'Post' forum keys in on future prospects

'Post' forum keys in on future prospects

Speakers note progress in finance and digital

Mr Pakorn says the SET is leading Asean in terms of trade value.
Mr Pakorn says the SET is leading Asean in terms of trade value.

The Bangkok Post celebrated its 72nd anniversary Wednesday with the "Thailand's Future: Driving Prosperity" forum, where business leaders and top government officials provided ideas and insights on driving Southeast Asia's second-largest economy forward.

From the financial market and digital realm to infrastructure investments, a variety of key notions were offered by four speakers as guidelines for propelling Thailand to a better future through sustainable development.

Regional leadership

The Stock Exchange of Thailand (SET) is set to continue dominating as regional market leader, with a vision towards becoming a fully integrated digital exchange that will cross over to other markets worldwide.

Thailand's bourse has been a market leader in Asean in terms of trading value and fund-raising, said SET president Pakorn Peetathawatchai.

The SET's trading value is double that of the Singapore Exchange, which has a daily trading value equivalent to 64 billion baht and 670 billion in funds raised over the past five years.

Essentially, the SET has about 37 listed firms with market capitalisation worth more than US$1 billion (33 billion baht), Mr Pakorn said.

SET-listed firms also offer dividend yields of more than 3% per year, compared with 1% offered by bank deposits.

The 2017 Dow Jones Sustainability Indices included 17 SET-listed firms, marking significant achievement in sustainability among firms.

"As Thailand's society ages, long-term investments in stocks have proved to receive the highest returns among four asset classes -- stock, gold, government bonds and bank deposits," Mr Pakorn said.

Revenue generated from overseas markets registered about 46% of total revenue, with 140 SET-listed firms expanding into Cambodia, Laos, Myanmar and Vietnam.

Mr Pakorn said the SET also acts in support of Thailand 4.0 policy, with four key sectors -- consumer goods, healthcare, tourism and infrastructure -- showing strong potential for contributing to sustainable development.

For example, Airports of Thailand Plc is the largest airport management service in the world, while Bangkok Dusit Medial Services Plc is the world's third-largest provider of healthcare services, he said.

Central Pattana Plc is also ranked among the top 16 retail and superstore management services worldwide, he added.

For startup development, the SET has been developing Live, a fund-raising platform for startups, which should be able to compete with other alternative fund-raising sources such as initial coin offerings (ICO), Mr Pakorn said.

The SET recognises the importance of digital technology, which has the ability to change the global financial landscape and securities trading in the future, he said.

EEC as growth driver

The government expects the Eastern Economic Corridor (EEC) to boost private investment to a 10-year high in 2019, catalysed by investment in infrastructure and the 10 targeted industries.

Private investment is anticipated to increase by 10% in 2019, given a GDP growth projection to expand by 5%, said Kanit Sangsubhan, secretary-general of the EEC Office.

The EEC is a key factor expected to drive Thailand's economy forward, following the Eastern Seaboard project's development as a centre for export-oriented industries.

Private investment expanded by 3.4% in this year's first quarter and investment has recorded continuous expansion for three consecutive years, said Mr Kanit, citing data from the National Economic and Social Development Board.

"In the past 10 years, Thailand's private investment and foreign direct investment [FDI] expanded by an average of 3% per year, with the country's GDP growth expanding by the same rate," said Mr Kanit.

The government expects to see real investment in the EEC next year through public infrastructure projects and investment from the private sector in the 10 targeted industries under the S-curve project, he said.

The government is confident that public infrastructure investment projects such as the Laem Chabang deep-sea port, the Map Ta Phut deep-sea port and the maintenance, repair and overhaul project will be launched within this year, he added.

The EEC project is also expected to be a boon for other Asean economies, and the resulting growth is hoped to be inclusive in distribution, Mr Kanit said.

"Prime Minister Prayut Chan-o-cha wants the EEC's infrastructure investment projects to be bid under a public-private partnership, in line with international bidding standards," he said.

The EEC project has been planned to garner investment worth more than 1.7 trillion baht over a five-year period (2017-21).

"In October, the government plans to launch the terms of reference of Phase 3 of Laem Chabang deep-sea port and Phase 3 of the Map Ta Phut deep-sea port to attract both local and foreigner investors," Mr Kanit said.

The new digital norm

Data analytics, digital platforms in the ecosystem, skilled people and a culture of innovation are among key success factors for smarter businesses to strike back against digital disruption, IBM says.

"Digital disruption is the new normal that cannot be avoided but rather must be understood. We must adapt fast to survive," said Kittipong Asawapichayon, country manager for software group at IBM Thailand.

Data is a new means by which organisations can gain insights, as 80% of internal data can be used for differentiation and otherwise making new products.

Citing IBM's global C-level survey covering 12,854 respondents in 112 countries, Mr Kittipong said that rather than being afraid of disruption, business executives are ready to strike back.

Executives foresee external factors affecting enterprises in the next few years, reinforcing the need for enterprises to keep a finger on the pulse of consumers while remaining aware of unknown competitors, technological change and people's skills.

The survey divides businesses into three groups, the first being the leaders or so-called re-inventors. They have exceptionally well-aligned strategies, a good operational and IT grip and are confident in their capacity to transform and manage disruption.

The second group are practitioners whose capabilities are yet to fully match their ambitions, although they aim to catch up or disrupt through innovation.

The third or aspirational group is the most challenged in solidifying the right vision, strategy and ability to execute.

"Compared with other groups, re-inventor organisations outperform when it comes to revenue, growth profitability and innovation," Mr Kittipong said.

Trinity of legal challenges

Law, competition and mindset are three prevailing challenges that Thailand urgently needs to address to attract foreign direct investment flows, said Prinn Panitchpakdi, country head of CLSA Securities Thailand.

These three factors must be improved in order to support the country's competitiveness going forward, Mr Prinn said.

For red tape, a "regulatory guillotine" is needed because Thailand has more than 1,500 related laws versus only 200 in South Korea, he said.

The digital asset royal decree recently implemented was a good step towards supporting the financial technology industry, but foreign shareholding in fintech companies remains limited at 50%, he said.

"Some laws should be revised such as those related to technology. If we are not open to technology, we may find ourselves left behind," Mr Prinn said.

Fair competition, meanwhile, is a necessity. The government and state-owned enterprises should review their oligopoly and monopoly roles, determining whether participation in the private sector is crowded out when economic growth reaches 5%, he said.

Mr Prinn said the royal decree is an example of unfair competition laws. In theory, the law supports competition and new opportunities. But in practical terms, the Revenue Department imposes a 15% tax rate for cryptocurrency traders, while the rate is 27% for issuers of digital tokens, he said.

Several good fintech startups have left Thailand to raise funds abroad in places like Switzerland and Singapore because of the punitive tax measures against digital assets in Thailand, Mr Prinn said.

"In a digital economy, ICO issuers are startups that the government has a policy to support, but they face high tax burdens," he said. "On the other hand, the three largest digital companies in Thailand -- Line, Facebook and Google -- pay nearly zero in taxes."

The third challenge is changing mindsets, whereby all social participants, including the public, the government and the private sector, need to be involved, Mr Prinn said.

Thailand needs to have more "active citizens" that do not wait for help from the government or large private companies, but rather know how to help themselves and be aware of their rights, he said.

"Corruption is 4.0, but the government system and the private sector are still at 0.4," Mr Prinn said.

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