Stalled financial reform hinders

“We’re now in the harvest period of previous reforms and have grown quite complacent,” Veerathai Santiprabhob, vice president of the Stock Exchange of Thailand, said yesterday.
When economic reforms took place a few years after the country was hit hard by the crisis, they had financial-sector support, and other businesses recovered later, he said.
Over the past four or five years, there has been no economic reform at all, and this poses a concern for the future, Veerathai said at a seminar hosted by news website ThaiPublica.
Supervision of the financial sector is fragmented, while the industry is getting more complex. The Finance Ministry, the Bank of Thailand and the Securities and Exchange Commission do not work closely together to ensure economic stability, he said.
Regulators neglect financial discipline, Veerathai said.
The Deposit Protection Agency was set up as part of the financial-market reform after the 1997 crisis, and regulators warned depositors not simply to deposit their money with financial institutions offering high interest rates. Depositors have to think about bank solvency as well, to manage their own financial risk, he said.
While several banks have regained their strength and expanded their business to reap large profits, they lag behind regional banks in terms of expanding into other countries.
Local banks have made high profits in recent years – for instance a record profit of Bt92 billion in 2009, when the economy contracted by 2.9 per cent – but small and medium-sized enterprises still have a hard time accessing long-term loans, he said.
Savers still have no better choice for investment than to put their money in banks that offer low rates of return.
Veerathai said the country was bogged down in the middle-income trap, unable to graduate into the ranks of higher-income countries.
The populist polices that have increased over the past decade promote moral hazard, he said.
Corruption is also widespread and weakens the country’s competitiveness, he argued.
“We’re still all right today amid the global financial crisis because we borrow money from future generations to spend,” he said.
Sethaput Suthiwart-Narueput, former chief economist at Siam Commercial Bank, said Thai authorities had not yet developed the necessary database for policy decision-making, although 15 years had passed since the crisis.
“At the Finance Ministry, we recently discussed how to support SMEs, but we don’t have information about them. Basic information is at the same low level it was at 15 years ago,” Sethaput said.
He said lack of reform and investment could hinder the country’s development.
Bangyong Pongpanich, chairman of Phatra Securities, said profits of private corporations jumped by 350 per cent over the past 15 years, but real wage growth was negative, leading to a widening of the gap between rich and poor. Productivity, which is the bedrock of sustainable growth, has been neglected, he said.
Global capitalism will have to transform from an excessive financial sector that created imbalances in the United States and Europe and caused the 2008 global financial crisis, he added.