Last year, Thai regulators relaxed regulations to allow local investors easier access to global funds, and recently they announced hedge funds would be allowed for sale to professional investors.
Now the country is moving ahead with more initiatives that impact asset and wealth management, according to Tanaratpattanakit.
Last month the Thai government approved a mandatory provident fund scheme that is expected to start next year.
The MPF scheme will generate huge amounts of new capital that will need to be managed, Tanaratpattanakit said, because currently most of the Thai workforce is not covered by a pension scheme.
Some private companies do offer a provident fund scheme to employees, but it is voluntary. According to provident fund statistics, in 2016, only 2.8 million private company employees were taking part out of a workforce of 38 million.
The new MPF scheme proposal will require all companies with 100 or more employees and without a comparable or better scheme to participate.
Employers and employees will each be required to contribute 3% of salary (capped at a salary of 60,000 baht or $1732 per month) for the first three years after implementation, according to consultancy Willis Towers Watson in Thailand.
Over seven years, beginning in 2018, the scheme will cover all employers. Employer and employee contribution rates would gradually increase to 10% each over a period of 10 years after implementation.
Although details of how the MPF will be managed — either by the government or private asset management firms — are still being finalised, asset and wealth management firms stand to benefit, Tanaratpattanakit said.
“The [provident] fund pool will increase very fast in the near future. It will move a lot of money into the stock market and it will also create strong competition between asset managers,” he said.
“It will be the same with wealth management, which has a lot of room to grow in Thailand,” he said, adding that the breadth and depth of wealth management in Thailand is not at a satisfactory level for Thai investors.
Greater disclosure
In a separate move, the Securities and Exchange Commission of Thailand is rolling out requirements for greater information disclosure in fund factsheets, Tanaratpattanakit said.
Among the new datapoints required are portfolio turnover, maximum drawdown and tracking error.
“They’ve also changed the way the firm has to present the data. Instead of wording, graphics such as charts need to be presented to help people understand more about the fund.”
The result will be more data available to investors, but the requirements will also prompt banks and asset managers to train client-facing employees.
“The banks and brokers have to prepare their staff for this information. If an investor wants further explanation, the advisor or salesperson may not know in depth what the data means,” Tanaratpattanakit said.
