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Exporters urged to trim credit lines

Exporters urged to trim credit lines

Exim advisory linked to US fallout

WICHIT CHANTANUSORNSIRI

With soaring due to the US , exporters should cut back their credit lines to buyers, reduce and increase efforts to diversify their markets, according to Apichai Boontherawara, the president of the Export-Import Bank.

He said that while it was difficult to estimate the impact the US crisis would have on the world market and Thai , would certainly be affected by the turmoil in .

“ need to adjust. Credit lines to buyers should be reduced and shortened, based on the likelihood that business partners in other countries are having greater difficulty with their cash flow,” Mr Apichai said.

“It might cause some difficulty in . But you need to save yourself.”

He said companies should also reduce their to conserve cash flow as and funding costs in the market could rise.

Exporters also needed to diversify to new markets to minimise the impact a downturn in Europe or the US might have on revenues.

Mr Apichai said the crisis would also have implications for exchange rates, with the US dollar likely to decline due to the heavy costs of the Wall Street .

A weaker dollar would in turn reduce the of as the baht strengthened.

The , like other banks, has increased its monitoring of existing loan clients for signs of and taken a more toward new loan applications.

Clients that could potentially meet with problems include firms heavily dependent on high levels of working capital, or customers in that could be affected by a .

relying on US dollars could also be affected as the currency weakened, Mr Apichai said, pointing to one 20-billion-baht originally made with Exim and 10 other financial institutions as an example.

Several institutions have since pulled out as a result of the global credit crunch, although in this specific case, Exim was ready to increase its share of the overall loan and provide additional funding.

Mr Apichai said that regardless, the would likely post less than 5% loan growth this year, well short of its original target of 10%. Outstanding loans currently stand at 53 billion baht.

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This entry was posted on Monday, October 6th, 2008 at Monday, October 6, 2008 and is filed under Business News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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