The government accepts private sector’s proposal to set up an economic recovery center

The government has set up an economic recovery center following the outbreak of the coronavirus, a government official said on Friday. 

Prime Minister Prayut Chan-ocha met with members of the economic cabinet and his economic advisers from various public and private agencies. 

The meeting happened after four core members of the ruling Palang Pracharat Party (PPRP), including three ministers, resigned from the party. The move signalled a possible cabinet shakeup.

Kobsak Pootrakool, the deputy secretary-general to the prime minister and one of the four PPRP members to resign, said after the meeting that the private sector proposed the idea for the Center for Economic Recovery after COVID-19 (ศูนย์ฟื้นฟูเศรษฐกิจ หลังสถานการณ์โควิด-19). 

Prayut agreed to the proposal.

The center’s first priority will be to help small and medium enterprises (SMEs) gain more access to liquidity.

The center is also considering extending the repayment period for SME loans which is due to expire by the end of August. They will be using funds from the 400 billion baht emergency loan budget. 

According to the Bank of Thailand (BOT)’s measure that came out in April, all SMEs have been provided with a loan payment holiday of six months with a credit line not exceeding 100 million baht.

“The center will be similar to the Center for Covid-19 Situation Administration but instead of doctors, it will be representatives from the private sector instead,” Supant Mongkolsuthree, Chairman the Federation of Thai Industries, told Thai Enquirer after the meeting. 

“Once the center is established, I believe that there will be more coordination between the public and the private sector in the economic stimulation efforts,” he added.

The government is also looking for the Thai Credit Guarantee Corporation (TCG) to provide more guarantees for SMEs that are experiencing a shortage of liquidity, Kobsak said.

Supant added that the TCG is already helping SMEs but they need more budget which is one of the proposals that the Joint Standing Committee on Commerce, Industry and Banking has been making in previous months.

According to the BOT’s policy that came out in April, the central bank will provide soft loans of 500 billion baht at 0.01 per cent interest rate per annum to financial institutions for two years. 

Financial institutions will then on-lend to SMEs at a concessional rate of 2 per cent per annum. 

JSCCIB said that since the BOT’s policy will end in 2022, banks are reluctant to provide loans. 

Supant said that so far, only 20 per cent of the central bank’s 500 billion baht budget has been given out to SMEs in the past three months. 

It was estimated that about 1.7 million SMEs with a cumulative outstanding loan of 2.4 trillion baht are eligible for the soft loan scheme. 

However, less than 100,000 debtors have got their hands on it.

This is why the TCG should be provided with about 100-200 billion baht so that they can continue to provide guarantees for SMEs’ loans beyond 2022. 

Kobsak also said that the tourism and the retail sector will continue to be supported by government measures including travel promotions to less well-known domestic destinations and the reintroduction of the Chim Shop Chai campaign.

He added that any new measures will be discussed with the National Economic and Social Development Council which is also part of the new economic recovery center. 

These measures will then be put up for the cabinet’s approval before they can come into effect.

Kobsak also said that the meeting expressed concern over the prospect that about 100,000 out of 500,000 newly graduates in 2020 will not be able to find a job. 

He said the center will come up with measures to deal with this specifically. 

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