Thai Garment Manufacturers' Association secretary-general Vallop Vitanakorn said that previously, exporters obtained loans simply by showing sales orders to the bank.

"Now, they're required to show letters of credit [issued by the buyers' banks] before the banks will extend new credit lines.

"Following the Thai Silp (South East Asia Import Export) factory closure, the situation is getting worse. Banks have pressured some small operators for early debt repayment. Under these conditions, many plants can be shut down like Thai Silp, because they cannot adjust their strategies to match the baht appreciation in time," Vallop said.

Thai Silp's closure on July 11 sent a shock wave through the entire economy for fear that more export companies could go under following the sharp appreciation of the baht from 39 to the US dollar early this year to yesterday's level of slightly above 33.

Bankers have declined to comment on their tougher credit conditions.

Garment Manufacturers' Association president Dej Pathanasethpong said he estimated the total loans of the textile and garment industries were about 150 billion baht (US$5 billion).

Yesterday, representatives of the association met Industry Minister Kosit Panpiemras to discuss problems in the industry. Dej later said that although garment industry operators had prepared themselves to handle current risk factors, half had suffered losses because the baht had appreciated much faster than adjustments in raw-material costs.

"Raw-material prices have become cheaper because of the baht's appreciation, but this won't be felt for six to nine months," he said.

He said it was very important for operators to focus more on material-requirement plans and making products that met customer demand.