Thailand approves latest economic relief program for businesses
On March 23, 2021, the Thai government approved its latest economic relief plan, valued at 350 billion baht (US $ 11.2 billion), to support businesses in the country.
Some 250 billion baht ($ 8 billion) has been allocated for soft loans, while the remaining 100 billion baht ($ 3.2 billion) will go to a “ warehousing ” program. assets ” whereby debtors can use their assets as loan collateral but will have the right to repay them. their assets within a specific time frame.
- Thailand’s latest relief plan aims to improve liquidity for businesses still affected by the pandemic through concessional loans.
- Businesses can also opt for the Asset Warehousing Program, which allows debtors to use their assets as collateral for loans, but have the right to buy back their assets once their business’ financial condition improves.
- The asset storage program will last up to five years.
The third stimulus package, valued at 1.9 trillion baht ($ 58 billion), includes 500 billion baht ($ 15 billion) in business-friendly loans, 1 trillion baht ($ 30 billion) ) financial assistance to temporary workers, contract workers, and self-employed workers, in addition to the development of local infrastructure. In addition, 400 billion (USD 12 billion) has been allocated to establish a Corporate Bond Liquidity Stabilization Fund (BSF), a special loan program that allows the Bank of Thailand to purchase bonds. corporate bonds through the BSF to ensure sufficient liquidity in the market.
Who will be eligible for the loan program?
The program is open to small and medium-sized businesses in Thailand that have been affected by the pandemic but are still deemed viable (a potential resumption of activity is expected).
The program has expanded to include both new and existing borrowers, and the credit limit has been increased to better support business recovery. In addition, the term of office has been extended.
Under the loan program, business owners with no more than 500 million baht (US $ 15 million) credit from financial institutions can apply for loans up to 30 percent of the limit. credit; it was previously 20 percent and capped at 150 million baht (4.7 million US dollars). The loan term has also been extended to five years, compared to two years previously.
The guarantee period is 10 years and the amount will not exceed 40% of the debts under the scheme.
New creditors without an existing line of credit, as of February 28, 2021, are eligible to receive 20 million baht ($ 638,000).
How Can Businesses Benefit From Asset Warehousing System?
The asset storage system allows a business to use its assets as collateral for loans, with the central bank tasking financial institutions to screen debtors.
Debtors will have the opportunity to redeem their assets when they improve their financial situation. The Bank of Thailand will provide loans to financial institutions, which will be extended to debtors under this relief measure.
The obligor will have the first right to redeem the collateral asset within five years, at a redemption price not exceeding the initial transfer price to the obligee. The obligee can charge the maintenance costs to the obligor for the asset.
In addition, if the debtor wishes to rent the property to the creditor, the rent payment will be deducted from the repurchase price. The asset storage program will last up to five years.
Who are the most likely beneficiaries of the program?
The government hopes this program will appeal to landowners, especially in the tourism industry. A recent survey by the Thai Hotels Association (THA) concluded that some 82.4 billion baht (US $ 2.6 billion) of combined hotel assets wanted to enroll in the program, with properties valued between 100 million baht (US $ 3.19 million) and 500 million baht. (US $ 15.9 million) showing the highest demand. The program also helps prevent hotel owners from selling all of their properties to foreign investors.
Tourism is a vital industry for Thailand’s economy, with the country recording more than 39 million international visitors before the pandemic, contributing US $ 64 billion to the economy. The industry itself contributes 20 percent of the total GDP.
Other initiatives to revitalize the tourism industry
In an attempt to revive the tourism industry, the Thai government has introduced a Recovery plan worth 22.4 billion baht (US $ 718 million) to boost domestic travel through subsidized flights, hotel accommodation, facilities at tourist destinations and food, etc. The Tourism Authority of Thailand (TAT) has expanded the program to an additional two million people from May 2021.
Another initiative was the publication of a tourist visa (STV) in October 2020, which allows tourists to stay in the country for up to 90 days and can be renewed twice – meaning tourists can stay for up to nine months in Thailand.
To be eligible, applicants had to undergo a 14-day quarantine and several COVID-19 tests upon arrival. In addition, they must purchase travel insurance worth US $ 100,000.
This article was first published by AseanBriefing which is produced by Dezan Shira and associates. The firm assists foreign investors across Asia from its offices worldwide, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers can write to [email protected]