Source - Bangkok Post
by VICHAYA PITSUWAN

Newspaper section: BusinessThailand's software industry is expected to grow by 6% this year due to rising demand from neighbouring countries, said the Software Industry Promotion Agency.

The digital content and animation segment could grow by 18%, said Rungruang Limchoopatipa, the president of SIPA.

Countries in the region such as Burma, Vietnam and Bangladesh have been seeking locally produced software products for their combination of quality and value.

While other industries are contracting, software and digital content operators expect to see 6% and 18% growth respectively, as more people look for cheaper in-house entertainment during the downturn, said Mr Rungruang.

"However, this growing industry has faced cash flow difficulties similar to other industries," he said.

The difficulty of evaluating intellectual property, the industry's main asset, makes it harder for the industry to access credit from banks.

This problem has undermined the industry's growth for years and something needs to be done to improve loan access and to promote local operators so they can tap benefits from growing demand, he said.

SIPA is working with the state-owned SME Bank to help the bank determine loan risks from the sector.

SIPA will endorse contracts for reputed software companies who face cash flow difficulties in delivering services to contracted customers.

The bank will consider small software development companies lower risk if they can win a SIPA contest or are given an investment grant by SIPA.

The government has approved a 30-million-baht budget for SIPA to jointly invest in software companies with high potential.

Prospective companies can now apply for the funding.

About 80 companies should benefit from SIPA's competitions and its joint investment scheme this year, said Mr Rungruang.

Preyapun Piyaanant, senior executive vice-president at the SME Bank, said the bank had difficulty in assessing the product potential or collateral value of the software industry's intangible assets.

SIPA's verification process would enable the bank to more easily approve loans, she said.

"There is an unlimited loans budget to serve this group of customers. We are also in the process of setting interest rates for this group lower other industries. The details should be finalised soon," said Mrs Preyapun.

The SME Bank plans to expand into retail banking by September. The move would the reduce cost of capital as withdrawal risks are minimal when compared to other customer segments, she said.

"Our interest rates will be competitive with commercial banks while depositors should feel more at ease to keep their money with us because we are government-owned," she said.