Finance Minister Korn Chatikavanij has promised both local and international investors that local banks have adequate liquidity to support their industries.

“Liquidity is high and we expect bank lending to expand at 10 per cent this year, which should be adequate,”

Korn said yesterday on the sidelines of a loan-contract signing between three local banks – Bangkok Bank, Siam Commercial and Tisco – on the one side and US-based car-maker General Motors on the other. Three banks have agreed to lend General Motors (Thailand) Bt13.5 billion to finance two vehicle programs and construction of a new diesel-engine plant in Rayong province.

Korn was replying to a question about whether Thai banks had adequate funds to finance other foreign investors.

Korn also praised the GM brand and its reputation.

“GM Khemkhaeng [investing for strength] means Thailand will also Khemkhaeng,”

he said, referring to the government stimulus package known as Thai Khemkhaeng, through which the government plans to invest up to Bt1.43 trillion over three years.

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What’s Good for GM Is Good For Us: Korn

Chansak Fuangfu, vice president for wholesale business at Bangkok Bank (BBL), said his bank and Siam Commercial Bank (SCB) were joint lead arrangers, lending Bt6 billion apiece, while Tisco Bank would provide Bt1.5 billion.

The loan term is seven years.

BBL president Chartsiri Sophonpanich said GM’s investment in Thailand was part of that company’s long-term international plan, because Thailand was an important production base for the industry. The move reflects Thailand’s strong competitiveness.

Vorapak Tanyawong, senior executive vice president for corporate banking at SCB, said the lending deal was completely ordinary and no different from other loans, so the three banks did not require any special collateral or conditions. Besides, GM’s major shareholder is the United States government, with a 61-per-cent stake.

“This kind of deal, with Thai banks lending to a foreign company, could occur again this year. Large loan amounts would require a syndicated loan, but for smaller amounts a single lender would do,” he said.

Steve Carlisle, president of GM Southeast Asia Operations and Chevrolet Sales (Thailand), said the funds from the three banks would be used for two important vehicle programmes at the company’s production base in Rayong province.

The programmes are designed to produce next-generation pickups and sport utility vehicles. These are significant products for Thailand, a country in which pickups remain the preferred means of four-wheel transportation.

The new products will strengthen Chevrolet’s line-up in Thailand and open up exciting new export opportunities to Asean markets and around the world.

The funds will also be used to build a new diesel-engine plant next to GM’s vehicle-assembly plant in Rayong province. With annual capacity of 106,000 units, these engines will power a range of vehicles built and sold in Thailand and elsewhere.

Recent Trade Reforms in Thailand

A steep fall in exports caused by the global trade slump drove down industrial production and investment in the frst half of 2009. Business and consumer sentiment was further undermined by political tensions. Although there were signs the worst had passed by midyear, the economy is expected to contract by more than was projected in March. Modest growth is seen resuming in 2010. The tempo of recovery will depend in large part on the Government fully implementing two fscal packages, including a new public investment program. Those plans would be at risk if political disruptions recur. The consumer price index is now forecast to decline this year, before low-level infation returns next year.

Infrastructure services, if quickly improved, could promote a better investment climate in Thailand

What’s Good for GM Is Good For Us: Korn

A clear policy framework is needed, and the development direction set forth by the policy makers should be based on reliable information on the current status of infrastructure development. Systematic, periodic, and internationally-standard information collection within the infrastructure sector will provide Thai policy makers with good background with which to assess the current situation, identify bottlenecks, set clear policy direction, and prioritize projects more effectively .

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