Lifeline For Key Economic Sectors

[george]

SURVIVAL LOANS

Lifeline for key economic sectors

Tourism, auto, export firms to have access to specialised financial aid

BANGKOK: -- State-owned specialised financial institutions (SFIs) will be allowed to provide loans to key economic sectors under the government's public-service-obligation scheme, Deputy Finance Minister Pradit Pataraprasit said yesterday.

The move is aimed at helping the tourism, automotive and other export-oriented sectors survive the economic crisis and minimise lay-offs.

Given the unfavourable economic outlook, executives at commercial and state-owned banks have been reluctant to lend, due to concerns over the rising level of bad debt.

However, loans provided under the public-service-obligation (PSO) scheme will have some protection as far as the responsibility of executives at state-owned banks is concerned.

Most executives have not wanted to take risks, as they could be prosecuted later if a large amount of their lending turned into bad debt.

To date, only the Government Housing Bank (GH Bank) has given loans under the PSO scheme.

Besides tourism and the auto and other export-oriented industries, other sectors with a high number of employees also qualify for loans under the PSO scheme, said Pradit.

The government's six main specialised financial institutions (SFIs) have together approved only Bt300 billion in loans so far this year, with the actual withdrawal of such funds amounting to just Bt100 billion.

The government recently boosted the target for lending via these SFIs by about Bt300 billion, from Bt625.5 billion to Bt925 billion.

As a result, the Bank for Agriculture and Agricultural Cooperatives' (BAAC) loan

target is Bt470 billion. That

of the Government Savings Bank (GSB) is now Bt240

billion; of GH Bank, Bt100

billion; of the Small and Medium Enterprise Develop-ment Bank (SME Bank), Bt43 billion; of the Export-Import Bank of Thailand (Exim Bank), Bt37.2 billion; and of the Islamic Bank of Thailand, Bt33 billion.

Pradit said Exim Bank and the SME Bank had provided little lending so far, as had the Small Busi-ness Credit Guarantee Corp. However, the GSB, GH Bank and the BAAC have done better.

Meanwhile, Finance Minister Korn Chatikavanij yesterday said the government was considering cutting corporate income tax from 30 per cent to 25 per cent in response to a proposal by the private sector.

"But we need the right timing. I said when I was appointed that our corporate tax rate should be 25 per cent," he said.

At this stage, the global economy remains sluggish, so a tax reduction would not help boost the local economy and new investment, he added.

Thai Chamber of Com-merce chairman Dusit Nontanakorn this week said the tax rate in the Kingdom was higher than in other countries, including Singapore and Malaysia.

-- The Nation 2009-08-05

[Jake1]

Tax cutting = good, Government assistance = bad.