On July 4, 2016, the long-awaited Secured Transactions Act Thailand came into force, providing small and medium-sized enterprises (SMEs) and startups with easier access to financing. The law allows businesses to use inventory, raw materials, and intellectual property as collateral.
According to Apiradi Tantraporn, the new legislation helps remove financial barriers for entrepreneurs seeking loans to fund existing or new businesses.
The law is aimed at stimulating economic growth by expanding access to funding and investment sources for SMEs, improving the secured transactions system, and increasing investment in domestic enterprises.
Previously, borrowers were not allowed to retain possession of movable assets pledged as collateral during the guarantee period.
Under the new law, restrictions on the types of assets that can be used as collateral have been lifted. Businesses can now pledge:
- Machinery
- Inventory and raw materials
- Real estate
- Intellectual property
- Other operational assets
This reform is expected to boost the registration of new companies, from startups to established SMEs.
Currently, Thailand has approximately 2.8 million SMEs, of which around 610,000 are registered as legal entities. Following the adoption of this law, the government expects an additional 300,000 SMEs to be registered.
According to the Department of Business Development, company registrations increased by 1% in 2015, mainly in the following sectors:
- Construction
- Real estate
- Restaurants and food services
- Business and consulting services
- Wholesale of construction materials
Source: bangkokpost.com