Leading economists in Thailand have expressed support for the government’s ambitious vision to transform the country into a regional financial hub. However, they caution that significant reforms are necessary, particularly in legal frameworks and the liberalisation of the financial sector, to achieve this goal.
The Thai Cabinet recently approved the principles of the Financial Business Centre Act, a draft law designed to enhance Thailand’s competitiveness and position it as a key financial centre in Southeast Asia. The law is expected to attract foreign investment, generate jobs, and stimulate economic growth. Despite these potential benefits, experts warn that existing barriers could impede progress.
Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Securities, acknowledged the initiative’s promise but pointed to the challenges posed by outdated laws and restrictive regulations. Drawing comparisons to established financial hubs like Singapore and Hong Kong, he stressed that Thailand cannot emulate their success without comprehensive reform.
“We cannot become Hong Kong or Singapore if regulators continue to protect existing players,” Pipat stated. He emphasized the need to open Thailand’s financial sector to greater foreign competition, as the current regulatory environment is seen as a deterrent for potential investors. While he recognized that increased competition might result in lower returns for financial institutions, Pipat argued that such competition is essential for long-term growth.
In addition to regulatory changes, Pipat highlighted the need for modernising payment systems, advocating for greater diversity in payment methods, similar to those offered in Singapore and Hong Kong. This includes enhancing cross-border transactions in various currencies and digital assets, which could help Thailand compete on a global scale.
Pacharapoj Nantaramas, executive vice president and chief economist at Krungthai Bank, shared similar concerns. He suggested a “sandbox” approach—an experimental model where different financial strategies can be tested to determine the most effective solutions for Thailand’s market. This model could help refine policies before widespread implementation.
Pacharapoj also underscored the importance of simplifying processes for businesses and skilled workers aiming to relocate to Thailand, as such ease of access is crucial for fostering a thriving financial ecosystem.
Burin Adulwattana, managing director and chief economist at Kasikorn Research Center, expressed optimism about the government’s initiative, likening it to the creation of a special economic zone focused on finance. He believes that while initial restrictions on competition may limit the early stages of the initiative, the long-term success of the financial hub will depend on full liberalisation and open competition.
Ultimately, economists agree that while Thailand’s push to become a regional financial centre has great potential, reforms to the legal system, regulatory environment, and financial sector openness are essential to ensuring the country can compete with more established hubs like Singapore and Hong Kong.
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