Bangkok: The Federation of Thai Industries (FTI) has partnered with the Thai Bankers' Association to introduce Transition Finance, a 5 billion baht loan program aimed at supporting the shift to low-carbon industries. This initiative's primary goal is to boost the capabilities of Thai entrepreneurs, with a particular focus on small and medium-sized enterprises (SMEs), by facilitating their access to necessary funding.
According to Thai News Agency, Mr. Prakob Piencharoen, Senior Executive Vice President and Head of Corporate and Investment Banking at Bank of Ayudhya PCL, and representative of the Thai Bankers' Association, emphasized that financial institutions play a crucial role in fostering an environmentally and socially sustainable economy. Commercial banks have collaborated to create sustainable loan products, which will be distributed through FTI. The initial phase targets a loan amount of at least 5 billion baht, designed to assist entrepreneurs, particularly in the industrial sector, in acquiring funds for projects that reduce environmental impacts, promote efficient resource use, and open new business opportunities rooted in environmental and social responsibility. The program's support will focus on two main areas:
Mitigation of greenhouse gas emissions by encouraging the use of clean energy, environmentally friendly machinery, investment in renewable energy, and employing technology to boost production efficiency and minimize waste.
Adaptation strategies, which include designing production and logistics systems to be resilient to disasters, sustainable resource management, and developing environmental restoration projects such as tree planting and carbon credit activities.
Mr. Kriangkrai Thienukul, Chairman of FTI, highlighted that environmental challenges and climate change significantly affect the Thai industrial sector. This collaboration will enable entrepreneurs, especially SMEs, to access green financing more readily to invest in clean technologies and eco-friendly production systems. This initiative aligns with FTI's 4 GO policy, particularly the GO Green initiative, which seeks to guide Thai industrial production towards reduced greenhouse gas emissions, efficient resource utilization, and environmental balance. This shift not only cuts long-term costs but also boosts the competitiveness of Thai industry in the global market, which increasingly prioritizes environmental standards and sustainability. Mr. Thienukul believes this partnership marks an essential starting point for a tangible transition of the Thai industrial sector towards a low-carbon economy.
Chaiwat Kovavisarach, Chairman of the Climate Change Institute at FTI, mentioned that Thailand emits around 350 million tonnes of carbon dioxide equivalent annually, with the energy and industrial sectors contributing to over 75% of this total. Although this accounts for less than 1% of global emissions, transforming climate challenges into opportunities can strengthen long-term economic stability.
Furthermore, Thailand faces pressure from international environmental measures, such as the EU's Carbon Price Adjustment Mechanism (CBAM), impacting exports worth over 300 billion baht annually. While geopolitical factors may postpone some of these measures, they are expected to be fully implemented eventually. Hence, advance preparation is crucial, as transitions require time. Various countries have developed transition finance mechanisms tailored to their specific needs. For instance, Japan has the Basic Guidelines on Climate Transition Finance for industries reliant on traditional energy but with long-term carbon reduction plans. The EU offers the Green Taxonomy and the Just Transition Mechanism, while Singapore has the Green and Sustainability-Linked Loan Grant Scheme to expedite credit access for businesses, particularly SMEs.
In Thailand, a significant challenge lies in the lack of systematic information and technical support. The Institute's mission involves supporting entrepreneurs, especially SMEs, by providing accurate information, developing carbon accounts, and aligning production processes with the Net Zero greenhouse gas emissions target. Today, efforts have advanced by acting as a central mechanism connecting the industrial and financial sectors, offering Transition Finance, and providing information and advisory services to guide the Thai industrial sector towards concrete sustainability.