: 373-0022

E-Mail: cult@ksc.th.com



Association of Asian Confederation of Credit Unions


Financial Schemes and Facilities for SMI: Comprehensive Directory   194
36/2 Moo 3, Soi Malee Suanson

Ramkanheang Road, Bangkapi, Bangkok 10240

Tel: (662) 374-3170, Fax: (662) 374-5321

E-Mail: accuran@ksc.th.com



Office of Environmental Policy and Planning (OEPP)

60/1 Soi Pibunwattana 7, Rama VI Road

Bangkok 10400

Telephone: (662) 271-4232-8, 279-5202

Fax: (662) 279-8088



Thai-German Energy Efficiency Promotion (ENEP)

c/o Department of Energy Development and Promotion (DEDP)

Mr. Dieter Brulez

108 Rangnam Rd., Rachathevi, Payathai

Bangkok 10400

Tel. 642 7121, Fax: 642 7120



Office of the Permanent Secretary

Ministry of Science, Technology and Environment

Khun La-ong

6th fl. MOSTE Building

Rama 6 Rd., Rachathevi

Bangkok 10400

Tel. 246-0064, 247-9419 Ext. 617,618

Fax: 247-9418




Financial Schemes and Facilities for SMI: Comprehensive Directory   195
Leasing Companies:



Krungthep Grand Pacific Co., Ltd.

24th Fl. Sathorn City Tower

175 Sathorntai Rd.

Thungmahamek, Sathorn,

Bangkok 10120

Tel. 679-6226, 679-6262

Fax. 679-6241-42



Krungthep Sakura Leasing Co., Ltd.

19th Fl. Sathorn City Tower

175 Sathorn South Rd.

Thungmahamek, Sathorn,

Bangkok 10120

Tel. 679-6161

Fax.679-6160



Krungthai I.B.J. Leasing Co., Ltd.

18th Fl. Thai Obayashi Tower

161 Ratchdamri Rd.

Lumpini, Pathumwan,

Bangkok 10330

Tel. 651-8120, 252-9620

Fax. 254-6119



Goldble Leasing Co., Ltd.


Financial Schemes and Facilities for SMI: Comprehensive Directory   196
9th Maneeya Center Tower

518/5 Ploenjit Rd.

Lumpinee, Pathumwan,

Bangkok 10330

Tel. 652-0814-16

Fax. 652-0730



KTT Leasing Co., Ltd.

11th Searmmitr Tower

159 Soi Asoke, Sukhumvit Rd.

Klongtoeynua, Wattana

Bangkok 10110

Tel. 661-6373 ect 7500-4

Fax. 661-6388



CMIC Leasing Co., Ltd.

8th CIMIC Tower

209 Sukhumvit 21 Rd. (Asoke)

Klongtoeynua, Klongtoey

Bangkok 10110

Tel. 664-1366, 664-1360-62

Fax. 664-1365



DKB Leasing (Thailand) Co., Ltd.

10th Fl. Buphajit Tower

20 Sathorn North Rd.

Silom, Bangrak


Financial Schemes and Facilities for SMI: Comprehensive Directory   197
Bangkok 10500

Tel. 266-6431-6

Fax. 266-6440



TISCO Leasing Co., Ltd.

3th Fl TISCO Tower

48/5 Sathorn North Rd.

Bangrak,

Bangkok 10500

Tel. 633-7799

Fax. 633-7900



Thaimex Leasing Co., Ltd.

24th Thaiprakanchivit Tower

123 Ratchdaphisek Rd.

Dindaeng, Dindaeng

Bangkok 10320

Tel. 246-9783-87

Fax. 246-9791



Thai Orix Leasing Co., Ltd.

24th Fl. C.P. Tower, 313 Silom Rd.

Silom, Bangrak,

Bangkok 10500

Tel. 231-0589

Fax. 231-0661




Financial Schemes and Facilities for SMI: Comprehensive Directory   198
Nakornthon Leasing Co., Ltd.

12th Lake Ratchada Tower

193/45 Ratchadaphisek Rd.

Klongtoey, Bangkok 10110

Tel. 661-9797

Fax. 264-0366

Nakornluang-Chova Leasing Co., Ltd. *

1091/179-181, New Phetburi Rd.

Makkasan, Ratchthevee,

Bangkok 10400

Tel. 651-6442-51, Fax. 253-5371



Bangkok Central Leasing Co., Ltd.

16th Sedtheewan Tower

139 Pan Rd., Silom, Bangrak,

Bangkok 10500

Tel. 266-6040

Fax.237-4492, 266-6190



Bangkok Leasing Co., Ltd.

102 Soi Aree, Sukhumvit 26 Rd.

Klongton, Phrakhanong,

Bangkok 10110

Tel. 259-0063 ext. 208, 338

Fax. 259-8632



BTM Leasing (Thailand) Co., Ltd.


Financial Schemes and Facilities for SMI: Comprehensive Directory   199
4th Fl. Harinthorn Tower

54 Sathonnua Rd.

Silom, Bangrak,

Bangkok 10500

Tel. 266-3060

Fax. 266-3067



BOA Leasing Co., Ltd.

29th Fl. Unitedcenter Tower

323 Silom Rd.

Silom, Bangrak,

Bangkok 10500

Tel. 266-7290

Fax. 266-7300



Phatthara Leasing Co., Ltd. *

29th Fl. Muangthaiphattara Office Tower 1

252/6 Ratchadaphisek Rd.

Huaykwang, Huaykwang,

Bangkok 10310

Tel. 693-2288

Fax. 693-2299



Sinphattana Industry Co., Ltd.

1770 New Phetburi Rd.

Bangkapi, Huaykwang,

Bangkok 10320


Financial Schemes and Facilities for SMI: Comprehensive Directory   200
Tel. 253-7111, 253-9666

Fax. 253-9677, 652-8495



Siam Samakkhi Leasing Co., Ltd.

27th Fl. Sinthorn Tower 3

130-132 Wireless Rd.

Lumpini, Phathumwan,

Bangkok 10330

Tel. 263-2990

Fax. 263-2991



Siamsanwa Trilease Co., Ltd.

23rd Thaiwa Tower 2,

21/145-146, Sathorntai Rd.

Thungmahamek, Sathorn,

Bangkok

Tel. 679-1555

Fax. 679-1483-4



Skandinavia Leasing Co., Ltd. *

20th Two Pacific Place Tower

142 Sukhumvit Rd.

Klongtoey, Klongtoey,

Bangkok

Tel. 653-2533-49

Fax. 653-2532




Financial Schemes and Facilities for SMI: Comprehensive Directory   201
A.C.L. Leasing Co., Ltd.

49 Asia Sermmittr Tower

Soi Phiphat, Silom Rd.

Bangkok 10500

Tel. 231-5234

Fax. 231-5767



S.One Capital Co., Ltd.

6th Fl. Golden Pavillion Tower

153/3 Soi Mahadlekluang

Ratchdamri Rd., Pathumwan,

Bangkok 10330

Tel. 652-1510-4

Fax. 652-1515



Advance Manufacturing Leasing Co., Ltd.

11th Fl. Timesquare Tower

246 Sukhumvit Rd. 12-14

Klongtoey, Klongtoey,

Bangkok 10110

Tel. 229-4831-9

Fax. 229-4840



G.E. Capital (Thailand) Co., Ltd.

8th Fl. Harinthorn Tower

54 Sathorn North Rd., Bangrak,

Bangkok 10500


Financial Schemes and Facilities for SMI: Comprehensive Directory   202
Tel. 266-3277, 632-0532, Fax. 266-3287



Citycorp Leasing (Thailand) Co., Ltd.

27th Saengthonthanee Tower

82 Sathorn North, Bangrak,

Bangkok 10500

Tel. 232-3300, Fax. 639-2241-2



SITCA Leasing Co., Ltd.

19th Fl. Electrolux Tower

New Phetburi Rd.

Bangkapi, Huaykwang,

Bangkok

Tel. 718-0171-85 ext 1901

Fax. 718-0189, 718-0195



C.T.I. Asset Leasing Co., Ltd.

M Fl. C.T.I. Tower

191/89 Ratchadaphisek Rd.

Klongtoey, Bangkok 10110

Tel. 661-8800-5

Fax.261-1050



Toyata Leasing (Thailand) Co., Ltd.

18-19th Fl. Abdulbrahim Place Tower

990 Rama IV Rd., Silom, Bangrak,

Bangkok 10500


Financial Schemes and Facilities for SMI: Comprehensive Directory   203
Tel. 636-1313, 636-1333, 636-1363

Fax. 636-1410-12, 636-1406-8



Thai Farmer Heller Factoring Co., Ltd.

Phattharaprakanphai Tower

252 Ratchadaphisek Rd,

Huaykwang, Huaykwang,

Bangkok 10320

Tel. 276-2030-3 ext 450

Fax. 275-5165, 276-9710

Nakornluang Factoring Co., Ltd.

11th Charnissara Tower 2

2922/205-6, New Petchburi Rd,

Huaykwang, Bangkapi

Bangkok 10310

Tel. 308-2080

Fax. 308-2658-9



Nawa Leasing Co., Ltd. *

16-16/1 Soi Kasemsan 1

Phayathai Rd.,

Wangmai, Phathumwan,

Bangkok 10330

Tel. 612-3233

Fax. 612-3255, 612-3291



Phara Sumi-Thai Leasing Co., Ltd.


Financial Schemes and Facilities for SMI: Comprehensive Directory   204
10th Fl. Uea Djeau Liang Tower

968 Rama IV,

Silom Rd, Bangrak,

Bangkok 10500

Tel. 637-544-51

Fax. 637-5442



President Holding Co., Ltd.

9th T.F. Group Tower,

Srinakarin Rd.

Bangkok 10240

Siam Commercial Leasing Co., Ltd. *

3-5th Fl. Shino-thai Tower

32/24-26, 53 Soi Asoke

Sukhumvit 21 Rd.

Klongtoeynua, Wattana,

Bangkok 10110

Tel. 260-12000

Fax. 260-1209



Sinbualuang Leasing Co., Ltd.

9/1 Suapa Rd.

Pomprab, Pomprab,

Bangkok 10100

Tel. 623-1400

Fax. 623-1399




Financial Schemes and Facilities for SMI: Comprehensive Directory   205
Ayudthaya Development Leasing Co., Ltd.

22nd Chamnarnpenchart Business Center Tower A

65/182 Rama IX Rd,

Huaykwang, Huaykwang,

Bangkok 10310

Tel. 643-1977-86

Fax. 643-1059-60



Ayudthaya International Factor Co., Ltd.

20th Fl. Lumpini Tower

1168/55 Rama IV Rd.

Thungmahamek, Sathorn,

Bangkok 10120

Tel. 285-6326-32, 679-9140-4

Fax. 285-6335



S.B. Leasing (Thailand) Co., Ltd.

19th Ramaland Tower

952 Rama IV Rd.

Suriwong, Bangrak,

Bangkok

Tel. 632-9250

Fax. 632-9258



Asiantrade & Leasing Co., Ltd.

24th Fl. Sinthorn Tower 3

130-132 Wireless Rd.


Financial Schemes and Facilities for SMI: Comprehensive Directory   206
Lumpini, Patumwan,

Bangkok 10330

Tel. 263-3841-9

Fax. 263-3850



Asia Sermkij Leasing Co., Ltd.

24th Sathorn City Tower

175 Sathorn South Rd.

Thungmahamek, Sathorn,

Bangkok

Tel. 679-6226, 679-6262

Fax. 679-6241



I.B.M. Leasing Co., Ltd.

388 Phaholyothin Rd.

Samsennai, Phayathai,

Bangkok 10400

Tel. 273-4036

Fax. 273-0681, 273-0674



Factoring Companies:



Krungthep Grand Pacific Co., Ltd.

175 Sathorn South Rd.

Tel. 679-6225-41



Siam General Factoring Co., Ltd. *


Financial Schemes and Facilities for SMI: Comprehensive Directory   207
232/13-4 Srinakarin Rd.

Tel. 758-5047-8



Nakornluang Factoring Co., Ltd. *

New Phetburi Rd.

Bangkok

Tel. 208-5061-4

Thai Farmer Heller Factoring Co., Ltd.

252 Ratchadaphisek Rd.

Huaykwang

Bangkok

Tel. 274-9698



Ayudthaya International Factoring Co., Ltd.

26/52-3 Chidlom Rd., Ploenchit

Bangkok

Tel. 252-2276



M.B.F. Factor (Thailand) Co., Ltd.

140 Wireless Rd.

Lumpini, Pathumwan

Bangkok

Tel. 254-3361-4



Thanamitr Factoring Co., Ltd.

6th Fl. Olympia Tower

444 Ratchadaphisek Rd.


Financial Schemes and Facilities for SMI: Comprehensive Directory   208
Samsennok, Huaykwang,

Bangkok

Tel. 512-1818



Siam Samakkhi Leasing Co., Ltd.

132 Sinthorn Tower, Wireless Rd.

Lumpini, Patumwan,

Bangkok

Tel. 263-2990



B.O.A. Leasing

Tel. 266-7290, 266-7300




Financial Schemes and Facilities for SMI: Comprehensive Directory   209
Venture Capital Companies:


(Members of the Thai Venture Capital Association with offices in Thailand)

Prudential Asset Management Asia Limited

Khun Phanpatch Thongphaitoon

10th Maneeya Center Tower

518/5 Ploenchit Rd, Patumwan

Bangkok 10330

Tel. 2556816-7, Fax. 258-9110



Crossby Holding (Thailand)

Khun Suraphon Viriyasathian

Khun Wiwat Vithoonsathian

25 Silom Complex Tower

191 Silom Rd., Bangrak

Bangkok 10500

Tel. 2662815, Fax. 266-2740



City Capital

Khun Arunrat Bavornveerakij

27th Saengthongthanee Tower

82 Sathorn North Rd.

Silom, Bangrak,

Bangkok 10500

Tel. 232-3200, Fax: 639-2473

H & Q (Thailand)

Khun Veeraphan Tunkasem


Financial Schemes and Facilities for SMI: Comprehensive Directory            210
12nd Fl. Room 1207 Sathorn City Tower

175 Sathorn South Rd., Sathorn

Bangkok 10120

Tel. 679-6312, Fax. 679-6316



Thai Strategic Capital

Khun Maaw Ong Thun

15th Silom Complex Tower

191 Silom Rd., Bangrak,

Bangkok 10500

Tel. 231-3870

Fax 231-3887



Financa

Khun Worasidh Phokhachaiphat

7th Fl. TISCO Tower

48 Sathon North, Bangrak,

Bangkok 10500

Tel. 266-6677

Fax. 266-6688



Thana Sathapana

Khun Khunakorn Mekdjaidee

1st Fl. Wanit 2 Tower

1126/2 New Phetburi Rd.

Bangkok 10400

Tel. 655-2052-4


Financial Schemes and Facilities for SMI: Comprehensive Directory   211
Fax. 655-2055



Nithi Venture Corperation

Khun Trikwan Boonnak

21st Fl. Thaniya Plaza Tower

52 Silom Rd., Bangrak,

Bangkok 10500

Tel. 231-2934-43

Fax. 231-2944



Rasa Holding

Khun Vikrom Kasemvut

26th Fl. Rasa Tower

555 Phaholyothin Rd.,

Chatuchak, Bangkok

Tel. 336-1957

Fax. 336-0868-9



I.F.C.T. Nomura Jafko Capital

Khun Tharin Eiamphetcharapong

3rd Fl. I.F.C.T. Tower 3

1770 New Phetburi Rd.

Bangkok 10320

Tel. 254-8066-74

Fax. 254-8075



Development Finance Corperation


Financial Schemes and Facilities for SMI: Comprehensive Directory   212
Khun Ratsamee Thaweesaengsakulthai

Khun Charles Seller

5th Bangkok Cable Tower 2

231/9 Sarasin Rd., Patumwan,

Bangkok 10330

Tel. 651-9200-6

Fax.651-9207



Uni Venture

Khun Thanakorn Ueathaveekul

14th Fl. Siriphinyo Tower

465 Sri Ayudthaya Rd.

Bangkok 10400

Tel. 201-3087

Fax. 201-3090




Tranpack Capital

Khun Alan Cam

19th Fl. Sathorn Thani Tower 2

92/54 Sathorn North Rd.

Bangkok

Tel. 236-6061-3

Fax, 236-6066



Laksab Kongthunruam

Dr. Jetsada Lohaundjit


Financial Schemes and Facilities for SMI: Comprehensive Directory   213
30th -32nd Fl. Lake Rathchada

193-195 Ratchadaphisek Rd.

Bangkok 10110

Tel. 264-0711

Fax. 661-9115



J.F. Electra

Khun John Deen Leewac

46th Fl. Jardine House 1,

Connet Place,

Central Hongkong

Tel. (852) 28843-888

Fax. (852) 2530-5525




Financial Schemes and Facilities for SMI: Comprehensive Directory   214
C. Types of loans typical in Thailand


Fixed Loans

The borrower will get disbursement of loan in full amount on date of contract.
Debt repayment of both principal and interest can be made in installment in
equal amount each month until the debt is fully repaid. In general, this is a long-
term loan of, say, 5 to 10 years so that the borrowed money can be spent on
investment in durable assets such as plant construction, purchase of land and
machinery.

Acceptances

The bank accepts any bill of exchange or certifies the payment in accordance
with the bill issued for buying and selling goods. The buyer who already
received the goods agrees to make payment to the seller afterward that when
such a bill reaches due date, the bearer of bill will be paid in the amount
specified on the bill. This method of acceptance can assure the seller that he
will be paid for his goods sold.

Overdrafts

The bank lends money to its client by entering into contract specifying the credit
line. Cheques within the credit line agreed upon make withdrawal. If withdrawal
is not made, interest will be not charged. Interest is charged in accordance with
the amount of money withdrawn. When the borrower deposits money in the
account, the bank will deduct it from the total amount of dept and will charge
interest from the outstanding dept at the end of the day by calculating
compound interest once a month. Usually, an overdraft is a borrowing with
certain objective, which can be to help the customer to use the money as
working capital in his business. This is a short term borrowing of not more than
one year. When the contract expires, the bank may consider granting an
extension of the contract at each time of the expiration.

Purchase and Resale of Promissory Notes Discounted in accordance with the
regulations of the Bank of Thailand

The entrepreneurs or customers sell their promissory notes to the commercial
banks and the commercial bank is able to resell them to the Bank of Thailand.
The promissory notes eligible to be resold at a discount must be the ones that
the bank purchased from the entrepreneurs of the businesses which are
specified, from time to time, by the Bank of Thailand such as livestock, planting
of certain crops, rice mill business, and exportation of certain goods. The Bank
of Thailand will fix the interest or discount rate to be charged from the
commercial banks, and the commercial banks will charge it from the customers
who sell the promissory notes.

Purchase of Bills Discounted



Financial Schemes and Facilities for SMI: Comprehensive Directory               215
The bank purchases inland bills from customers such as cheques, promissory
notes and bills of exchange in order to help them receive the money before
payment date on such a bill. This enables the customers to have working capital
for their operation.

Aval

The bank acts as guarantor of payment in accordance with the promissory note
or bill of exchange that the bank’s client issued and promised to pay. When the
bearer of the bill to which the bank has given an aval sends the bill to the bank
for collection when it reaches the due date, the bank must make payment
immediately without any delay.

Issuance of Letter of Guarantee

The bank issues a letter of guarantee to its client by making a promise to the
recipient of such a letter of guarantee that if the client does not act in
compliance with the terms and conditions as agreed upon in the letter of
guarantee thus causing damage to the recipient of the letter of guarantee and
the client fails to make payment, the bank will make payment instead in the
amount of not more than the one specified in the letter of guarantee, for
example, guarantee of bidding tender, guarantee of construction contract,
guarantee of payment for electricity, etc. The method of issuing a letter of
guarantee will help the client because it is not necessary for him to use cash as
guarantee.

Issuance of Domestic Letter of Credit

The bank issues a letter of credit to the seller in order to assure the payment for
the cost of goods sold. If the seller delivers the goods to the buyer and acts in
accordance with the conditions agreed upon by both the buyer and the seller as
specified in such a letter of credit, the bank will make payment according to the
letter of credit. The issuance of domestic letter of credit helps facilitate business
conduct between the buyer and the seller.

Service of Advising Letter of Credit

When the importer’s or buyer’s bank in a foreign country issues a letter of credit
to the bank, the bank will advise the seller/exporter about the letter of credit
issued. The seller can either be the bank’s customer or other bank’s customer.

Foreign Bills Purchased under Letter of Credit

When the seller already delivered the merchandise to the buyer, the
seller/exporter must submit relevant documents as specified in the conditions of
the letter of credit to the bank within the duration stipulated in the letter of credit.
The bank then checked the correctness of the documents. If correct, the bank
will purchase the documents by charging discount and pay the cost of goods to
the seller, then it will collect money from the issuing bank.

Foreign Bills for Collection Purchased


Financial Schemes and Facilities for SMI: Comprehensive Directory                   216
In case the exporter and the importer have been trading with each other for a
long time, they usually use trading contract or purchase order. If the bank
considers that the seller/exporter is reliable, the bank will purchase the bills for
collection by charging discount. The exporter will be paid first by the bank that
will later send the bills for collection to the importer/buyer’s bank.

Transfer of Letter of Credit

In case the exporter in accordance with the letter of credit is unable to deliver
the merchandise by himself because he cannot gather the merchandise in time
or export quota runs out, he can request the bank to transfer the letter of credit
to other exporter to act as exporter instead of himself. It has to be specified in
that particular letter of credit that it is a “transferable letter of credit”. The bank
will receive fee from transferring such a letter of credit by collecting money from
the first exporter who gave the transfer order or collecting it from the transferee,
depending on the agreement between the two sides.

Confirmation of Letter of Credit

In case the exporter is not confidant about the financial position of the issuing
bank in a foreign country he can request the bank that advises the L/C or the
bank in which he trusts to confirm the payment in accordance with the L/C. The
confirming bank will agree to be responsible for making payment to the
exporter. When the exporter already took action in compliance with all the terms
and conditions specified in the L/C, the bank would charge fee for the confirmed
L/C by collecting money either from the importer/buyer or the exporter/seller
depending on the conditions specified in the L/C.

Packing Credit

Commercial banks pursue the policy of supporting Thai exporters by extending
packing credit to them at lower interest rates than general interest rates in order
to help them reduce their exporting costs by having promissory notes, debt
repayment contract and collateral.




Financial Schemes and Facilities for SMI: Comprehensive Directory                  217
Deutsche Gesellschaft für
Techniche Zusammenarbeit (GTZ) GmbH

- German Technical Cooperation -

GTZ Office Bangkok
Tel: (662) 661-9273 (8 lines)
Fax: (662) 661-9282
Email: gtz-bkk@inet.co.th
Web: www.gtzth.org

Street Address: 193/63 Lake Rajada Building (16th Flr.)
New Ratchadapisek Road, Bangkok 10110
Postal Address: P.O. Box 11-1485 Nana, Bangkok 10112

				
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