The Capital Market Development Fund (CMDF) and McKinsey & Company collaborated on research of the Thai capital market to identify both opportunities and limitations. The pair looked at competitiveness and efficiency as the Kingdom looks to cope with changing trends and challenges in the fields of technology, economy, society and environment.
Ultimately, the Thai capital market has a key role in driving sustainable development in the country. According to the study, it is still competitive when compared to its ASEAN neighbors, although there are some areas of concern.
These include the cost of doing business in certain types of capital markets, such as the cost of trading shares on the secondary market, being among the highest regionally and soaring mutual fund costs. In order to overcome current obstacles, CMDF and McKinsey & Company believe the Thai capital market must adapt and become more cost efficient. The pair cited 10 potential policy proposals that would allow sustainable development of the Thai capital market. These are:
- Promote sustainable financing to help Thailand move towards Net-zero carbon emissions by advocating for Green Finance innovation in the Thai capital market.
- Develop a pension fund to support an aging society by supporting the development of the National Pension Fund.
- Promote small and medium enterprises (SMEs / startups) through funding, consulting, platform creation and fundraising agreements.
- Expand digital assets: Various applications should be explored and confidence in risk management should be developed.
- 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.
- 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.
- Attract long-term investments from foreign institutional investors: Create a more open environment that is on par with regional leaders and have infrastructure to support new economic sectors.
- Develop domestic institutional investors: Strengthen domestic institutional investors by diversifying investments into a wider variety of assets.
- Unlock data analytics: By investing in data standardization and collecting data resources for investment.
- 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.
Also Interesting: Thailand continues its rapid embrace of digital financial services
Interest Analysis
None of the floated policy proposals are new or a unique challenge to the Thai capital market. If anything, all the report from CMDF and McKinsey & Company does is highlight Thailand’s biggest issue. And that is the inability for government departments to work together. Any initiative that requires cross departmental or ministerial support is doomed to fail.
The only reason foreign investment policy has been streamlined is due to the Thailand Board of Investment basically being allowed to bring everything in house. And that still ruffles feathers to this day. Look, these 10 ways to develop the Thai capital market would be great if implemented. The real challenge is finding a starting point for one, let alone the entire lot.
Related: Ho Chi Minh City aims to become a leading investment destination in Southeast Asia
