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STOCK MARKET: New policies set to boost investment

By Wichit Sirithaveepom

New steps to lift investment in the local stock market won cabinet approval yesterday.

Finance Minister Dr. Somkid Jatusripitak said the measures included tax incentives for listed firms, support for stock dividends and initiatives to encourage the debt market. The Finance Ministry also plans to divest its holdings in state-owned banks, selling at least 15 - 20% of outstanding shares to the public to boosttrading liquidity in the market.

Dr. Somkid noted that boosting trading liquidity and the "free float" of shares readily available in the market were part of a global trend of Securities exchanges worldwide. He said the new measures would send a signal to international investors that Thailand was boosting market liquidity.

While the SET already requires companies to maintain a free float of at least 10%, in practice, many companies have floats below the minimum. Dr. Somkid said the Finance and Commerce ministries would coordinate with the Senate to amend the Public Companies Act to further support the equities market. Revisions will allow firms greater flexibility in setting their stock par value, issuing stock dividends and treasury stocks.

Prasarn Trairatvorakul, secretary-general of the Securities and Exchange Commission (SEC), said he wanted listed firms to have a free float of at least 15 - 20%.
Without changes, the Thai market risked being left behind other exchanges in the competition for global capital, he warned. Several state enterprises, Dr. Prasarn noted, had large market capitalisation, but only small floats. Thai Airways, for instance, had a free float of only 7%
while Krung Thai Bank just 1%.

The measures passed yesterday will cut corporate tax for listed firms to 25% for up to Baht 300 million in net profits, with profits over that level taxed at the normal 30% rate. Newly listed firms on the SET will qualify for a 25% corporate tax rate, wlth no limit on profits. Both measures will be effective for five years.

Bangkok Post, May 24, 2001

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