Kasikornbank pledges seven-decade experience to Vietnamese SMEs

Talking about the bank’s business strategy in Vietnam, Pattanapong Tansomboon, first senior vice president of Kasikornbank (KBank), spoke to VIR’s Sam Luong about the prospects of Vietnamese small- and medium-sized enterprises (SMEs) in the finance and banking sector, the bank’s specialisation and experiences in handling financial crises, and how the bank plans to promote the long-haul growth of Vietnam-based SMEs.

What were the purposes of the seminar hosted on March 30?

One of the main targets was to bridge the gap between the government and the private sector to create a nurturing environment for the long-term growth of Vietnam-based SMEs. With the long history of the Thai government in carrying out favourable policies for the SME segment, especially in tackling financial crises, the seminar was one of the measures KBank and MPI brought out to discuss the current financing challenges and provide practical solutions.

What do you think of the current development scene of SMEs in Vietnam?

The Vietnamese government has issued many policies to support SMEs, offering incentives, access to credit and human resources development, reinforcing the trust of the business community as well as bolstering foreign investment.

However, in order to maintain the current supportive condition as well as advance production and services, the Vietnamese government ought to place more stress on regulations, capital management, and technical consultation to meet the target of one million enterprises by 2020, which currently stands at 600,000.

In 2017, the SME sector constituted roughly 98 per cent of the total number of enterprises in Vietnam, contributing 30 per cent to the state budget and 40 per cent to the GDP, as well as creating 50 per cent of all new jobs in the country.

However, due to their modest charter capital, the majority of Vietnam-based SMEs encountered shortages of investment for infrastructure development as well as hurdles in market penetration, product distribution, and marketing activities. To add, a substantial number of SMEs also struggled with seeking the right sources of capital in order to fund further business activities.

Since early 1990s, the Thai government has provided immense support to the SME sector. As one of the leading lenders in the country, what contributions did KBank make to the overall landscape of Thailand’s SME sector?

In Thailand, the total earnings of SMEs accounted for 40 per cent of the country’s gross domestic product (GDP). The SME sector, which is the backbone of the Thai economy, can employ 83 per cent of the total labour force in Thailand, indicating boundless potential on the long run.

From my perspective, the prominent conglomerates today started as small- or medium-scale companies at some point, which received financial or other support from the finance and banking sector in the past. Thanks to experienced entrepreneurs, today’s SMEs have a good chance to become the next business leaders in, say, 15 to 20 years.

Take the example of one of the world’s largest conglomerates based in Thailand, the $45-billion revenue Charoen Pokphand Group (CP). Starting from scratch as an SME in 1921, CP Group grew to become a leading business specialised in agribusiness and food, retail and distribution, and telecommunications.

Throughout our lengthy involvement in the Thai SME sector, KBank was the first financial institution to choose SMEs as our core business, constructing today’s thriving SMEs scene from a formerly underserved sector. Specifically, after introducing the SME Operation Foundation, the bank accomplished cost efficiency with prudent risk management, excellent brand image, and increased its market share as well as customer centricity.

In addition, KBank specifically tailored its products and lending policy to serve different customer segments. Moreover, KBank also organised various interactive learning and networking activities targeting SME’s sustainable business development and opportunities for SME expansion.

As an experienced lender in the finance and banking sector, KBank would offer support to the local SME community by expanding their networking and business via supply chain financing, advisory, and business matching, as well as public and private sector partnerships. In order to actualise this target, KBank needs to be a licensed lender incorporated in Vietnam, the application for which is currently pending.