Capital market must grow, says PM

INVESTING & MARKETS

Thailand's capital market must continue to develop to support the Thai economy's growth, says Prime Minister Abhisit Vejjajiva.

Prime Minister Abhisit Vejjajiva admires a golden dragon worth 15 million baht displayed by the Chin Hua Heng gold shop at yesterday’s opening of SET in the City. SOMCHAI POOMLARD

The cabinet recently approved the capital market development plan which calls for the Stock Exchange of Thailand's market capitalisation to rise to 130% of gross domestic product within five years from 86% today, he said.

The plan aims to raise the efficiency and potential of the capital market for Thailand's overall benefit, he said.

The Thai market must grow to compete with other markets in the region for global capital. A larger, more liquid market in turn will help reduce financing costs for Thai companies and support economic growth.

Mr Abhisit, speaking at the opening of the SET in the City 2009 investment exhibition, said the development plan also aimed to increase public participation in the market, with a goal of doubling the investor base to 5% of the population in five years from 2.4% today.

Legal and tax reforms will eliminate current obstacles to the market, facilitate mergers and acquisitions and support the development of new products and services such as Islamic financing.

The SET itself will undergo change in a process called demutualisation, where its monopoly on exchange services will be eliminated and non-members allowed to trade on the market. The securities sector will also be liberalised, with brokerage fees to be allowed to fall starting next year to support greater competition in the market.

Mr Abhisit said the capital market needed to expand its range of financial services to better meet investors' needs.

New innovations such as infrastructure funds would allow the public to take a direct stake in new public investment, while derivatives linked to interest rates or government bonds would give investors greater tools to manage risk.

A new national savings fund, already approved by the cabinet, will also help increase the pool of long-term savings in the market and strengthen the social safety net for the elderly.

SET chairman Sompol Kiatphaibool said the SET in the City event, now in its sixth year, aimed to encourage the public to take an interest in savings and personal investment.

A total of 96 organisations are participating in the event, which is being held through Sunday at Siam Paragon.

Relate Search: Abhisit Vejjajiva, Stock Exchange of Thailand, Siam Paragon