SME Development Bank of Thailand

1. SME Development Bank of Thailand

2. The Bank’s History The government has a long history in supporting small and medium enterprises. In 2002, it changed the role and name of the Policy Bank to Small and Medium Development Bank of Thailand (SME Bank), with the objective of providing financial and developing services to SMEs • Established as the Small Industry Finance Office (SIFO) under the Department of Industrial Promotion, Ministry of Industry to provide financial support to small industries • As a government-owned financial institution and solely funded from the National Budget, SIFO’s services was limited and could not enjoy all the flexibility enjoyed by other FIs • Re-established by Act of Parliament as the Small Industries Finance Corporation (SIFC) under the Ministry of Finance and Ministry of Industry • Commenced operations in Jan 1993 with an initial registered capital of THB 300 million, SIFC was able to source funds both domestically and overseas • SIFC was recapitalized to THB 2.8 billion, with Ministry of Finance holding 92% of the shares • Reactivated by Act of Parliament as the Small and Medium Development Bank of Thailand (SME Bank) under Ministry of Finance and Ministry of Industry. SME Bank was formally established on 20 Dec 2002 with all assets, businesses, debts, capital, profits, reserves, etc transferred from SIFC. The authorized capital has been increased to THB 10 billion

3. Vision and Mission Vision “To be a financial institute that assists and supports SMEs” Mission - Support the government policies to assist and support SMEs - Financially serve and respond to the needs of Thai SMEs - Promote and develop Thai SMEs along with the financial assistance - Develop an innovative communication technology and effective organization

4. The Importance of SMEs to the Thailand’s Economy Employment Creation Generating Foreign Currency Income Development for Various Types of Skills Linked with Businesses of Large Enterprises Creation of New Entrepreneurs Creating Competition and a High Quality Service Culture Increasing Utilization of Domestic Products

5. Overview of the SME Sector in Thailand • Production Value 39.4% of GDP (Not included Agriculture) • Export Value 29.0%of Thailand Total • Employment 76.4%of Thailand Total Employment 98.6% of all enterprises are SMEs SME Classification: by employment and fixed assets Definition Small Medium Number of Fixed Assets Number of Fixed Assets Employees excl. land Employees excl. land (THB mm) (THB mm) Manufacturing 50 or less 50 or less 51-200 > 50 to 200 Service 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

6. Unique Position in Thailand’s Bank Market • SME Bank is set-up as an organization for which profit maximization is not the primary goal - it is the Bank’s policy not to compete with commercial banks • SME Bank collaborates with other special financial institutions and provides funding to SMEs which cannot obtain loans from commercial banks • SME Bank does not compete directly with the other SFIs - Bank of Agriculture and Agricultural Cooperatives and Government Savings Bank performs lending roles with an emphasis on different areas Specialized Financial Institutions for SMEs SME Development Bank of Thailand Bank of Agriculture and Agricultural Cooperatives These policy banks collaborate to develop the grass-root economic system… …but each bank has its own client base “SME Bank” Building an entrepreneurial society Total Solutions Smart SMEs, First-time exporters “Rural Development Bank” On-farm and off-farm community enterprises Export-ImportBank of Thailand Government Savings Bank “Exporter’s Bank” Full banking service Export insurance and investment abroad “People’s Bank” To develop human capital Smalll Business Credit Guarantee Corporation (SCBG) To provide Credit Guarantee for SMEs’s loans approved by banks.

7. Network 5 Regional Offices 9Zones + 1 Bureau 99 Business Development Centers 1,614 Officers

8. General Loans Services Long-term Short-term Commercial Facilities Factoring Loan Leasing and Hire-Purchase LG Joint Venture Business Diagnosis Business Training Business Planning & Development Marketing Networking Policy and Special Loans Credit& Service • SMEs Capacity Development Loans • Machine Fund • Machine Hire-Purchase Loans • Loans to Facilitate Borrower’s • Business Recovery • SMEs Power • Loan Aimed to Slow Down Layoffs • OTOP ,Grass Roots • Loans to Reslove Poor People’s Debts • OTOP Loans • Food Business Support Group • Thai Cuisine to the World • Food Safety from Farm to Consumer • New SMEs Support Loan • Franchise Loan • sme Power for Tourism • Loans for Small Businesses

9. SME Development Services • New Entrepreneur Creation Program, • Accounting System and Software Application • POS System Training for Small Retail Business • Intellectual Property Management Training • Tax Laws and Planning Training • Modern Financial Management Training • Market Research and New Product Development Training • Free of charge to access SME Bank’s publicity channels • SME Operation Diagnosis Service • Workshops (In-house Training & On the job training) • Service of On-site Deep Counseling

10. Example Loan • Sme POWER • Loans to help sustain employment and minimize layoffs • Sme POWER for Tourism Operators • SME Power for a New Start” Project • OTOP

11. Loans to help sustain employment and minimize layoffs Objective Support SMES who were effected from Economic Crisis to operate and minimize layoffs or expand increase in employment Target Groups SMEs who registered and allowed in commitment with Social Security Office Not over 50 Million Baht (Credit Amount of Project 6,000 million baht ) Credit Amount Criteria Interest Rate 5% 5 years (Not over year 2014) As usual Criteria Collateral

12. “ OTOP Loan” Objective Support in Funding . Production System, Management, Product ,Marketing and Distribution Channel Target Groups Individual Person or General OTOP Entrepreneurs who were guaranteed by government organization such as Mister of Industry , Minister of Commerce, etc. Fees Total 5,000 Million Bath Lending from 50,000 not over 1,000,000 Bath Per case Credit Amount Criteria • Term Loan : Not over 5 years • Short Term Loan : P/N Type of Loan MLR +1 % Per Year Interest Rate

13. “ OTOP Loan” Fee 1,000 Bath Per case • Individual Person • Juristic Person • Cross Guarantee between Individual Person and Juristic Person • Others ( As the regulation of SME Bank ) Collateral

14. Example of OTOP Entrepreneur BHUTESUAN MASKS

15. Others Activities

16. Mass Communication for Clients Visit SME BANK Entrepreneurs by mass media for helping in Public Relations including creating SMEs image SME Catalogue SME Catalogue for publishing SME BANK’s Client Product over 500 businesses target group both domestic and international purpose to support with increase in channel marketing 15

17. Market Place Holding the activities for helping SME BANK’s Client to sell their products at various place such as SME BANK TOWER and move on to government organization and alliance place in domestic and international i.e. Ministry of Finance, Ministry of Industry, PTT included other province of Thailand

18. Business Diagnosis • Shin – Dan Program • Diagnosis and Kai-zen for • SME BANK Clients • Seminar to prepare • for improvement • and • - Consulting for implementation

19. Business Matching Holding Business Matching with Japan Finance Cooperation in Automobile and Electronic Spare Parts Cluster

20. THANK YOU