Mr. Wiboon Perm-Arayawong, President Thai Credit Guarantee Corporation (TCG)

Apr 25, 2012

Credit Supplementation for SMEs: Thailand Case Study

35th ADFIAP MeetingIstanbul, Turkey

35th ADFIAP ANNUAL MEETING, ISTANBUL, TURKEY

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Presentation Outline

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Thailand

Area (km2) 513,120 513,120

GDP (mil USD) 318,522318,522

GDP-PPP (USD) 4,1504,150

Population (mil) 6969

No. of Enterprises 2,924,9122,924,912

No. of SMEs 2,913,1672,913,167

% to Population 4.214.21

% to Total Ent. 99.5999.59

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Bank

Thai’s Credit Guarantee System

Loan requests

Loans disbursement Claim payment

Letter of Guarantee issue

Claim submission when legal action is taken against the borrower.

Public Policies, Capital and Loss Compensation

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Application for Guarantee2SMEs

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Thai Credit Guarantee (TCG)

A state-owned specialized financial institution (SFI) under the supervision of the Ministry of Finance.

Established on December 30, 1991 as the sole Credit Guarantee Corporation in Thailand to assist viable SMEs to access to finance.

There are 9 Offices covering all regions throughout Thailand.

Chiang Mai

Phitsanulok

UdonThani

Nakhon Ratchasima

Chonburi

Ayutthaya

Suratthani

Songkhla

Bangkok and Greater

Bangkok Office

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Annual SME Outreach 2006-2011(Million THB) No. of Guarantee Issued

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Statistics of Credit Guarantee & NPG (FY 2003-2011)

(Million THB)

2003 2004 2005 2006 2007 2008 2009 2010 2011 Cumulative

Approved Guarantee

Outstanding Guarantee

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Percent of Outstanding Guarantee to Total SME Loan

(Mil. THB)(%)

2,494,084

2,732,149 2,774,7142,906,745

2,608,806

2,853,907

3,291,750

Accumulated Job Creation

2003 2007 2008 2009 2010 2011200620052004

108

66

27 34 4144

1915

ADDITIONALITY

Cumulative Approved Loan Guarantee

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Financial Sustainability

Retained Earnings

Annual Net Income

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1.5 Lesson Learned

• Thailand had lost opportunity to assist SMEs to access to finance effectively for 17 years with individual guarantee only.

• Portfolio guarantee scheme was proved to be more effective than individual guarantee

• Partial credit guarantee (PCG) is an effective public support scheme for crisis-response.

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Thai SMEs

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OUTSTANDING LOAN OF ALL BANKSBillion THB (Exchange Rate 30 THB/USD)

5 Yrs Avg. Growth Rate:Large 23.0 % p.a.Medium 8.8 % p.a.Small 2.3 % p.a.

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NUMBER OF BORROWERS

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2 /3 of SMEs Don’t Borrow from Banks

How did this 2 million SMEs

finance themselves?

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Target SMEs

Ration of SMEs (classified by group) from the total number of SMEs in Thailand (approximate 3 million SMEs)

Source: In 2009, OSMEP estimated the total number of SMEs throughout Thailand at 2,914,912 SMEs.

Group 3 Guesstimate 600,000 SMEs

Group 1

Group 2Group 4

Group 5

Group 6

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BANKS’ SME LOANS

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CURRENT LOAN GUARANTEE

% Guarantee to Their SME Loan

% Guarantee to Their SME Loan

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Strategic Direction

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Strategy MapStrategy Map

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PROVIDE THE BEST TOTAL SOLUTION TO OUR CUSTOMERS

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Fast Convenience Reliable Consultant Training Partner National Credit Guarantee Institute

PRODUCT / SERVICE ATTRIBUTES RELATIONSHIP

FinancialPerspective

CustomerPerspective

InternalPerspective

Learning & GrowthPerspective

Growth StrategyGrowth Strategy Productivity StrategyProductivity Strategy

Risk Based PricingRisk Based Pricing

New Customers

New Products &

Services

CustomerPenetrations

Reduce cost to serve

MinimizeNPGs

Maximize use of Existing Assets

OPERATION MANAGEMENT PROCESSES

CUSTOMER MANAGEMENT PROCESSES

INNOVATION PROCESSES

REGULATORY & SOCIAL PROCESSES

HUMAN CAPITAL INFORMATION CAPITAL ORGANIZATION CAPITAL

Credit GuaranteeManagement

Friendly

NPGs Management

Risk Management

Targeting

Recovery

Growth

Acquisition

Retention

Identify New Opportunities to Serve Customers

Anticipate Future Customer Needs

Corporate Governance

Corporate Social Responsibility

A CAPABLE, MOTIVATED, AND TECHNOLOGICALLY ENABLED WORKFORCE

Values

Skills Knowledge

Core Credit Guarantee Solutions

Decision Support System

Infrastructure

Culture Leadership

Alignment Teamwork