FETCO's three-phase plan for confidence

After a discussion with seven capital-market associations, FeTCO chairman Paiboon Nalinthrangkurn suggested that the government quickly assess the macroeconomic and fiscal impacts and clearly communicate this to investors.
The first of the three phases is short-term measures, which are as follows:
1. Maintaining the current plan to reduce corporate income tax from 30 per cent to 20 per cent, postponing the minimum-wage increase, and urging the Bank of Thailand to cut the policy rate by 50 basis points to help alleviate businesses’ debt burden while stimulating consumption and investment;
2. Tax measures including tax exemption on replacement of flood-damaged machinery and equipment, and waiving of employees’ and employers’ contributions to provident funds;
3. Providing soft loans or financial support for working capital for flood-hit listed manufacturers or small and medium-sized enterprises;
4. Adjusting delivery schedules of state-owned projects for flood-affected project developers;
5. Offering such assistance as subsidy for wages, training and temporary work for the unemployed.
In the second, medium-term phase, the capital markets could act as a main mechanism of fund mobilisation for the nation’s recovery because of low financing costs, Paiboon said.
A fund should be set up quickly to raise money from local and overseas investors for infrastructure development, and venture-capital funds should be promoted for private-sector’s fund-raising, he said.
Special advisory teams on trade negotiation, trade restoration, business restoration and financial rehabilitation should be formed, as traders cancelled orders after manufacturers suspended their operations. The federation proposed that the government employ proactive communication strategies such as roadshows to restore investors’ confidence through the Foreign Affairs Ministry, Commerce Ministry and foreign chambers.
The third phase is long-term measures, which should include clear government disaster and water-resource management plans, investment in infrastructure such as roads, railways, dams, permanent dykes and large water-distribution canals, and diversification of industrial zoning.