Thai capital market and its role in development
The Thai capital market is still the main lever that drives sustainable development in the country and pushes its competitiveness in the Asean region, a study by the Capital Market Development Fund (CMDF) and Mckinsey & Company shows.
CMDF and McKinsey & Company (Thailand) Co. Ltd., a global management consulting firm has introduced a white paper report on “Improving Thailand’s Capital Market Competitiveness and Efficiency”.
They studied the opportunities and limitations of the Thai capital market structure in terms of competitiveness and efficiency to cope with changing trends and challenges in the areas of technology, economy, society and environment, both nationally and globally.
CMDF is a unit under the Securities and Exchange Act B.E. 2535, aimed at promoting the development of the capital market, organizations, and infrastructure.
The Thai capital market is also a source of long-term funding that promotes economic development and innovation, in addition to being a source of knowledge in savings and investment.
The Thai capital market benefits the country in many ways, whether it is helping people who are transitioning into an ageing society to have savings for retirement or creating an environment that is conducive to startups and small and medium businesses (SMEs).
However, the cost of doing business in certain types of capital markets, such as the cost of trading shares in the secondary market (with the current cost being the second highest in Asean, calculated by excluding Financial Transaction Tax that may apply) or mutual funds is still higher than the Asean average.
As a result, the Thai capital market must adapt in order to compete with more cost efficiency. Moreover, this report provides 10 additional policy proposals for the sustainable development of the Thai capital market in the future as follows:
(i) Promote sustainable financing to help Thailand move towards Net-zero carbon emissions by advocating for Green Finance innovation in the Thai capital market.
(ii) Develop a pension fund to support an ageing society by supporting the development of the National Pension Fund.
(iii) Promote small and medium enterprises (SMEs / startups) through funding, consulting, platform creation and fundraising agreements.
(iv) Expand digital assets. Various applications should be explored and confidence in risk management should be developed.
(v) Improve financial literacy through the cooperation between public and private sectors, new types of investment projects and by promoting awareness of investing from an early age.
(vi) Promote retail investor investments: Reduce the complexities of starting out in investing. Adopt digital technologies to increase the number of retail investors in the Thai capital market.
(vii) Attract long-term investments from foreign institutional investors: Create a more open environment that is on par with regional leaders and has infrastructure to support new economic sectors.
(viii) Develop domestic institutional investors: Strengthen domestic institutional investors by diversifying investments into a wider variety of assets.
(ix) Unlock data analytics: By investing in data standardization and collecting data resources for investment.
(x) Attract and nurture talent: By attracting personnel with in-demand skills into the Thai capital market and upgrading personnel in the current Thai capital market to have the expected skills.
Developing the Thai capital market according to this approach, while maintaining cost competitiveness can help the Thai capital market to build on the success of the past and create a Thai capital market that can meet the needs of a new generation.
However, successfully creating Thailand’s capital market of the future will require committed support and cooperation from all stakeholders in the public and private sectors.
The detailed white paper report can be downloaded from the website www.mckinsey.com/featured-insights/.