The Stock Exchange of Thailand has proposed revisions in the capital market's tax structure and regulations as part of a long-term development plan and preparation for the Asean Economic Community.
In an exclusive interview with The Nation, Sathit Limpongpan, the new chairman of the SET, said changes in the stock market’s tax structure and improved cooperation within the Asean Exchanges were part of the market’s long-term development strategy.
The Asean Exchanges comprise seven stock markets from six countries: the SET, Bursa Malaysia (BM), the Singapore Exchange (SGX), the Hanoi Stock Exchange (HNX), the Hochiminh Stock Exchange (HOSE), the Indonesia Stock Exchange (IDX), and the Philippine Stock Exchange (PSE).
Sathit said he believed that the corporate tax, which has been lowered from 35 per cent to 20 per cent, was at an adequate level but some changes were needed in the M&A (mergers and acquisitions) tax structure. He said the current tax structure was not supportive of corporates seeking to merge and there were details within the regulations that needed clarification. This would reduce the temptation for illegal or “off the books” mergers.
“I completely agree that the M&A tax structure should be revised, since it would lower tax costs for corporates that decide to merge, and it could provide greater transparency.”
He said the SET had filed proposals for amendments in the tax structure to the Finance Ministry that were currently under review.
The SET has also encouraged Thai listed companies to raise funds abroad, while proposing changes in capital-market regulations to allow foreign companies to raise capital directly in the exchange in order to improve the market’s connections with the CLMV countries (Cambodia, Laos, Myanmar and Vietnam).
The SET has already established a strong connection with SGX and BM through the Asean Linkage project. Sathit said it was connected with the bourses in Cambodia, Laos and Vietnam (currently Myanmar does not have stock market) through the sharing of information on the market’s system and corporate governance. He said this was a good start in terms of collaboration but there was still room for improvement.
“Since we already have a good connection thorough data sharing, the next step is to encourage listed companies in Thailand to hold shares with the local companies in those countries and to allow their local businesses to raise capital in our market.”
Sathit said that not only would Thai companies benefit from venturing abroad through market expansion, businesses in Cambodia, Laos and Vietnam would also benefit from the support of Thai listed companies in financial consultation and their preparations for listing in their own countries.
He said the SET had begun to persuade Thai listed companies with experience in investing abroad to pay more attention to the CLMV countries to help them improve their markets. The goal is that one day, Thai holding companies that are raising funds to support their main operations abroad (such as CK Power) will come back to invest in the Thai stock market.
In its effort to encourage foreign companies to raise capital in the SET, Sathit said it had suggested to the Securities and Exchange Commission that it change the regulations to allow foreign firms to list directly in the SET. The SEC approved this in March but it will not become effective until the commission announces it officially.