As of the end of September, Exim Bank recorded outstanding loans of Bt74.468 billion, up by Bt928 million from the end of 2015, with a new loan drawdown of Bt16.02 billion and partial repayment of existing loans. This contributed to a business turnover of Bt90.717 billion, of which Bt59.707 billion was for SMEs.
Outstanding SME loans amounted to Bt30.867 billion, surging Bt7.604 billion or 32.68 per cent year on year. This was attributable to Exim Bank’s strengthened collaboration with public and private enterprises and the development of new products catering to SMEs, especially small businesses that had limited access to the financial facilities of commercial banks.
Recently, Exim Bank introduced “Exim Instant Credit”, a pre- and post-shipment working-capital loan at an interest rate of 3.5 per cent per annum requiring only a personal guarantee. Offering a credit line of up to Bt500,000, the new facility features quick approval within seven business days and aims to help boost SME exporters’ liquidity as well as drive Thai export growth in the fourth quarter of 2016.
Exim Bank’s non-performing-loan ratio as of the end of September stood at 5.07 per cent or Bt3.774 billion. The bank’s allowance for doubtful accounts was Bt6.424 billion, of which Bt3.111 billion was the minimum provisioning requirement by the Bank of Thailand, representing a ratio of loan-loss provision against the requirement of 206.52 per cent, enabling Exim Bank to maintain a strong financial status.
In addition, with the launch of “Instant SMEs Export Insurance” in mid-2016, the bank recorded an increasing number of export credit insurance customers. It generated Bt41.671 billion from January-September in export and investment business turnover, of which Bt8.135 billion came from SMEs’ exports, representing 19.52 per cent of the bank’s total export credit insurance business. The export credit insurance business turnover is expected to improve gradually and meet the target set for the end of 2016.
From the fourth quarter of 2016 and through 2017, Exim Bank says it aims to accelerate its development of products and services to serve Thai entrepreneurs’ trade and investment in emerging markets known as New Frontiers and CLMV (Cambodia, Laos, Myanmar and Vietnam).
To date, the bank has approved a total accumulated amount of Bt52.328 billion in international trade and investment loans, with outstanding loans accounting for Bt31.641 billion as of September.
Exim Bank plans to open representative offices in Myanmar, Laos, Cambodia and Vietnam over the next couple of years to promote and support Thai trade and investment in CLMV.

After a BOI meeting chaired by Prime Minister Prayut Chan o-cha yesterday, secretary-general Hirunya Suchinai said the panel agreed to promote Thailand as a hub of feed-meal production and a research and innovation centre of the industry in Asean.
The decision was made after the board noted that Thailand has raw materials to supply to this industry and can support the industry from upstream to downstream.
Promotion of the industry should help raise production standards and add value to the feed-meal products exported from Thailand.
According to the BOI, exports of feed meal have increased by about 10 per cent a year.
Promotion of the industry should boost technology transfers to the country as well as research and development.
Thailand could also become a centre for R&D in the feed-meal industry. It is the world’s seventh-largest feed-meal producer.
The BOI also agreed to allow producers of small aviation parts and suppliers to aviation producers to invest in more provinces. Earlier, the government had limited investment promotion to 14 provinces that were near airports, or had their own.
The change should help small and medium-sized enterprises become suppliers to large manufacturers in the aviation industry.
The meeting approved privileges for 13 projects worth Bt63.44 billion in the agriculture, steel, machinery, logistics parts, chemical products, plastic and printing industries as well as in services, utilities and energy.
The BOI’s acknowledgement will encourage the use of at least Bt15.22 billion in local raw materials each year.
More investment is expected to be promoted under the BOI this year and next year as foreign firms still have confidence to invest in Thailand, Hirunya said.
For this year, investment under BOI promotion should reach the target of Bt550 billion.
In the first nine months, 1095 projects worth Bt356.9 billion have applied for investment in Thailand under the BOI’s promotion, Hirunya said.

Public spending expanded well and remained an important growth driver.
The value of merchandise exports improved in many categories, which helped compensate for the initial effects on tourism after the government’s restriction of zero-dollar tour operators.
Private investment increased in certain sectors as reflected by greater import of capital goods by export-oriented manufacturing sectors. The central bank’s private investment index increased 0.8 per cent in September from August, during which it increased by 0.5 per cent.
Private consumption expanded at a slower pace relative to earlier periods because of lower spending on non-durable goods. The BOT’s private consumption index for September was up 0.1 per cent from the previous month, during which it fell 0.2 per cent.
On the stability front, the headline inflation rate increased on higher domestic fuel prices. The unemployment rate remained low. The current account posted a surplus as the trade surplus – improved exports and continuing low import level – compensated for the deficit in the service, income and transfers accounts.
Government revenue collection expanded from the same period last year mainly from taxes, partly reflecting an improvement in overall economic activities. However, non-tax revenue contracted from a high level in the same period last year during which the government expedited a collection of revenue from some state-owned enterprises.
The value of merchandise exports expanded from last year for the second consecutive month, up by 3.5 per cent year on year, or 3.9 per cent when excluding gold. The expansion was observed in many categories.
The export of electrical appliances was driven by capacity expansion to meet rising demand from various markets, especially CLMV (Cambodia, Laos, Myanmar and Vietnam), Europe and the US. In addition, a smaller contraction in the value of some exports was due to recovering oil prices. Indeed, the gradual pick-up in exports was in line with an improvement in the Manufacturing Production Index.
Despite continuing public investment and private investment crowding in, the real-estate market decelerated as demand softened after government stimulus measures ended.
The value of merchandise imports grew by 1.7 per cent from the same period last year. Excluding gold, imports grew by 0.3 per cent on the back of growth in various categories. Imports of capital goods expanded in transformers and power generators, consistent with steady investment in alternative energy.
Moreover, the import of machines for electronics and electrical-appliance industries displayed a better outlook. Imported raw materials and intermediate goods also expanded for such industries.

However, in the remaining months of this year, GSB will try to push its growth above the new target, president Chartchai Payuhanaveechai said yesterday.
The bank also expects its non-performing-loan ratio to improve to 2-2.2 per cent from 2.4 per cent currently because during the past two to three months, GSB sent staff to offer debt restructuring to borrowers.
On World Savings Day yesterday, Chartchai commented on the situation in Thailand.
Deposits in the financial system are anaemic in line with the reduction in people’s incomes following the economic slowdown.
The ratio of savings to gross domestic product is now 11 per cent, compared with 16 per cent seven years ago. However, the decline is not raising concerns yet, as the savings rate in Thailand is higher than the investment rate – 33 per cent to GDP versus 25 per cent to GDP. This indicates that liquidity in the country is high.
GSB held Bt2 trillion in deposits in the third quarter of this year, down by Bt30 billion to Bt40 billion from the first half.
Even though saving in general is weaker, GSB is aiming for deposit growth of 1.5-2 per cent this year by gradually launching deposit products. Tomorrow, GSB will offer a five-year deposit product with a special lottery. It expects to raise about Bt50 billion.

Apparently, the best practices used in the past may not work well under today’s circumstances. Some problems can keep on repeating and are raised up to the management’s attention, and it is necessary for the company to find new solutions that can fix such issues in a more timely manner.
The following is an example of how a production team resolved an urgent problem through flexibility and an out-of-the-box idea.
The production team was required to make products for an urgent order from a customer. With such short notice, the production manager needed to plan for the line’s readiness and machine set-up, and to have operators who could run the production properly.
These were factors that could be controlled by the production manager. However, the main problem was an insufficient stock of raw materials.
Importing directly from the com-pany’s overseas supplier, even by air, still could not meet the production schedule. After an intensive brainstorming session, the team came up with the idea of borrowing the materials from a local competitor, and returning an equivalent amount once the ordered shipment arrived.
Here are some ideas for resolving challenging issues |creatively.
Fix a difficult problem with an easy solution: Sometimes it is worth looking for an alternative to cope with a hard problem by finding simple and easy ways to resolve it. By applying general or traditional practices to complicated issues, we may be able to find the way to fix problems easily.
Be proactively result-oriented: It is usual to see people spend so much time cracking on with the issue without any productive results. It is important for decision-makers to aim at getting the proposed solutions at the end of the discussion, so that action-plan execution can follow. With the result-oriented mindset, ideas can be generated, which might include some unexpectedly good ones.
Welcome wild ideas: When the brainstorming session based on typical ways of looking at the issue cannot go even further, it is time for the team members to start thinking of other, unusual alternatives. It is possible to find a good solution if we can abandon the normal viewpoints. For example, if a company has vacant warehouse space, can this be utilised for something other than keeping goods?
Talk to many people: To get new ideas, it is advisable to talk to people from various fields, such as people from different educational backgrounds, from different job functions or with different industry experience. By connecting with people, solutions can emerge from the conversation, which can lead to a win-win situation for all parties.
Most companies have opened up an opportunity for staff members to participate in generating ideas to deal with specific issues or problems. However, sometimes it is quite hard to be successful in the meeting-room environment.
Why don’t we change the place or time, so that people can come up with fresh ideas under changed conditions? This can be a genuine key to problem-solving success.

Dr Yanyong Thammatucharee is senior vice president for finance and accounting at Central Marketing Group. He can be reached at yanyong@cmg.co.th.

The Industry Ministry said yesterday that its Manufacturing Production Index (MPI) in September was up 0.6 per cent from a year earlier. A Reuters poll had forecast a decline of 0.3 per cent. In August, output rose a revised 3.18 per cent from a year earlier, rather than the 3.13-per-cent increase reported earlier, which was the highest growth in 40 months.
Industrial goods accounted for 81 per cent of total exports in September, which unexpectedly rose 3.4 from a year earlier, customs data showed. Exports are worth about two-thirds of Thailand’s gross domestic product.
Capacity utilisation rose to 65.23 per cent in September from August’s revised 64.42 per cent.
Exports have contracted in the past three years but there are indications the dire situation is turning around. On Friday, the Finance Ministry said it expected exports this year to shrink less than it initially forecast.
Separately, the Commerce Ministry said exports might not contract at all this year, with commodity prices expected to improve along with higher oil prices and global demand. – Reuters

GH BANK PRODUCT |FOR PARENTS’ HOME

Government Housing Bank has set aside Bt20 billion for a new mortgage product for customers needing to buy a home for their parents.
Chartchai Sirilai, president of GH Bank, said the product would have a fixed interest rate of 3.5 per cent per annum for the first four years.
The product is in line with the govern-ment policy to give importance to the ageing society and to encourage Thais who take responsibility to look after their parents, including their accommodation.
Chartchai also said customers who had shown good loan-repayment discipline for 48 months would be offered a 1-percentage-point interest-rate reduction.

MILLENNIALS FRAMING NEW REGIONAL LIFESTYLE TRENDS

Asia-Pacific millennials share similar long-term lifestyle priorities with other generations, despite often-superficial perceptions of this emerging superclass, according to CBRE research.
The findings of the report demons-trate that perceptions of millennials – people who reached adulthood around the year 2000 – as preferring informal employment, changing jobs regularly and avoiding financial responsibility are inaccurate in this region.
According to CBRE research, consistent with previous generations, most millennials save money to buy a home and spend prudently. The report also illustrates that this demographic aspires to carve out a stable career but take into account factors such as office design when selecting an employer – with 71 per cent of respondents willing to give up other benefits for a better office environment.
“The millennial demographic in Asia-Pacific is a game-changer for businesses across the board,” said Steve Swerdlow, chief executive officer of CBRE Asia Pacific. “Their life, work and play priorities and habits will shape economics, redefine opinions on workplace design and functionality, and drive new attitudes towards consumption and experience for the foreseeable future.”

The farmers are from Ang Thong, Nakhon Ratchasima, Phetchabun, Mae Hong Son, Phitsanulok, Tak, Nan, Chiang Mai and Chiang Rai provinces.
Wheat imports have ballooned since tariffs on the commodity were waived in 2014.
Deputy Commerce Minister Suvit Maesincee met with large feed-meal producers last week to ask them to purchase maize at Bt8 per kilogram, but the effort failed.
The ministry was only able to get the producers to provide information on their import quantities, stockpiles, and pricing.
The domestic maize price now is only Bt6 per kilogram as feed-meal producers have shifted from maize to imported wheat to in order to save costs.
A Commerce Ministry source said farmers had complained that low purchases by feed-meal plants had combined with a high supply during the current harvest season to push down maize prices dramatically.
For their part, feed-meal producers said they could not purchase maize at the high price the ministry wanted as other cereal grains suitable for feed-meal production were cheaper.
Although feed-meal producers have previously said they would suspend wheat imports during the maize harvest season to ensure prices would not fall, the ministry has found that imports of wheat and DDGS (distiller’s dried grains with solubles, which are made from maize) had continued.

Significant jump in imports
According to an analysis by the ministry, import of wheat has increased significantly since 2014, when it totalled 593,000 tonnes, after the government waived import tariffs on wheat that year.
Wheat imports had jumped to 3.46 million tonnes by last year, and this year are expected to reach 5 million tonnes.
After the tariff was waived, the price of wheat dropped by Bt1-Bt2 a kilo.
The ministry also found that DDGS import had increased from 226,000 tonnes in 2014 to 462,000 tonnes last year. Higher use of DDGS to supply feed-meal production has also result in decreased use of domestically produced maize.
The ministry has reported that the major importers of wheat are feed-meal producers, as well as one food producer. They are Bangkok Producer Produce Merchandising, which is a subsidiary of Charoen Pokphand Group, Betagro, Laemthong Corporation, Sun Feed, and United Flour Mill.

The index has been moving around the 1,500 level for most of the time, except for the period of mid-October when market jitters caused the index to fall sharply but the recovery came in a matter of only a few days.
Foreign investors turned net sellers of Thai shares in October but remained net buyers of around US$3.3 billion (Bt116 billion) year-to-date. Apparently, foreign investors have begun trimming their risky asset holdings |on the back of uncertainties in the run-up to the Fed meeting tomorrow and Wednesday and the US Presidential election on November 8.
Going forward, we believe that corporate earnings will be in focus for both Thai and global markets.
Coupled with a number of ongoing concerns such as geopolitical tensions, the impact of Brexit, the health of European financial institutions and a possible output cut by major oil producers, the market is likely to see elevated levels of volatility.
We believe an “income portfolio” might be a suitable strategy in view of the global uncertainties. For the Thai market, our high-dividend top-picks are ADVANC, INTUCH, TMT, JASIF, DIF, CPNRF, LHHOTEL, AP, PS, LH, SIRI, SC, BCP and TCAP.
In the overseas market, we like Manulife US REIT, Mapletree Greater China Commercial Trust, Frasers Centerpoint Trust, Ascendas India Trust and IREIT Global. These Singapore REITs offer generous dividend yields of 5.5 per cent-8.6 per cent. We recommend that investors go through our full research reports and understand the accompanying risks before making investment decisions.

Tisco Securities

The Thai market has clawed back most of its early October losses, with the bulk of the recovery occurring in the days immediately after the passing of HM the King. With 3Q earnings starting to be priced in, we expect the SET to be mostly driven by external events for the rest of the year, namely next month’s OPEC meeting, the November 8 US election and potential US Fed rate hike in December. Hence, we continue to maintain our 2016 SET target of 1,490 and see better prospects next year ahead of new elections in Thailand.
Overall, we expect companies to report earnings improvement YoY in 3Q but |trending down QoQ. On a positive note, |bank results have beaten our estimates by |4 per cent. We also expect select transport, tourism and agri/food stocks to perform |well both YoY and QoQ. While property should see YoY earnings improvement, |QoQ is likely to decline due to delayed launches.
Energy sector earnings could be down significantly QoQ thanks to poor refining margins and the absence of stock gains. Telcos are also likely to see lower QoQ earnings on higher expenses (with the exception of DTAC/JAS). Commerce should be up YoY, but QoQ performance is sluggish due to the seasonality effect. Media on the other hand remains stuck in a rut.
Following the government’s relaxation of some rules during the mourning period, we observe that life in Bangkok is starting to return to normal. Some pre-booked events (such as weddings) have been allowed to take place while bars and cinemas remain open (though traffic has fallen sharply). Cable TV operators have managed to side-step the NBTC’s request for round-the-clock commemoration programs. Meanwhile, the initial rush to buy black mourning clothes and memorabilia may lead to a short-term spike in consumer spending.
For telcos, the handset subsidy war |continues unabated through advertising |has been low-key (which may prove advantageous for some operators such as DTAC). Nonetheless, we still expect to see some impact on 4Q16 tourism and consumption. |As a result, any hopes for 3Q earnings momentum to continue into 4Q will likely be dashed.

Research Department
Trinity Securities

After mid-October 2016 for the Thai bourse, it was interesting that small and medium caps distinctively outperformed big caps. From October 13- 25, the SET Index yielded a return of 6.6 per cent, compared to SET50’s 4.7 per cent.
There’s a high possibility for small and medium caps to further outperform big caps until early next year, given big caps under pressure. Commercial banks’ estimated profit could be cut from high loan loss provision and lower fee-based income. Although the energy group will likely see increase in its estimated profit, however, it could not offset that impact.
We see the peak of capital flow has passed through in the 3Q16 and capital inflow is expected to slow down from now, given higher US bond yield and US dollar appreciation. Now, markets continue to weigh only 70 per cent for a possibility of the US rate’s rise. Impacts from LTFs and RMFs inflows could be limited late this year as the SET Index is now relatively high, while extension of LTFs’ holding from five calendar years to seven calendar years. Therefore, investors may not see them as attractive to buy.
LTFs worth about Bt7 billion are expected to see redemption in early 2017, accounting for 15 per cent of total LTFs purchased in 2013 (five calendar years ago). That will directly affect big caps as they are the biggest proportion of LTFs’ holdings. Those purchasing LTFs in 2013 have cost of purchase at the SET Index of 1,406 points with gain of about 6.7 per cent at the index of 1,500 points.
Focus on small and medium caps with upsides. Stock picks: GL, JMT, COM7, JMART, ALT, INET, PYLON, SEAFCO, TTCL, SCI, TPCH, ANAN and RML.

The seven enterprises in question operate subject to a policy drawn up two years ago by the military-led government, which established the State Enterprises Policy Commission – or Superboard – to oversee their rehabilitation plans.
Since the beginning of last year, SME Bank has outperformed in terms of making a profit and achieving efficiency, said Mongkol Leelatham, president of the bank.
Prime Minister Prayut Chan-o-cha told the bank at a state-enterprises policy committees meeting last Wednesday to propose a five-year plan and a 2017 business plan to the subcommittee on screening and rehabilitating state enterprises by on Tuesday, he said.
“If we can keep up our performance in terms of the quality of borrowers and new lending, SEPO [State Enterprise Policy Office] will allow the bank to exit the rehabilitation plan, and we will run the bank under the Finance Ministry, as before,” he added. SME Bank will be more flexible in doing business if it can exit from the rehab plan, which the bank believes it will be able to do so because the state-enterprise policy commissioners agree that it can achieve the targets set for it, Mongkol explained.
Under the Superboard’s resolution on December 17, 2014, SME Bank has to change the way it supports SME customers by focusing more on small SMEs that require a credit line of no more than Bt15 million, while its new non-performing loans (NPLs) must not exceed 5 per cent.
Mongkol said new NPLs resulting from loans provided during 2015 and so far this year stood at 1.89 per cent, while gross NPLs at the bank as of the end of September totalled Bt18.98 billion, representing 20.66 per cent of outstanding lending.
The level of gross NPLs had improved from Bt23.45 billion at the end of last year, and Bt31.96 billion at the end of 2014.
The bank’s chief said that under the 2016 business plan proposed to SEPO, it would provide new loans totalling Bt35 billion and its gross NPLs would not exceed Bt18 billion by the year’s end.
“We believe that we can achieve the targets, as the new loans that we have provided during 2015-16 total Bt57 billion, and the rate of new NPLs is only 1.89 per cent,” he said.
As of September 30, SME Bank had this year provided new lending of Bt26.25 billion, of which Bt24 billion was for small SMEs with a credit line of no more than Bt15 million per business.
The prime minister on Wednesday also instructed SME Bank to carry out three policies.
Firstly, the bank should help SMEs that are unable to access funds, even though this customer segment is high-risk.
Second, the bank should think about how to improve its human resources for sustainable growth and creating trust and good governance in the organisation.
Third, it should create a bank culture among employees, making them aware they are owners of the bank, and the bank should apply the sufficiency-economy theory for progress in the organisation, the PM said.