Thai Startup Businesses Call for Government Help Amidst Pandemic
Published: August 4, 2020 at 7:26 pm
Businesses have been hit hard by the COVID-19 pandemic. While the Thai government has poured help towards small-and-medium enterprises, or SMEs, startup companies are clamouring for more financial assistance in order to keep themselves afloat.
The pandemic has left roughly 70,000 startups losing business due to the pandemic in the first two quarters of the year.
Thailand currently has 1,500 startup companies. The government has put an emphasis on digital commerce as part of its drive to revolutionise the country as a major hub for the Association of Southeast Asian Nations.
Financial assistance is readily available for small-and-medium enterprises as their size and financial structure make them eligible for traditional business loans from the government as well as financial institutions.
Startups, HUBBA and TechSauce co-founder Amarit Charoenphan, are a wholly different ballgame. Their size make it difficult for them to avail of loans doled out by the government through the Bank of Thailand, and Government Savings Bank, among others.
One of the requirements for availing of the soft loans is tenure in the market. Another is profitability, which Amarit points out most startups lack.
The technopreneur also pointed out that startups don’t have any collateral at all to secure their loans against, making it more difficult for them to access the much-needed financial assistance.
The Government Savings Back has set aside THB250 billion for soft loans to businesses negatively impacted by the COVID-19 pandemic. Much of these cash, however, have already been borrowed by tenured SMEs that the lockdown driven near to the brink.
The Bank of Thailand has a bigger budget at THB500 billion, which can be availed of in one of the many commercial banks in the country.
However, most banks are reluctant now to let even SMEs borrow money due to the uncertainty of the current situation.
That has left startups with no financial assistance to apply for and secure for their fledgling businesses.
Amarit pointed out that, out of the 20 startups that he has provided advice for with regards to fundraising, none have qualified and have received any assistance via government soft loans.
He then highlighted the need for venture capital firms in Thailand. VC firms operate on a different set of requirements in extending financial assistance. Instead of loans, they are directly infusing capital to the company, which the borrower has to grow in order to return the funds with profit to the issuer.
The TechSauce co-founder pointed out that, while there are 30 VC companies offering startup loans to neophyte enterprises, they are mostly corporate entities.
Mr. Amarit then said that, if the number of VCs in Thailand will grow, the environment will become more competitive, and startups will have more advantageous deals to choose from to fund their operations.
Finally, he said the government can work on further digitizing the operations of government agencies and give tech startups a chance to supply the needed talent, earning revenues along the way. Amarit said that this is more ideal than giving the deals to larger corporations, and could stimulate the startup market.