SME Best Practices Financing Model OTOP Business Model

SME Best Practices & Financing Model OTOP Business Model 1 18 November 2010

OTOP ONE TAMBON ONE PRODUCT : OTOP Project is one of the government's urgent policies encouraging Thai communities to make use of Thai wisdom. And also helps impart modern knowledge and manage to introduce the products to the domestic and international markets through chain stores and outlets. The government aims to strengthen local communities to be selfdependent and create jobs and income to the community members. The local wisdom and resources, therefore, have been employed to develop quality products and service with their own advantages and value added. While maintaining Thai culture and way of life, the products also meet the needs of the domestic and international markets. 2

FROM POLICY TO IMPLEMENTATION 2001 2002 2003 2004 2005 Create the Mechanism Management and Working Integration Obtain the Strategic Planning / Support the network of OTOP Producer. Searching for Core Product (In Search of Excellent) Selected 80, 000 registered products Select the best product (OTOP Product Champion : OPC) for supporting the producer to have a standard type and quality which guarantee in Social Consumer. Classify standard into 1 -5 Star Level Develop Quality and Product Standard Promote and Support OTOP Product into Community Standard , Industrial Standard or Others) Halal, Food and Drug, etc ( Support in Marketing From Local Product to International Standard followed by Strategic Planning “Local Links Global Reaches” 3

FROM POLICY TO IMPLEMENTATION 2006 Searching for Excellent OTOP Created Product and Service of each province to be unique and different image 2007 Searching for potential marketing product and develop knowledge network aimed to develop in community )Knowledge Base OTOP : KBO ( 75 Networks with a quality standard development 2008 Emphasize Marketing Support in KBO Strengthen Network Effective in Management Working business plan turn into Professional Entrepreneur 2009 Sustainable Development Changing emphasize in product to integrate and more participate in community 4

NUMBER OF OTOP IN THAILAND Registered Entrepreneur 31, 798 OTOP Product 69, 217 Products Selected Product with 1 -5 Star Level 11, 534 Products Knowledge Base OTOP : KBO 75 Persons Provinces Source : Community Development Department , Ministry of Interior Support in regional OTOP channel distribution helps to increase sale volume more than 200 Million Bath 5

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Special Project To support Micro Finance 7

“SME POWER FOR A NEW START” Objective Target Group For the cash flow of business Owners of Small and Medium Enterprise whose business was impacted by the recent political protest in Bangkok area Ø Revolving Fund Amount Criteria Interest Rate Fee and Collateral Ø Duration Loan ) not over 6 years( Ø Not Exceed 1, 000 Baht Ø Grace Period 2 years Ø 1 st year = 0 % ØFrom 3 rd year = 3% Ø No Fee Ø No Collateral 8

PUBLIC DEBT CONTROL PROJECT (INFORMAL DEBTS) Objective Target Group To support a loan for Entrepreneurs who have informal debts People who registered with GHB or BAAC and the debts must also incur before November 19, 2009 by negotiating Amount Criteria Interest Rate Collateral 50, 000 – 200, 000 Baht Ø Not Exceed 100, 000 Baht = MLR Ø Exceed 100, 000 Baht = MLR + 2 : Year Ø Not Exceed 100, 000 Baht guarantee at least 1 person Ø Exceed 100, 000 Baht guarantee at least 2 persons 9

“ OTOP LOAN” Support in Funding, Production System, Management, Product , Marketing and Distribution Channel Objective Target Groups Individual Person or General OTOP Entrepreneurs who were guaranteed by government organization such as Mister of Industry , Minister of Commerce, etc. Credit Amount Total 5, 000 Million Baht Lending from 50, 000 not over 1, 000 Baht per case Criteria Type of Loan Interest Rate 1. 2. Term Loan : Not over 5 years Short Term Loan : P/N ØMLR +1 % Per Year ØNot below MLR + 2 % : Year )In case Cross Guarantee( 10

“ OTOP LOAN” Fee Collateral 1, 000 Baht per case 1. Individual Person 2. Juristic Person 3. Cross Guarantee between Individual Person and Juristic Person 4. Others ( as the regulation of SME Bank ) 11

OTOP ( DETAIL ) Objective ØExpand /Adjust Business ØDevelop Production System, Marketing or Channel Distribution ØDevelop various types of product for adding value. ØRevolving Fund Qualification ØIndividual Person / Juristic Person ØOTOP Document Guarantee from concerned institution such as Community Development Department 12

OTOP ( DETAIL ) Type of Loan Ø Term Loan duration not over 5 years Ø Short Term Loan : Promissory Note Amount ØOTOP 3 Star amount not over 500, 000 Baht ØOTOP 4 Star amount not over 750, 000 Baht ØOTOP standard 5 Star or OTOP Product Champion : OPC amount not over 1, 000 Baht 13

OTOP ( DETAIL ) Interest Rate Ø MLR + 1 % : Year Ø Not below MLR + 2 % : Year )In case Cross Guarantee( Fee Ø 1, 000 Baht per case 14

OTOP ( DETAIL ) Collateral -Individual Person …. *Government Officer guarantee , lending amount not over double of salary per year - Juristic Person guarantee not over 80 % of shareholder - Cross Guarantee * Co-borrow amount not over 200, 000 Baht * To be OTOP 4 – 5 Star or get Community Product Standard -Others Collateral followed by SME BANK regulation 15

GIFT AND SOUVENIR 16

FOOD AND BEVERAGE 17

FASHION AND JEWELRY 18

COSMETIC AND SPA 19

TOTAL OTOP APPROVAL LOAN Year 2005 Number of Entrepreneurs 235 Amount (M. B) 000 2006 244 106, 414, 000 2007 144 000 150 30, 260, 000 2009 63 12, 620, 000 2010 36 9, 290, 000 Total 872 269, 762, 000 2008 20 83, 19 27, 98

MICRO FINANCE APPROVAL LOAN (JAN. – JULY. 2010) 21

MICRO FINANCE APPROVAL LOAN (JAN. – JULY. 2010) Type of Project SME Power for a New Start Project Number 10, 987 Amount (M. B) 5, 086. 00 Loan for General Retail in public debt 226. 00 2, 248 Public Debt Control Project 0. 20 2 OTOP Loan for General Retail Customer Total 29 8. 00 204 56. 00 13, 470 5, 376. 20 22

PROBLEMS OF OTOP Ø Under Standard Production System Ø Management Ø Product Development : Unprominent , Low Quality, Etc. Ø Marketing and Channel Distribution Ø Funding 23

OTHER SERVICE รวมลงทน Business Diagnosis SME Marketing Arms Services บรการอนๆ อาวลและ Training รบรองตวเงน คำประกน การรบรองเครดต Letters of Guarantee Services Business Development วนจฉย Joint Venture Services สถานประกอบการ 24

SME & OTOP DEVELOPMENT • Aim to Support and Develop Entrepreneurs both before and after lending credit • Increase Potential and Capacity in competition to Thai SMEs & OTOP 25

BUSINESS DIAGNOSIS Shin – Dan Program - Diagnosis and Kai-zen for SME BANK Clients - Seminar to prepare for improvement and - Consulting for implementation 26

CONSULTING Deep Consulting in Business Plan Develop and Upgrade Business into standard 27

SME CATALOGUE SME Catalogue for publishing SME BANK’s Client Product over 500 businesses target group both domestic and international purpose to support with increase in channel marketing 28

OTHER ACTIVITIES IN MICRO FINANCE PROJECT Thai Festival at Tokyo Japan 29

BUSINESS MATCHING SME Bank and Japan Finance Cooperation (JFC) Create Merchandise Channel between Thailand Japan 30

Thank you More Information 1357 www. smebank. co. th 31