The Thai capital market is about to be seriously reformed. The master plan to reform the market will be finished soon. The high level committee chaired by the Minister of Finance will consider the plan for approval at the committee’s final meeting at the end of next month.
The capital-market master plan is a result of hard work and joint effort by the Securities and Exchange Commission, the Stock Exchange of Thailand, the Bank of Thailand and the Ministry of Finance plus private companies. The drafting was divided between four working committees:
- general drafting,
- product development
- law and regulation overhaul
- tax reform
The vision of the plan is that the Thai capital market must be the main engine to efficiently gather, mobilize and guide economic resources in the country. This is to provide maximum benefits from developing the country’s potential and competitiveness. The mission of the plan is sixfold:
- To give investors and issuers easy and comprehensive access to the capital market
- To develop qualified diversity of products and services in the capital market
- To lower the cost of funds to issuers as well as lowering intermediary and transaction costs to investors, issuers and intermediary institutions
- To build efficient infrastructure in the law, regulations, accounting, tax and technology
- To provide adequate education and appropriate protection to investors
- To promote competition in the Thai capital market and facilitate integration between the Thai market and the world’s other capital markets.
The plan will lay down reform measures and “big bang” measures as by:
- Abolishing the monopoly on stock-exchange business and pushing for corporatization and demutualization of the Stock Exch-ange of Thailand
- Liberalizing and enhancing efficiency of intermediary institutions
- Reforming law and regulations for better development of Thai capital market
- Amending tax rules to facilitate the deepening and broadening of the Thai capital market
- Developing new capital-market products and services
- Establishing a saving system for post-retirement officials and workers- the so-called national pension fund
- Promoting an investment culture through long term saving
- Developing the bond market
The details of each measure are long and exhaustive. However, I would like to point out some examples. In the liberalization and enhancement of the efficiency of intermediary institutions, the reforms will allow securities companies and mutual-fund management companies to do comprehensive securities business on a single license platform and they will liberalize licenses permitting all qualified companies to do securities business, liberalize trading and commission fees and allow trading access for foreign securities companies.
The reform of laws and regulations will promote the mergers and restructuring of listed firms, make it more convenient for foreign portfolio investors to invest in Thailand’s capital market and enforce legal penalties for misconduct in the capital market.
The drafting of the capital-market development master plan is completed but for details about action plans for the eight measures that need to be added and the timing of each step. Also key indicators for assessing the successful implementation of the plan must be specified.
By Chodechai Suwanaporn [email protected]
Source: Fiscal Policy Office / www.fpo.go.th