The Stock Exchange of Thailand plans to encourage listed companies to embrace a sustainable enterprise programme as a sideline to capital market developmentso the bottom line grows in tandem with social sustainability.
The move came after SET chairman Sathit Limpongpan spoke earlier this year about revamping the organisation’s support structures as a result of the political instability.
“Either CSR [corporate social responsibility] or good governance is not enough for Thai businesses,” Sathit said.
“When fund managers decide to invest in any business, the SE [sustainable enterprise] programme is now one of the crucial factors they prefer most.”
Sathit wants to see the SET become known as a brand where everyone can invest – not bet – by changing people’s perception that the stock market was only for rich people.
“If successful, the Thai capital market can move forward with sustainable growth,” he said.
As a first step, the SET will encourage listed companies to focus on an SE programme by using money allocated for CSR programme.
The four main areas the SET wants to push up are corporate bonds, gold delivery in the spot market, the agricultural futures market and educating people on the capital market.
Had it not been for solidity of the Thai capital market, Thailand could have witnessed another collapse of the financial system similar to the 1997 financial crisis.
In those days, the country relied mostly on bank savings, with some of money raised by businesses via the stock market.
Businesses, therefore, still had cash flow on hand even though there was a run on banks.
In the past almost all money was banked, making it the financial sector with the largest resource of funds.
Though the stock market is now larger than the country’s gross domestic product, with market capitalisation of Bt11 trillion to Bt12 trillion, outstanding bank deposits are about Bt12 trillion.
But the corporate bond market is still small with outright transactions of Bt8 trillion.
“We need to make the corporate bond market bigger,” Sathit said.
Pakorn Peetathawatchai, executive vice-president and head of the SET’s corporate strategy and finance division, was assigned by Sathit as the head of the project to study how to develop the SE programmes in the aforementioned four areas.
Pakorn has is conducting research to find the most suitable models for the programme and expects to be finish this month.
He said the SET had focused on current problems related to investments in a bid to find resolutions.
For example, he said if gold trading in the spot market was delivered physically it might reduce risk.
Gold trading in the spot market also needed to be design with a clearing system.
For agricultural futures market, Pakorn said that best model would have more active transactions.