The Federation of Thai Capital Market Organisations is to propose a series of short- and long-term capital market stimulation measures to the caretaker government in the hope of being able to turn the bearish stock market into a bull run.

Although the federation has not given details of its proposed measures, its chairman, Kongkiat Opaswongkarn, said yesterday that one of them would rely on a second equity market master plan.

"We will ask for the government's collaboration to make the measures viable," he said. "There will be no need for amendments to the law, because such action could only be taken by the next government."

He said he wanted the federation's plans to get the nod from the government before they are made public.

The federation's plan comes after Bt1 trillion was wiped off the market capitalisation of Thai shares when the local bourse was swept up in the foreign investors' sell-off phenomenon which has bruised stock markets around the world. The sell-off is a reaction to anxiety over further interest-rate hikes by the US Federal Reserve.

The SET Index yesterday fell a further 2 per cent to 646.78 as the selling spree continued. Foreign investors have dumped Thai shares with a cumulative net worth of more than Bt40 billion since the sell-off began on May 10.

"I believe that our measures will help us escape from the economic doldrums spiral," Kongkiat said. "The contingency fund will be exclusive."

The planned capital market stimulation measures are aimed at preventing the economy from slipping into recession in an environment of political vacuum and rising economic risks, he said.

"If liquidity in the stock and commodity markets declines significantly amid interest rate hikes and skyrocketing oil prices, it will send an impact across the world and the situation is likely to last longer than next year," Kongkiat said. "Therefore, it is necessary for us to seek pre-emptive measures."

Meanwhile, Listed Companies' Association chairman Prasert Bunsumpun said the association planned to ask relevant parties to offer corporate income tax incentives to companies listed on the Stock Exchange of Thailand and the Market for Alternative Investment (MAI) next year.

The tax incentive plan aims to increase the number of listed companies.

"We will propose the issue to relevant parties, including the Federation of Thai Capital Market Organisations, the Stock Exchange of Thailand, the Securities and Exchange Commission, the Fiscal Policy Office and the Revenue Department, to build up the government's awareness and attention. We would like them to consider corporate income tax privileges and other incentives to differentiate listed from non-listed companies in a bid to attract big companies to list on the stock market," he said.

He did not reveal further details.

In its first term, the Thaksin government approved tax privileges for companies listed on the stock market and the MAI, entitling companies listed on the SET to pay only 25 per cent and companies listed on the MAI only 20 per cent.

The regular corporate tax rate is 30 per cent.

However, the tax incentive is no longer available.

Siriporn Chanjindamanee

The Nation