CLMVT urged to up financial integration

The integration should also help local companies compete with foreign companies, as this will result in sustainable growth in their economies, Chartsiri Sophonpanich told the “CLMVT Forum” during a session on “Enabling Trade and Investment in CLMVT: Roles of Banking and Finance in Regional Development”.
He highlighted four roles of the financial sector in the region: service provider, developer of the capital market, funding mobiliser, and supporter of local companies.
To push for a single CLMVT market, capital must be strong, he said.
Thailand in the past relied on such centres as Singapore and Hong Kong, as well as international organisations such as the Asian Development Bank (ADB) and the International Finance Corporation, to finance investments. Now, after going through a rapid growth phase, Thailand has entered the stage of wealth accumulation, with surplus savings and well-functioning capital markets. So now is the time to mobilise savings accumulated in Thailand for the rest of the region and use Thailand as a funding base for CLMV countries.
Moreover, the Bank of Thailand has relaxed regulations on direct investments by individuals, while the Finance Ministry now allows foreign countries to issue baht-denominated bonds.
Laos was the first country to issue baht-denominated bonds, the first lot worth Bt1.5 billion and the second worth Bt12 billion, Chartsiri said.
He called on the five countries to work jointly on developing the capital market, and he pointed to the dual listings of Malaysia and Singapore as an example of cooperation.
Chartsiri said each country in the CLMVT group should set up projects, a method of funding mobilisation, and mechanisms to ensure that risks are acceptable to all.
“CLMVT requires funding because the region is constructing infrastructure projects.” He noted that the ADB had said the CLMVT region requires funding of US$30 billion (Bt1 trillion) per year to support infrastructure.
He stressed that the financial sector should play a role in supporting local companies because luring foreign investment was not helping the sustainable growth of the region’s economies.
“Each country should help local SMEs and start-ups compete with foreign companies. Competitive local companies can become country champions, and regional champions, or could be global champions. The strength of local companies will be passed on to the economic development,” he said.
Chartsiri believes the five countries have potential to grow if they are able to synergise their supply chains and reduce barriers to trade and investment.
“Laos is the battery of Asia, and Thailand, China and Vietnam are its clients. China has attracted Thai companies Banpu and Ch Karnchang to run energy businesses there. Vietnam has become an electronics production base for Samsung, making Vietnam the electronics cluster in CLMVT,” he said as an example of how to synergise in CLMVT.
The scalability of CLMVT makes this region more attractive, and the five can share benefits to make themselves a single market, he added.