The Bank of Thailand (BOT) is advancing discussions with the National Economic and Social Development Council (NESDC) and the Finance Ministry to create a support plan aimed at vulnerable businesses in response to Thailand’s economic slowdown and rising global uncertainties.

Roong Mallikamas, the Deputy Governor for Financial Institutions Stability at the BOT, highlighted the urgent need to shift towards sustainable business practices and reinvigorate investment cycles, which have been lacking significantly in recent decades.

Roong emphasized that merely providing liquidity is insufficient for the country's economic recovery.

As part of this initiative, the BOT is examining the financial data of banks to gain a comprehensive understanding of debtor vulnerabilities to enhance support mechanisms.

The Finance Minister has instructed BOT officials to engage with commercial banks to identify business characteristics that suggest potential for survival, focusing on whether businesses require new products, access to new markets, or specific types of assistance.

Clear guidelines for bank assurances needed for lending will also be established.

The initial focus of this support strategy will target three pilot industries: tourism, food and agro-processing, and the medical and wellness sectors.

Roong noted that while interest rate cuts could alleviate some financial burdens for businesses, they are not a complete solution.

The Thai economy requires more substantial adaptations beyond just liquidity improvements.

Current efforts to define appropriate support measures for debtors are expected to guide the formulation of government-backed initiatives, which may include credit guarantees or soft loans.

Roong indicated that credit guarantees could be implemented through the Thai Credit Guarantee Corporation (TCG) with higher coverage ratios, circumventing any delays associated with the newly proposed National Credit Guarantee Agency (NaCGA).

Despite these measures, a significant barrier to financial access remains the reluctance of commercial banks to lend due to increased credit risk.

The BOT is collaborating with various agencies to clarify the risk environment to encourage banks to lend to borrowers deemed likely to repay.

Long-term strategies will also focus on lowering the cost for smaller debtors while empowering borrowers through greater access to diverse financial services and credit data.

The BOT is pursuing the 'Your Data' initiative, aimed at creating a digital data bank that enables borrowers to leverage their financial transaction histories as collateral, potentially instilling greater confidence in lending institutions.

Amid these financial measures, household debt continues to pose a challenge for Thailand, weighing heavily on domestic consumption.

The latest data indicates that household debt has slightly decreased to 87.9% of GDP, the highest ratio in the ASEAN region, with a substantial portion attributed to non-productive consumer loans.

Younger generations in Thailand are increasingly incurring debt at earlier stages, with many retirees also struggling due to insufficient financial literacy and unexpected life circumstances.

In response, the BOT is implementing a comprehensive strategy to stimulate income growth, encourage responsible lending practices, and enhance public financial literacy.

One notable effort is the 'You Fight, We Help' scheme, which supports individuals in debt management.

Although participation resulted in only about half qualifying for relief during its initial phase, BOT officials view this as a satisfactory outcome.

The program allows participants to reduce their first-year installment payments significantly, with additional incentives for maintaining repayment disciplines.

As the BOT prepares for the next phase of this initiative, Roong confirmed adjustments would be made based on lessons learned from the first phase, particularly addressing eligibility issues for applicants.

The BOT also noted variances in commercial bank participation in the program, especially concerning different types of loans, with state-owned banks showing higher rates of enrollment due to their lack of auto loan portfolios.

In future efforts, prioritization will be given to banks' individual circumstances over standard performance metrics.