The Bank of Thailand is accelerating the injection of 1.3 billion baht in loans into the system to help revive SMEs.

The Bank of Thailand governor is pushing ahead with lending through Credit Boost and Secure Plus programs, aiming for a total loan disbursement of 1.3 billion baht by 70. The goal is to revive SMEs and address structural problems. The governor sees potential in the northeastern economy but emphasizes the need for adaptation and enhanced competitiveness.

August 3, 2569 – Mr. Witai Rattanaporn, Governor of the Bank of Thailand, opened the 2569 Annual Seminar of the Bank of Thailand's Northeastern Regional Office on the theme "Working in Isaan, Our Homeland," stating that the Bank of Thailand has clearly adjusted its role to place greater emphasis on regional economies and regional offices, as these offices serve as a link between the Bank of Thailand, the private sector, and the public.

Currently, the Bank of Thailand considers not only the macroeconomic picture but also prioritizes the microeconomic level. Its various programs encompass monetary policy, adjustments to the policy interest rate to support the economy, structural support measures, and solutions to problems at the individual and business levels.

"It must be acknowledged that the economic growth rate has been declining continuously. From around 7%, it dropped to 5%, then 4%, and after COVID-19, it grew by approximately 3%. In the past, if the economy grew by only 3%, it might have been considered disappointing. But now, even 3% growth is considered very satisfactory."

Mr. Witai further stated that the slowdown was due to both global economic volatility and internal structural problems. External events inevitably affected Thailand and the Northeast region, including the trade war and US tariffs, which impacted agricultural products.

Regarding the conflict in Iran, which has caused volatility in oil prices, crude oil prices were previously around $68–70 per barrel before rising to $140 per barrel, and are expected to remain volatile. This directly affects the prices of gasoline and diesel in the country. If the Oil Fund cannot bear the subsidy burden, the price of diesel could rise to around 40 baht per liter. If prices do not adjust, the cumulative impact will make daily life and businesses more difficult.

However, the domestic economy faces several structural problems, such as difficulty for businesses to access credit, corruption, educational issues, and unfairness. Small and medium-sized enterprises (SMEs) bear relatively high fees from commercial banks, while state-owned banks charge almost no fees.

"Commercial banks are facing declining income from interest rate spreads, so they are turning more to income from fees and investments. The Bank of Thailand has therefore stepped in to help reduce this burden of fees."

Regarding the economy this year, initial forecasts in March indicated GDP growth of only 1.5%, considered very low. As the situation improved, the estimate was revised upwards to 1.8–1.9%. With government stimulus measures, including the "Thai Helps Thai Plus" project and the 400,000 billion baht emergency decree, the economy is now expected to expand by approximately 2.3%. While still low, this is better than the original forecast of 1.5–1.7%.

“The 2.3% growth has several limitations. Exports may grow by as much as 14%, which is very high, but imports are growing even faster, causing the country's trade deficit to widen. In addition, Foreign Direct Investment (FDI) is at a record high, resulting in total investment expanding by approximately 6%, compared to the usual growth of only 1–3%. However, the majority of this investment is concentrated in high-tech industries such as AI, data centers, and cloud services.”

These industries create relatively few jobs. For example, a single data center might employ only 30–40 people but consumes enormous amounts of electricity and water. Furthermore, their local content accounts for only about 30% of their consumption, compared to approximately 70% for typical businesses. Therefore, it is evident that even with increased investment, the benefits distributed to the Thai economy remain limited.

Exports are also concentrated in a particular area. High-tech products grew by 45%, while other product categories combined grew by only 2%. There are approximately 105 manufacturers of high-tech products, and of these, about 85 are foreign companies, accounting for 85% of exports in this category.

Therefore, while this growth is positive, the benefits to Thai people are still limited, both in terms of employment, domestic purchases, and profits for Thai businesses. Nevertheless, having Thailand in the AI ​​supply chain is certainly better than not having it, as this technology will create significant changes in the future.

The economy of Northeastern Thailand has potential.
But we need to adapt quickly.

Mr. Witai stated that the Northeast region has high potential, with approximately one-third of the country's population, around 22% of SMEs, a large agricultural production base, and a strategic location with good connectivity to neighboring countries.

However, the region also faces long-standing structural problems. Household income is the lowest compared to other regions, at approximately 100,000 baht, compared to the national average of around 260,000 baht.

Non-performing loans (NPLs) in the Northeast stand at 10%, compared to 3% in other regions. Business recovery in the Northeast is slower than in other regions. Large-scale loans in the system have returned to positive growth of approximately 4.8%, but the Northeast economy is still contracting by about 10%. Furthermore, about 50% of the Northeast's workforce is in the agricultural sector, which is experiencing decreased productivity and competitiveness compared to key competitors in both rice and rubber production.

Importantly, the Northeast region also has high levels of household and business debt. From my experience working with the Government Savings Bank in two stints, totaling eight years, I have found that the debt problem in the Northeast, especially civil servant and household debt, is very severe, with a debt ratio of approximately 58%, which is considerably higher than in other regions.

However, these problems do not mean that the Northeast lacks potential. The key issue is how to transform that potential into productivity and income for both businesses and households. Today's seminar may not bring about immediate change, but hopefully it will help spark collaboration among businesses, households, labor, civil servants, and relevant agencies to utilize their potential and adapt for the better. The most important thing is action, because Thailand has the ability to analyze problems, but perhaps in the past, we haven't taken enough action to solve them.

"The Bank of Thailand in this era is focused on seriously addressing problems, having launched several projects to tackle structural issues. However, large-scale problems take time; no single project can solve everything immediately."

Injecting 1.3 billion baht in loans.
Help SMEs

The Credit Boost program, a new loan guarantee mechanism, has already disbursed nearly 50,000 billion baht in loans and is expected to help SME loans, which are currently in negative growth, return to positive growth next year. If the program is successful, a proposal will be made to the government to improve the business loan guarantee mechanism through the Thai Credit Guarantee Corporation (TCGC) to make it more comprehensive and effective. Another program is Secure Plus, which uses land as collateral and has relaxed the Bank of Thailand's inspection criteria.

“It is expected that the Credit Boost and Secure Plus programs will collectively disburse approximately 130,000 billion baht in loans within the next year and help support the economy. In addition, there is a debt restructuring program for small borrowers with loan amounts not exceeding 100,000 baht per person, enabling them to reintegrate into the economic system. Currently, almost 150,000 borrowers have been assisted, and we aim to expand this further next year.”

Mr. Witai also stated that all sectors need to adapt, including the Bank of Thailand, labor, farmers, and entrepreneurs. The agricultural sector must increase productivity through cooperation from the Ministry of Agriculture and related agencies. If increasing productivity is difficult, then sales methods and value-added products must be adjusted. Farmers cannot continue producing in the same way because Thailand's production costs are higher than its competitors. If productivity cannot be increased, then the value of products must be upgraded to generate higher income.

Traditional seasonal work models, such as farming followed by factory work after the harvest season, are becoming increasingly difficult to implement because a number of factories have closed down, and those that remain operational are continuously reducing their workforce. Thai businesses cannot compete on price and cost with Chinese products unless they upgrade their efficiency, utilize technology, and increasingly apply AI. Otherwise, their competitiveness will gradually decline.

It is believed that the Northeast region does not lack potential, skilled personnel, or resources, but rather it is at a critical juncture where all sectors must adapt—farmers, businesses, and industries—to cope with competition and changing circumstances. If they adapt, the economy will improve, people will have higher incomes, and the quality of life for farmers and their households will improve as well.

“We hope that both external and internal changes will have a positive impact on the Northeast region, enabling the region to participate in the cycle of change and benefit from new opportunities. The Bank of Thailand is ready to provide encouragement and develop all the tools it can within its role as an organization, adhering to the key principles of ‘reaching out’ and ‘staying grounded’.”

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