Approaches to achieve the above are listed below:
Equity Market Development Emphasizing on the Supply Side
- Encouraging the listing of state enterprise on the SET
The government will fully support privatization process of the state enterprises to become a public company listed on the SET. The Ministry of Finance (MOF) will:
- Hold 100% stake in a so-called 'National Enterprise Holdings' employing efficient and professional management system. The National Enterprise Holdings will establish sectoral joint ventures to be under one arm of National Holding Administration. Public offerings will then be conducted either from these sectoral ventures or from their sister companies.
- Prepare to meet following targets:
2001 : Three state enterprises expected to join roster on the bourse; Internet Thailand Co.,Ltd, Thai Airways International Public Co.,Ltd, and the Petroleum Authority of Thailand. Also in the plan is the reduction of government holding in Krungthai Bank Public Co.,Ltd. These in all will increase total market capitalization by about 83,659 million baht (excluding Krungthai Bank and newly issued shares)
2002: Seven state enterprises expected to join roster on the bourse; Telephone Authority of Thailand, Mass Communications Authority of Thailand, Thailand Tobacco Monopoly, Ministry of Finance, Airport Authority of Thailand, Government Housing Bank, Port Authority of Thailand, and the Government Savings Bank. There will also be the reduction of government holding in Bangkok Metropolitan Bank Public Co.,Ltd. And Siam City Bank Public Co.,Ltd. After all, it is estimated that total market capitalization will increase 303,737 million baht (excluding in Bangkok Metropolitan Bank Public Co.,Ltd. And Siam City Bank Public Co.,Ltd.).
2003 : Five state enterprises expected to join roster on the bourse; Electricity Generating Authority of Thailand, ; Metropolitan Electricity Authority of Thailand; Provincial Electricity Authority of Thailand, Metropolitan Water Works Authority, and Provincial Water Works Authority. Estimated total market capitalization stands at 309,991 million baht.
In a strive towards this privatization scheme, all actions taken in accordance with the plan will be under Corporatization Law, which creates no impacts on existing benefits the employees of those potential enterprise used to obtain. Employment period will continuously be counted and stock options will be provided. These attempts are expected to enhance competitive efficiency as well as to provide an opportunity for the Thai people to invest in these good enterprises. It is certain that all potential enterprises will employ good corporate governance practices to ensure that they are commercially competitive, efficiently managed, transparent, and after all well received by the investors.
In support of this essential national agenda, the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) will corroborate to support the listing of those state enterprises. After the transformation to be a public company, the enterprise will automatically be approved to list on the SET, and will be able to complete public offering within one year. On the process of public offerings, the state enterprises have to conform to SET regulations and qualifications especially on good governance aspect. The ultimate objectives are to make those potential state enterprises commercially competitive while maintaining as high standards as existing listed companies.
- Providing incentives to list and retain listing status
Measures to attract more listing include:
- Special tax incentives for newly listed companies, which will be paying 25% corporate taxes for five consecutive years. The state enterprise wishing to list on the SET must proceed to list within three years since this measure has been put into effect. The MOF, the SEC, the SET, Association of Asset Management Companies, and Association of Securities Companies, together should all cooperate to finalize these tax incentives for listed companies within one week.
- Adjusting disclosure rules and accounting standards to alleviate the burden as well as justify competitive advantage of the companies in case that some of the disclosed information affects their operations and competitive strategies. The accounting standards will also be adjusted in line with current business conditions. In the association to finalize this scheme, the SEC, Listed Companies Association, Association of Securities Companies, and Association of Asset Management Companies must meet to make final conclusion by the end of April 2001.
- Minimizing the Par Value. The Ministry of Commerce has already considered adjusting Public Company Act to reduce the par value of securities to be at a minimum value allowed.
- Targeting at BOI-Promoted firms or firms receiving privileges from the government. This finalized scheme will be collectively carried out further by the Board of Investment (BOI), the SEC and the SET within two weeks.
- Developing Capital Resources for Small and Medium-Sized Enterprises as well as the Market for Alternative Investment (MAI)
In an attempt to pursue regular listing, the MAI will conduct proactive marketing strategies as well as offer listing incentives as follows:
- Corporate income taxes will be reduced for companies going to list on the MAI within these three years, from 30% to 20% for five consecutive years starting from the first listing year. This is anticipated to increase the number of listed companies, the size of the MAI itself, as well as to provide more investment alternative for investors. It is advised that rules and regulations of the SET and MAI be revised to be in line with each other.
- Incentives offered to venture capital business will be included in the meeting soon to be organized by the Ministry of Industry to discuss the supporting schemes offered to promote the growth of the SMEs.
In support of long-term development of the bond market on sustainable and concrete infrastructure, following measures are carried out:
- Promulgation of the Public Debt Management Act in order to facilitate regular and predictable supply of government securities
- Amendment of Securitization Act and removal of tax impediments associated with securitization processes. This will allow financial institutions to unload their loan portfolio from their balance sheets.
In addition, the government has provided commitment to amend and promulgate various legislations pertaining to the development of the Thai capital market including the Securities and Exchange Act, the Public Company Act, the Derivatives Market Act, the E-Commerce Act, the Class Action Act, and the Trust act. The result of which will help promote good corporate governance among private enterprises, create instruments necessary for risk management, accommodate the impact of information technology on the capital market, and allow the establishment of trust businesses. These after all will enhance flexibility, efficiency and fairness of business activities in equity and debt market, which all pave the way for overall capital market development in the future.
