Conditions for obtaining loans are tightening for beleaguered Thai textile and garment exporters, whose baht denominated income is being steadily eroded by the strengthening currency.

The pressure this is putting on these exporters has forced factories to close and prompted financial institutions to ask to see letters of credit (L/Cs) before considering whether to extend credit to the exporters.

Documentary evidence

Secretary-general of the Thai Garment Manufacturers' Association, Vallop Vitanakorn, says exporters used to obtain loans simply by showing sales orders to their bank.

"Now, they're required to show L/Cs [issued by the buyers' banks] before the banks will extend new credit lines," he says.

Thai Silp closure

Concerns over credit availability for the textile industry follow in the wake of the closure of one of Thailand's largest textile firms known as Thai Silp.

Itwill reopen after receiving financial backing from the Thai Textile Institute and will reinstate its workforce.

Nearly 5,000 workers lost their jobs after the garment manufacturer unexpectedly shut down on 11 July 2007, when the factory's owners said they had to close the firm because of declining orders causedby the high baht.

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