Latest news with #Paopoom
Bangkok Post
4 days ago
- Business
- Bangkok Post
Bill aims to enhance credit guarantees
The draft National Credit Guarantee Agency (NaCGA) Bill mandates that all financial institutions contribute to a credit guarantee fund in exchange for a guarantee system that reduces their lending risk. According to Deputy Finance Minister Paopoom Rojanasakul, every financial institution providing credit to companies or businesses will be required to contribute to the credit guarantee fund established under this law. He said the fund will be sourced from three channels: government contributions, contributions from financial institutions, and fees collected from entrepreneurs requesting credit guarantees. Mr Paopoom said the government does not intend to set high contribution rates. The purpose of the fund is to build a higher-quality credit guarantee system, which should reduce the risk borne by financial institutions. Though the contributions made by institutions will account for only one-third of the fund, they should benefit significantly from reduced lending risks, he said. The exact contribution rate from financial institutions has yet to be finalised, but it is expected to be set at a very low level, said Mr Paopoom. The ministry held discussions with financial institutions regarding their contributions to the fund prior to the drafting of the law to gather feedback on the pros and cons. As with any legislation, there are winners and losers, but the key is to assess the overall national benefit, he said. This system represents a vital enhancement of the country's financial capacity, said Mr Paopoom. The draft aims to reform the current credit guarantee system operated by the Thai Credit Guarantee Corporation (TCG), making it easier for entrepreneurs to access loans. A survey revealed that 40% of the country's 3.2 million small and medium-sized enterprises (SMEs) still face difficulty in accessing credit through formal financial systems. The draft stipulates financial institutions must contribute to the NaCGA fund, which will serve as a source of funding for credit guarantee operations. The government's contribution is estimated at 10 billion baht, while entrepreneurs also pay guarantee fees. The draft requires financial institutions to contribute to the fund at a rate not exceeding 0.3% of the total outstanding business loans of commercial banks and specialised financial institutions. The effective rate will be issued later via a ministerial regulation, said Mr Paopoom. The credit guarantee fee charged by NaCGA is based on the individual risk profile of each entrepreneur, unlike the current portfolio-based fee system that does not reflect the specific risk of individual loans. Under the new model, the agency assesses the credit risk of each loan application requesting a guarantee. Once approved, the entrepreneur can use the guarantee certificate to apply for a loan from a financial institution. The scope of NaCGA will be broader than that of TCG, he said, able to guarantee loans from commercial banks and non-bank financial institutions, as well as guarantees for debt instruments or asset securitisation. However, this does not include equity instruments or loans provided by other businesses involved in capital sourcing, as determined by the policy committee, and excludes equity or equity-like instruments. NaCGA may also guarantee loans provided by other funding-related businesses, as determined by policy directives, excluding equity or quasi-equity instruments. This broader mandate is designed to better address the liquidity needs of entrepreneurs. Entrepreneurs eligible for guarantees from NaCGA are not limited to SMEs, as other types and sizes of businesses may also qualify, as defined later by the board of directors. The agency can also propose plans directly to the cabinet in urgent cases where there is a need to support entrepreneurs or promote credit access in alignment with government policy goals, such as the development of strategic sectors or the national economy. Beyond improving SMEs' access to formal credit and reducing reliance on informal funding sources, NaCGA is expected to serve as a stabilising mechanism in times of economic volatility, particularly during crises marked by a high level of risk and uncertainty in the financial system, said Mr Paopoom.
Bangkok Post
5 days ago
- Business
- Bangkok Post
Paopoom looks for more assistance from monetary policy
Thai monetary policy must "step on the gas" to help support the economy, which has been affected by US reciprocal tariff threats, says Deputy Finance Minister Paopoom Rojanasakul. He said monetary policy is not only about policy interest rates, but also includes measures such as credit distribution, injecting liquidity into the economic system or easing certain conditions to incentivise banks to lend. In the past, the Finance Ministry called for the relaxation of loan-to-value criteria, and eventually the Bank of Thailand did ease these conditions, although it took a long time for consideration. Regarding the responsible lending framework, Mr Paopoom said it may need to be reviewed for deployment during a more suitable period. He said a key fiscal measure is the 115-billion-baht stimulus package already approved by the government, which is expected to rev up the economy in the fourth quarter of this year and the first quarter of 2026. On June 24, the cabinet approved 481 projects worth 115 billion baht as part of a stimulus package expected to create 7.4 million jobs and lift GDP growth by 0.4 percentage points. Finance Minister Pichai Chunhavajira said earlier the government needs to implement stimulus measures as both domestic and international factors weigh on the economy, especially the global trade war and US tariffs, which dampen exports and reduce income. The key principles for the stimulus budget include: ensuring widespread distribution of funds, promoting employment and supporting projects with long-term impacts. Each investment project must have a minimum value of 500,000 baht, except for essential projects such as those in the tourism sector, which may be below that threshold. The investment period must not exceed 12 months and must be completed by Sept 30, 2026. According to Mr Paopoom, Thailand's economic outlook would be improved if not for the new US tariff proclamation of 36% for Thailand on Tuesday, as the local Manufacturing Production Index posted growth for two consecutive months after previously falling into negative territory. "The Trump tariffs are a major issue, but the final tax rate for Thailand remains uncertain," he said. In the latter half of this year, Mr Paopoom said both the Thai and global economies are expected to face increasing challenges, with the Thai economy forecast to decline in the second half compared with the first half. The Bank of Thailand forecasts economic growth of 2.3% for 2025, with a 2.9% expansion in the first half and a 1.6% increase in the second half.
Bangkok Post
06-07-2025
- Business
- Bangkok Post
Ministry keen to press financial bills
Despite ongoing political uncertainty, the Finance Ministry appears poised to push forward three key financial bills. According to Deputy Finance Minister Paopoom Rojanasakul, the three drafts are an amendment to the National Savings Fund Act, the Financial Hub Bill and the National Credit Guarantee Agency (NaCGA) Bill. The draft amendment to the National Savings Fund Act allows the National Savings Fund to issue a "retirement lottery", aimed at attracting more people to save. This bill is expected to be presented for its first reading in parliament on July 16. The Financial Hub Bill is designed to attract foreign investors and financial businesses, stimulate domestic economic activity and enhance financial skills among the local workforce. This bill was already reviewed and finalised by the Council of State and is expected to be submitted to the cabinet for approval on Tuesday. Once approved by the cabinet, it will be forwarded to parliament for deliberation. According to Mr Paopoom, the draft NaCGA Bill is expected to be submitted to the cabinet on July 8 or July 15. This legislation is meant to improve access to formal credit for small and medium-sized enterprises by allowing NaCGA to assess lending risks and provide credit guarantees to financial institutions. He said everyone involved in the process must continue to perform their duties because the country faces many obstacles that need to be resolved, including economic problems and border-related challenges. All ministries must continue to progress with their work. Regarding the Entertainment Complex Bill, which was already approved by the cabinet, the government aims to submit it to parliament during the upcoming legislative session this month. However, Mr Paopoom said the draft still requires a detailed review before it can move forward. "We can't afford to stop. Everyone must cooperate to ensure Thailand continues to move forward, both economically and in resolving border issues," he said. "We are trying to push through as many items in the pipeline as we can. There are no delays, with 2-3 draft laws heading to parliament." Last week, three major private sector groups expressed growing concern over political instability, urging the government to ramp up efforts to rebuild trust and confidence among the public and businesses. The Joint Standing Committee on Commerce, Industry and Banking is preparing to hold discussions with the Bank of Thailand, the National Economic and Social Development Council, the Finance Ministry and the Commerce Ministry to re-prioritise economic strategies, given limited resources. The focus is on stimulating the economy over the next 6-12 months.
Bangkok Post
05-07-2025
- Automotive
- Bangkok Post
Thai auto sector showing signs of recovery, minister says
Encouraging signs are emerging in Thailand's industrial sector, particularly in automotive manufacturing, which is showing a strong recovery after a prolonged contraction, according to Deputy Finance Minister Paopoom Rojanasakul. The government is beginning to see positive momentum in the automotive industry, which had been in decline for two years, Mr Paopoom said on Saturday. The country's Manufacturing Production Index (MPI) in May increased by 1.9% year-on-year, marking the second consecutive month of growth following nine months of contraction, he said. The automotive MPI rose by 12.7% — also for the second consecutive month — after turning positive for the first time in 21 months. Automobile production in Thailand rose 10.3% in May from a year earlier, with the first annual rise in 22 months helped by higher pickup truck output for export markets, the Federation of Thai Industries (FTI) reported earlier. However, for the first five months of 2025, output was still down 7.8% from a year earlier to 594,492 vehicles. Most industry leaders expect the full-year figure will also show a contraction. Domestic car sales (including pickup trucks) rose for a second month in May, up 4.7% year-on-year, though demand is still constrained because of high household debt and tougher screening of loan applications. Passenger car production in May surged by 22.1%, maintaining momentum after posting positive growth in April for the first time in a year. New passenger car registrations in May also grew by 8.7%. The pickup truck MPI in May grew by 5.2%, its first increase in 23 months. However, the pickup market requires additional stimulus as it has been affected the most by lending constraints, said Mr Paopoom. The Ministry of Finance has proposed a new programme that would offer tax reductions on new pickups to buyers who trade in their old ones. Meanwhile, the MPI for motorcycle manufacturing continued its growth for the third consecutive month, rising by 7.4%, in line with a 5% increase in domestic motorcycle production.
Bangkok Post
01-07-2025
- Business
- Bangkok Post
Debt relief scheme to be expanded
The cabinet has approved expansion of debtor eligibility for the "You Fight, We Help" debt relief programme. Under the new criteria, debtors who have been in arrears from one day up to 30 days, as well as those with overdue debts exceeding 365 days, are now allowed to join the scheme. This expansion will increase the number of eligible debtor accounts by 2 million, with a total debt value of 310 billion baht, according to Deputy Finance Minister Paopoom Rojanasakul. Speaking after the weekly cabinet meeting on Tuesday, Mr Paopoom said previously only debtors who owed money for more than 30 days but less than 365 days were eligible for the scheme. "This expansion of the programme should allow more debtors to benefit from it," he said. "The registration deadline for the programme was extended to Sept 30 of this year, from the original deadline of June 30." Since the programme launched in December of last year until April 15, 2025, 530,000 eligible debtors, or 27% of the 1.9 million eligible participants, have registered. The amount of debt enrolled in the programme tallied 385 billion baht, accounting for 43% of the total eligible debt amount of 890 billion baht. According to Mr Paopoom, the cabinet's decision to expand eligibility criteria aims to support all groups of debtors and assist the public. The types of debtors and methods of assistance remain the same. Under the programme, repayment instalments are gradually reduced over a three-year period. If the debtor fully complies with the conditions throughout the entire term, the interest is waived.
