By The Nation Published on September 22, 2010
There is more to be done to strengthen the capital market, Securities and Exchange Commission secretary general Thirachai Phuvanartnaranubala said in an interview with CNBC yesterday, when it comes to greater control on foreign companies.
He favoured the Malaysian model, which encourages the incor�poration of foreign companies' local operations in the country, to prevent negative consequences to local oper�ations in case of a global crisis.
"If something happens, the hold�ing companies can simply sell the shares in those companies, for example," he said, referring to the tough times facing American International Assurance (Thailand).
Thirachai also favoured more regulation of hedge funds, particularly the risk weight of their bank borrowing.
He reiterated that liberalisation of brokerage fees was important. The industry is slated for full liberalisation in 2012.
"The only way to make our local brokers strong and gear them towards a more competitive position abroad is really to make them face more competition at home. And the only way to do that is to lift all kinds of barriers. That we have been doing and we plan to continue with the plan," he said. "Unfortunately, we have to admit some of the brokers will have to make adjustments. They will have to plan."
He expressed confidence that local brokerage houses would be ready in two years' time, as the plan was announced five years in advance.
"We announced everything five years in advance, and if you have five years to plan and to link up with strategic partners abroad or try to go to niche market, if you cannot do that � five years is a long time."
In a separate development, the Asian Development Bank yesterday announced a US$300million (Bt9.2 billion) 15year loan to Thailand for capitalmarket development designed to boost invest�ment and support longterm, sustainable growth.
The loan was approved along with a technical assistance grant for the capitalmarket development programme, the ADB said in a statement released by its Manila office.
The loan funds are being released after the completion of an agreed series of measures undertaken by the government between 2007 and this year.
"Thailand's capital markets need to be deeper, more diversified and inclusive if Thailand is to avoid the middleincome trap and graduate to a highincome economy," said Kunio Senga, directorgeneral of the ADB's South Asia Department.
The programme is anchored to the government's Capital Market Development Master Plan for 200913, which sets out a road map for financesector development and reforms over the medium term.
The master plan focuses on key dimensions of capital markets, including developing the equity market, bond market and money market. The goal is to help the country transform from a middleincome to highincome economy through increased contribution of the domestic capital market to financ�ing domestic investment and economic growth.
The ADB's programme supports the government's agenda in four areas: regulatory environment; mar�ket efficiency, liquidity and transparency; market infrastructure; and new products and investors. To date, the government has made substantial headway, including establishing a timetable for the demutualisation of the Stock Exchange of Thailand, strengthening the surveillance and enforcement capabilities of the Securities and Exchange Commission, moves to develop the domestic bond market, and simpli�fying taxes on financial transactions, the ADB said.