Thailand Invests ฿10 Billion: Job Creation and Economic Growth
Thailand is launching a ฿10 billion (approximately US$300 million) credit guarantee scheme to bolster small and medium-sized enterprises (SMEs) and revitalize the country’s automotive sector. This initiative, spearheaded by the Thai Credit Guarantee Corporation (TCG), will facilitate SME access to financing for new pickup truck purchases—a vital tool for many Thai businesses. The program, starting in April, aims to inject much-needed capital into the economy following a period of sluggish growth and declining loan disbursements.
The intervention addresses Thailand’s commercial bank lending contraction of 0.4% in 2024—the steepest 15-year decline, according to the Bank of Thailand. SME and hire-purchase loans experienced significant contractions, with the latter plummeting by 9.9%. This credit crunch hampered business operations and investment, particularly affecting SMEs reliant on vehicle financing. The pickup truck loan guarantee program directly addresses this challenge.
TCG President Sittikorn Direksoonthorn announced the initiative, highlighting its potential to benefit 12,500 SMEs, safeguard 37,500 jobs, and generate an estimated ฿41.3 billion in economic activity. This substantial capital injection is expected to have a ripple effect, boosting not only the automotive industry but also related sectors like logistics, transportation, and retail. The program’s focus on new pickup trucks specifically aims to stimulate automotive production, further contributing to economic recovery.
Mr. Direksoonthorn also revealed that TCG is exploring extending credit guarantees to independent leasing companies currently excluded by existing regulations. Currently, TCG guarantees are limited to leasing companies where financial institutions hold a majority stake. A decision on this expansion is expected later this month, potentially broadening the program’s reach and further improving SME access to financing.
The program offers attractive terms: an estimated 2% guarantee fee and a seven-year loan term. This extended term minimizes monthly payments, making financing more manageable for SMEs. Interest rates are expected to remain around 6%, comparable to other loan categories, thanks to the TCG guarantee.
Importantly, the program is designed for accessibility. While the pickup truck must be used for business purposes, there are no restrictions on it being the buyer’s first vehicle, and no specific truck type is mandated, allowing businesses to choose vehicles best suited to their needs.
The ฿10 billion pickup truck guarantee program is part of a broader TCG strategy to guarantee new loans totaling ฿60–70 billion in 2025, using a ฿110 billion guarantee fund. This ambitious plan targets various sectors, including businesses recovering from the COVID-19 impact, vulnerable enterprises, green businesses, and sectors aligned with national strategies, with a particular focus on the tourism and service industries. TCG also plans to lower the guarantee threshold for retail loans to approximately ฿50,000 per borrower, significantly expanding access to credit for even smaller businesses. This follows a 2024 reduction from ฿220,000 to ฿100,000, demonstrating a continued commitment to supporting small-scale entrepreneurship and fostering economic growth. The pickup truck loan guarantee program is a significant step in this direction, providing a crucial lifeline for SMEs and injecting renewed vigor into the Thai economy.
