‘Reforms essential’ to make Thailand a regional financial centre

Economists back government’s vision, cite Singapore and Hong Kong as examples to emulate

 

Leading Thai economists have voiced their support for the government's push to establish Thailand as a regional financial hub, but stressed the need for reforms, including legal amendments and greater liberalisation of the financial sector.

 

The Cabinet recently approved the principles of the Financial Business Centre Act, a draft law aimed at boosting Thailand's competitiveness and positioning it as a key financial centre in the region.  

 

The initiative hopes to attract foreign investment, create jobs and stimulate economic growth.

 

However, economists have highlighted potential obstacles. 

 

Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Securities, acknowledged the potential benefits but warned that outdated laws and restrictive regulations pose a major challenge. 
 
He pointed to the success of established financial centres like Singapore and Hong Kong, which benefit from robust legal frameworks and fair judicial systems.

 


"We cannot become Hong Kong or Singapore if regulators continue to protect existing players," Pipat argued.  


 

He emphasised the need for Thailand to open its financial sector to foreign competition, arguing that current regulations deter potential investors.

 

He also suggested that while increased competition could lead to lower returns for financial institutions, it is essential for long-term growth. He called for a comprehensive reform of the legal system, contracts, the judiciary, and regulatory oversight.

 

Pipat stressed the importance of modernising payments systems, advocating greater diversity in payment methods, similar to those offered in Singapore and Hong Kong, including the facilitation of cross-border transactions in various currencies and digital assets.
  

Pacharapoj Nantaramas, executive vice president and chief economist at Krungthai Bank, echoed these concerns.  

 

He suggested a "sandbox" approach to test different models and identify the most effective strategy for Thailand.

 

He highlighted the need to streamline processes for businesses and skilled workers seeking to relocate to Thailand.

 

He cautioned that attracting foreign investment through generous incentives could strain public finances and urged careful consideration of the cost-benefit ratio.

 

Burin Adulwattana, managing director and chief economist at Kasikorn Research Center, expressed optimism about the initiative, comparing it to the creation of a special economic zone for finance.

 

He believes it could significantly increase financial flows into Thailand. While acknowledging the potential limitations imposed by initial restrictions on competition, he stressed that long-term success hinges on full liberalisation and open competition. 

 

"We believe it is beneficial. If liberalised, it will bring more money into the country, increase tax revenue, retain talented individuals, and create jobs," Burin said.

(2025/02/07-00:00)