Exporters renew plea for greater loan access

       H1 STATE BANK LOANS: Approved: B300bn Target: B625.5bn
       Thailand's exports still have a chance to contract by a modest 5-10% if the government rapidly extends loans to ease liquidity problems for local industries and exporters, according to the Thai Chamber of Commerce.
       "The most effective stimulus measure to improve exports right now is accelerating loan extensions," said Pornsil Patchrintanakul, the deputy secretarygeneral of the chamber."Tight liquidity remains unaddressed and the credit extension by local banks is still moving at a snail's pace despite government pledges to speed up their lending activities."
       Local industry groups have complain-ed of increased difficulty in obtaining credit in recent months as commercial banks have tightened lending procedures due to heightened risk.
       The government has responded with increases for credit-guarantee programmes and directives to state banks to expand lending activities to prevent the economy from deteriorating even further.
       State banks have been slow to react,however, approving just 300 billion baht worth of loans in the first half, compared with atarget of 625.5 billion.Disbursements have totalled just 100 billion baht.
       Finance Minister Korn Chatikavanij said the government had now directed state banks to raise their lending to one trillion baht from 600 billion planned earlier. The banks' extra funding would come from the second economic stimulus package.
       However, Mr Korn brushed aside a Commerce Ministry proposal to cut the so-called blue corner tax, which would guarantee higher tax rebates for imports to be used in export-oriented production, as prior legal amendments would be needed.
       Mr Korn also vowed to work more closely with the Bank of Thailand to make sure the baht moves in the same direction as currencies in the region.
       To curb further baht appreciation,he said, the government would promote using the weak US dollar to buy imported capital goods.
       Mr Pornsil said the ministry's idea to offer higher tax rebates was good,but in practice it was likely to run against World Trade Organisation rules, as a higher tax rebate is tantamount to a government export subsidy.
       The Finance Ministry's denial of the proposal was unlikely to affect the sector that much, said Mr Pornsil.
       Thailand's exports rose for the third consecutive month in July, making the government increase its export projection for the year to a contraction of 10-18%. The previous forecast was for a 15-19% shrinkage.
       Shipments in July increased to $12.9 billion, their highest value in seven months, from $12.33 billion in June and $11.65 billon in May. The year-onyear contraction was 25.68%.
       The marginal improvement was mainly due to a reduced contraction for shipments of agricultural, agroindustrial and industrial products.