Doubts persist over financial hub bid

Though the cabinet endorsed the Financial Hub bill, economists query the motivations behind it, write Somruedi Banchongduang, Phusadee Arunmas and Nuntawun Polkuamdee

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The cabinet approved the Financial Hub bill on Feb 4, marking a significant step in Thailand's bid to become a regional player in finance.

The bill, comprising 96 sections, establishes a One Stop Authority (OSA) committee with broad regulatory powers, including licensing and tax incentives, to attract investment in fintech and blockchain. While the government touts the bill as being a catalyst for foreign direct investment, critics warn of overly complex regulations, loss of financial institution autonomy, and increased compliance costs.

Former finance minister Thirachai Phuvanatnaranubala has voiced strong opposition, arguing the bill could destabilise the financial system.

Mr Thirachai contends the country’s financial system is still too slow and unable to compete with existing financial centres such as Singapore and Hong Kong, which are governed by English law and have more advanced dispute resolution mechanisms for complex financial transactions.

He also wondered whether the bill's true intent is to enable the government to issue a cryptocurrency, potentially gaining control over the country’s financial system and bypassing the central bank's authority.

Mr Thirachai warned that centralising financial oversight under a new office could erode confidence in monetary policy and the baht.

INITIATIVE WINS PRAISE

Thitima Chucherd, head of economic and financial market research at SCB EIC, a research centre under Siam Commercial Bank, said as all relevant regulatory agencies are involved in implementing the government's financial hub initiative, the project is expected to comply with existing regulations while addressing potential risks, particularly those related to financial system stability and money laundering.