Help For SMEs Affected By FATF Action

MONEY LAUNDERING

Help for SMEs affected by FATF action

Wichit Chaitrong

The Nation

BANGKOK: -- Export-Import Bank of Thailand is bracing for any problems arising from the recent decision by the Financial Action Task Force (FATF), a global financial watchdog, to place the country on its watch list, which could have an adverse effect on small exporters.

The bank also pledges to provide more loans to Thai interests wanting to invest in Burma and other countries.

"The FATF move has not yet affected the bank or our customers, but we are ready to provide information if our counter-parties abroad request anything related to the issue," Export-Import Bank of Thailand (Exim Bank) president Kanit Sukonthaman said yesterday.

Kanit was referring to the FATF's decision to place Thailand and 14 other nations on its watch list, calling for the countries to fully address their perceived deficiencies in the fields of combating money laundering and financial terrorism.

"Large firms may not be affected due to their good reputation of doing business for a long period, but small firms might face difficulties in conducting export-import businesses in the future," he said.

However, as the Thai authorities are committed to complying with international standards by putting in place two new pieces of legislation, problems should not arise, he predicted.

He also said Exim Bank this year would work with commercial and state-run banks to provide loans to Thai investors planning to invest in Burma, as the neighbouring country is opening up for foreign investment.

"We'll participate in syndicated loans, not go it alone," he added.

Outstanding Exim Bank lending to the Burmese government is currently about Bt2 billion, and the country has never defaulted on its repayments, he said.

Moreover, the bank no longer needs an interest subsidy from the government, as it has restructured the Burmese lending by borrowing long-term funding to cover the cost, said Kanit, referring to the controversial loan involving the sale of equipment to the Burmese government by the telecom business of former prime minister Thaksin Shinawatra.

Meanwhile, the bank this year will mainly promote Thai small and medium-sized enterprises through loan extension, export credit guarantees and training programmes, he said.

The bank last year approved Bt13.5 billion worth of loans to SME exporters, representing 36.6 per cent of its overall loan approvals of Bt36.86 billion for the year.

SME customers account for 80 per cent of Exim Bank's client base.

Last year, the bank extended Bt7.81 billion in loans to support Thai investment abroad.

It also approved Bt4.48 billion in export credit insurance to help exporters mitigate nonpayment risks from foreign buyers, resulting in credit lines approved by the bank coming in at Bt41.33 billion, some 120 per cent higher than the target of Bt34.86 billion, he said.

Kanit said the turnover of export credit guarantees last year was Bt134.69 billion, an annual rise of 23.9 per cent. This has increased the bank's insurance-claim obligations to Bt35.92 billion.

"We have reinsured half of that amount with reinsurers in order to reduce our risk exposure," he added.

The bank expects outstanding loans will increase by 5 per cent this year, the president said, adding, "It is not easy to extend more loans to SMEs, since all major commercial banks are also focusing on SME lending."

-- The Nation 2012-02-22