Brokerages want fees to stay on sliding scale in 2012

Three winners of this year's Prime Minister's Award have laid down strategies to focus on fast-growing Asean and Asian markets to offset sluggishness in traditional markets.

Thailand's leading spice producer under the "Hand Brand No 1" brand, Nguan Soon Group, will soon open a kiosk in Singapore to sell its spices, herbs and food ingredients.

Visit Limprana, managing director, said last week that the company's move to establish a foothold in the city-state is part of its strategy to reach end-users and boost awareness of Hand Brand No 1.

"Asean markets have grown largely in the past several years. The greater purchasing power of Asean people and the wider recognition of Thai foods have increased the opportunity for our company to sell our products," he said.

The Hand Brand Kiosk in Singapore is a prototype. Each kiosk will cost about Bt10 million-Bt20 million. The stall will sell various kinds of products, mainly spices, chilli, seasonings and ingredients for Thai menus, such as phad Thai noodles and Thai curries.

Nguan Soon won the award for the best brand this year.

The firm is targeting about 40 shops in Asean and the Middle East next year.

It recently opened a Thai restaurant called Muay Thai in Bahrain. The restaurant aims to lure more Thai food lovers as well as act as a distribution centre for the company's products.

The restaurants will use the company's ingredients so the cooks could prepare the 60 items on the menu more easily.

Exports are projected to increase to more than 30 per cent of company sales, he added.

Tropicana Oil, winner of the "best OTOP exporter" award, has strengthened its marketing plan for the Asean, Russian and Chinese markets.

Suradej Ninek, managing director of the producer of virgin coconut oil, said the company would focus on Asian markets due to concerns about slowing growth in traditional markets like the US and EU.

Exports to Russia have soared in the past few years. Tropicana will keep on exploring Russia, while also keying in on the Asean and Chinese markets after the Asean Economic Community takes full shape in 2015.

To increase the value of its products, the company usually spends about Bt3 million a year on research and development. It has its own technology for

crunching coconuts for oil. Cosmetics made from coconut oil will be introduced next year to boost export income, he added.

Kamalaya Koh Samui, the winner of the best service provider award, expects to achieve continued growth next year.

John Stewart, founder and chairman, said that despite the global economic difficulties, the company has expanded steadily each year thanks to its quality service.

"The global economic slowdown has not affected the growth of the firm. Upper-class consumers have continued to spend for spa services out of concern for their health," he said.

Spending per client has risen 400 per cent from an average of Bt4,000-Bt5,000 a day in the past few years to Bt17,000. Because people are always interested in their health and have some stress, they will invest to prevent health problems. Thai spa and massage services could respond to clients' demand.

Kamalaya has 60 massage and 30 treatment rooms on Samui Island and employs about 200 local staff at the resort, he added.

A source in the industry who asked not be named said most brokerage houses believed they would be badly hurt by full liberalisation.

The sliding scale applies to retail clients, while free negotiation is applicable only to big clients with daily transactions of Bt20 million or more.

"Brokerage houses should not be subject to cut-throat competition, which will hurt the overall industry, as we witnessed this year. The rates under the sliding scale are relatively low compared to charges by overseas houses," the source said.

He based his evaluation of the brokerages' preferences on a preliminary vote at the Association of Securities Companies (Asco)'s latest meeting. He insisted that despite the agreement, brokerage houses have no intention of defying the SEC plan.

Asco earlier informed the SEC in writing that brokerage houses wanted to maintain the sliding scale for another year. However, the watchdog turned down the request, saying brokerage houses have had ample time to adjust and that conditions in the Thai equity market differ sharply from 2001, when the first attempt at full liberalisation was made. In that year, average daily turnover was less than Bt9 billion. Brokerage houses had to compete for clients, reducing the average commission fee to 0.14 per cent of transaction value.

This year, daily turnover is expected to reach Bt28 billion. Meanwhile, the market is full of financial products, including equities and derivatives, for investors. The SEC believes that in the new market environment, even if the commission fee is close to the 2001 level, brokerage houses will survive.

The sliding scale, in use since January 1, 2010 and scheduled to be abolished on December 31, 2011, places commission fees in four levels. For transaction values below Bt1 million, the fee is 0.25 per cent; from Bt1 million to Bt10 million, the fee is 0.22 per cent; from Bt10 million to Bt20 million, the fee is 0.18 per cent; and from Bt20 million and higher, the fee is fully negotiable. For online transactions, the commission fee is 60 per cent of non-online rates.