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Thailand: Capital market key to post-Covid economy
The efficiency of Thailand’s capital market needs to be promoted in order to support the country’s post-pandemic economy, according to Finance Minister Arkhom Termpittayapaisith.
He added that the role of the Thailand’s well-balanced capital market has not only been key to supporting Thailand’s economic development and competitiveness, but has also helped the country’s economy better manage and absorb shocks.
“Looking forward, there is a need to further promote efficiency of the capital market in order to support the post Covid-19 economy,” Mr Arkhom said in his opening speech and keynote address on the topic of shaping the country’s readiness for post-pandemic economic opportunities at the Thailand Focus 2021 virtual conference on Wednesday, organised by the Stock Exchange of Thailand.
He envisioned that the Thai capital market in the future should be a source of funds for small and medium-sized enterprises and start-ups that will promote innovations and new businesses.
Moreover, he added, it will be a financing channel for the public and private sectors to raise new funds to invest in physical and digital infrastructure projects. In addition, it will be a place for a financial exchange using the latest technologies.
Mr Arkhom said that in the post-Covid-19 world, economic growth will be driven by new industries such as the electric vehicle sector and the digital economy. Thailand’s capital market will play a crucial role raising funds for high value-added industries and providing financial support for start-ups, he added.
The minister said that regarding the Thai economy, the road ahead will not be so rosy — many challenges and uncertainties remain. But he said it was certain that the government was committed to doing its utmost to overcome the pandemic.
Mr Arkhom also outlined the government’s plans to support the country’s long-term growth, including by addressing the issue of inequality by promoting equal opportunities for all and poverty reduction. He stated that the government has continued to invest in infrastructure, strengthened competitive industries and promoted future industries.
Going on to describe how the pandemic has severely affected Thailand’s economic activities and growth prospects for 2021, Mr Arkhom said the state has introduced various measures to help people and businesses cope, with the government’s two emergency loan decrees empowering it to borrow 1.5 trillion baht to fund these initiatives.
The finance ministry has revised the economic growth projections for the Thai economy in 2021 to 1.3%, due to the latest wave of the Covid-19 outbreak.
Mr Arkhom added that Thailand’s fiscal position remains strong, even after the significant increase in borrowing. The country’s debt to gross domestic product ratio remains low at 56.1% and is expected stay below the 60% ceiling at the end of fiscal 2021 as a result of many years of prudent management and fiscal discipline.
He added that if Thailand needed to raise the ceiling in the future, the related committee could increase the threshold.
Speaking at the same virtual conference, Bank of Thailand governor Sethaput Suthiwartnarueput said he was confident about Thailand’s recovery as the economy had proven to be resilient, with strong economic fundamentals.
The country’s sound fundamentals include international reserves that are amongst the highest in the world, and low external debt. In addition, Mr Sethaput said the country’s banking sector was in a healthy position and acted as a shock absorber, with a strong capital adequacy ratio of 20%.
Moreover, the governor added, Thailand’s fiscal position was firm with a reasonable level of public debt and low financial costs. This meant the government had more room to implement additional fiscal measures to support Thailand’s recovery and prepare for the post-Covid economic expansion.
He said the green and digital economies would play key roles in facilitating Thai economic growth when the pandemic was over.
The other speaker was Pisit Puapan, director of the macroeconomic analysis division at the ministry of finance’s fiscal policy office, who said the Thai economy had been supported by the export sector’s strong recovery. In the first seven months of 2021, Thai exports expanded by 16.20% year-on-year.
The finance ministry expects the Thai economy to expand by 4-5% in 2022, thanks to rising tourist numbers and continuous export growth.
He said that many state economic agencies shared a similar view that Thailand will achieve some growth this year, and enjoy a strong recovery next year.
Source: https://www.bangkokpost.com/business/2171375/capital-market-key-to-post-covid-economy