Display mode (Doesn't show in master page preview)

23 Mar 2021

Financial Institutions

Soft loan and asset warehousing… promising options for businesses seeking aid in times of great uncertainty (Current Issue No.3199)


The financial position of Thai businesses, particularly small and medium enterprises (SMEs), remains precarious amid the uncertainties that are hindering economic recovery. Revival of the economy remains subject to progress made in vaccinations, both domestically and internationally; as well as the risk presented by the emergence of new COVID-19 variants. Businesses in the tourism industry and related supply chains have seen declines in international tourism revenue for more than 12 consecutive months. At the same time, other sectors are also casualties of these grueling circumstances caused by the prolonged nature of the latest COVID-19 outbreak.

Recently, the Thai government and the Thai Bankers' Association greenlighted an asset warehousing scheme and new loan measures to support SMEs. KResearch perceives that these two measures will provide business operators – particularly SMEs that have been both directly and indirectly affected by the pandemic – additional options in coping with the current economic conditions and the volatility of the tourism industry. At the same time, such measures could help to ease the burden of financial institutions caused by deteriorating debt quality among the aforementioned businesses which could affect their provisions during this period wherein their revenues earned from core businesses have yet to return to pre-pandemic levels.

The success of the asset warehousing scheme depends on two principal conditions: the recovery trends of the economy and tourism activity, and the conclusions to loan agreements between debtors and creditors which differ in practice per the conditions that each debtor is subjected to/per the established conditions for each debtor. Meanwhile, these measures may not be available to businesses that operate on leased lands or do not have ownership of the land or property. Moreover, competitiveness potential may be an issue for small businesses, especially individuals who operate guesthouses via mortgaged loan.  

Henceforth, relevant authorities may have to consider adding new guidelines to support small enterprises while periodically assessing the effectiveness of these schemes for further improvement in the upcoming period.​

Financial Institutions