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“ The Role of SME Bank in Thailand ”
Mr. Nattapon Dejvitak
Vice President
SME Development Bank of Thailand
16 February 2006
Established as the Small Industry Finance Office (SIFO) under
1964 the Department of Industrial Promotion, Ministry of Industry
1964
Re-established by Act of Parliament as the Small Industry
1991
1991 Finance Corporation (SIFC) under the Ministry of Finance and
Ministry of Industry
1993 Commenced operations in Jan 1993 with an initial registered
1993
capital of THB 300 million
SIFC was recapitalized to THB 2.8 billion, with Ministry of Finance
2001
2001 holding 92% of the shares
Re-activated by Act of Parliament as the SME Development
2002
2002 Bank of Thailand (SME Bank) with authorized capital has been
increased to THB 10 billion
Historically, the commercial banking sector has been highly
averse to SME lending. The government thus utilized specialized
(“SFIs”
financial institutions (“SFIs”) – most notably SME Bank – to ease
the lack of liquidity in the SME sector
SME Bank does not compete directly with the other SFIs - Bank
of Agriculture and Agricultural Cooperatives and Government
Savings Bank – which perform lending roles with an emphasis on
different areas
The government has 95% ownership of SME Bank and
provides supervision
Quasi- Moody’
Quasi-sovereign rating by Moody’s : Baa 1
SME Bank’s Public Policy Role is based on:
• SME Bank being instrumental in implementing the
government’
government’s policies:
- Promoting and developing SMEs and the
grass-
grass-root economy
nation’
- Improving the nation’s competitiveness and
fostering sustainable economic growth
Bank’
• SME Bank’s provision of vital services to the SME
sector that other private or public entities cannot provide
• Various financing schemes based on specific
government policies
Bank’
SME Bank’s role and objectives are well stipulated by law —
Small and Medium Enterprise Development Bank of Thailand
Act of 2002, Section 11
“The Bank shall have the objectives in conducting the
business in the aspect of development, promotion, providing
assistance and supporting the establishment, business
operation, expansion or improving of medium and small
enterprises by granting loans, providing security guarantee,
making joint investment, providing consultation and advice
or other necessary services under the provision of the Act.”
2002 : 44 branches
2003 : 65 branches
2004 : 80 branches
Number of Staff as of Dec. 2005
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1993 1995 1997 1999 2001 2003 2005
To be the bank which
helps build Thai
Entrepreneur Society
1) To support the creation and lasting success of
new entrepreneurs
2) To promote and develop the sustainable growth
of Thai SMEs and their evolution into SMART
SMEs
3) To promote value creation in Thai SMEs in
order to contribute to the national interests
SME Bank restructured its businesses into 10 clusters
in line with the government’s economic strategy
Food Hi-tech. &
Energy
Fashion Wholesale &
Retail
Automotive
10 Clusters Packaging &
Services Logistic
Tourism Franchise &
OTOP
Manufacturing
Small Medium
Number of Fixed Assets Number of Fixed Assets
Employee excld. land Employee excld. land
(THB mil.) (THB mil.)
Manufacturing 50 or less 50 or less 51-200 > 50 to 200
Services 50 or less 50 or less 51-200 > 50 to 200
Wholesale 25 or less 50 or less 26-50 > 50 to 100
Retail 15 or less 30 or less 16-30 > 30 to 60
The total number of small, medium and large enterprises throughout
The total number of small, medium and large enterprises throughout
Thailand is estimated at 1.87 million. Out of these, 99 % or approximately
Thailand is estimated at 1.87 million. Out of these, 99 % or approximately
1.85 million are SMEs
1.85 million are SMEs
Employment
Employment
Creation
Creation Creating
Creating
Creation of
Creation of Competition and
Competition and
New
New a High Quality
a High Quality
Entrepreneurs
Entrepreneurs Service Culture
Service Culture
Development
Development Generating
Generating
for Various
for Various Foreign
Foreign
Types of Skills
Types of Skills Currency Income
Currency Income
Linked with
Linked with Increasing
Increasing
Businesses of
Businesses of Utilization of
Utilization of
Large
Large Domestic
Domestic
Enterprises
Enterprises Products
Products
SMEs account for nearly 80% of non-farm employment, 42% of GDP
and 38% of manufactured exports
SME Development Bank of
Bank of Thailand Agriculture and
Agricultural Cooperatives
“SME Bank”
Building an entrepreneurial society “Rural Development Bank”
Total Solutions
Smart SMEs On-farm and Off-farm
First-time exporters community enterprises
Export-Import
Government Savings Bank of Thailand
Bank
“Exporter’s Bank”
“People’s Bank”
Full banking service
To develop human capital Export insurance
Investment abroad
Lack of Deficiencies in
Competitive Advantages Good Governance
Problems & Obstacles
of SMEs
Limitation in Gaining Government Efforts in
Access to Funds Promoting SMEs
To successfully implement the government’s national agenda with regard to
SME sector development, SME Bank, as a specialized financial institutions, has
been mandated to provide various forms of financing and business development
services to SMEs
Bank finance alone is not a guarantee for project success.
Bank finance alone is not a guarantee for project success.
Philosophy
Philosophy Advisory and development services are created to help
Advisory and development services are created to help
promote sustainable growth of SMEs
promote sustainable growth of SMEs
- To improve clients’ business management skills
- To improve clients’ business management skills
- To develop clients’ ability in formulating and –
- To develop clients’ ability in formulating and –
implementing business strategy successfully
implementing business strategy successfully
Goals
Goals
- To expand clients’ market base & opportunities
- To expand clients’ market base & opportunities
- To enhance clients’ business performance and to
- To enhance clients’ business performance and to
develop sustainable ability to repay debt
develop sustainable ability to repay debt
SME Bank’s next five year plan is aimed at building
an entrepreneurial society in Thailand
Paradigm Shift
Past Role Current Role
Role Financial institute for SMEs Institute to build an
entrepreneurial society
Process Act as an advisor to focus on Provide full range development
credit and investment Cultivation Funding Advisor
Focus Focused on product / work Focused on entrepreneur /
function customer
Target Group General SMEs Strategic business group x area
Operation Dealing and coordination from Networking and full range of
time to time aggressive operation
Local Policy Supporting
Servicing Group Controlling Group Group
• 10 Clusters • Financial and Risk
• 80 Business Management Group
Strategic Development
Target Group Centers • Operations Group
• Entrepreneur
• 19 Area Offices • Management
Development
Policy Group Support Group
What have been changed ?
Past structure Current structure
• Financial solution • Total solution
• Branch office plays a credit based • Branch office to lead business
marketing role cultivation
• 7 business strategic groups and 8 • Expand to 10 business strategic
Area Offices groups and 19 Area Offices
“ The Role of SME Bank in Thailand ”
Mr. Nattapon Dejvitak
Vice President
SME Development Bank of Thailand
16 February 2006
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