In August 2012, the Institute for Global Law and Policy at Harvard Law School convened a research mission and workshop in Bangkok focused on new financial services regulation and development strategies in the emerging markets of the ASEAN region. This Bangkok initiative, which was held August 29-31, 2012, is part of a multi-year, broad-ranging IGLP research initiative undertaken in collaboration with Visa International to explore the themes of liquidity in the global economy, productive financial services regulatory structures in emerging markets, and financial inclusion. We launched the initiative at Harvard Law School in March 2012 with a free-ranging discussion and to identify a core group of researchers and policy-makers with the interest and expertise to join with us as we pursue these issues over the coming years. The agenda and a brief report on those discussions are available HERE.

The August 2012 mission brought together government officials, industry representatives and scholars to continue these discussions. Our sessions focused on the following three themes:

  • Liquidity in the Global Economy and Capital as Legal Institutions. Our goal was to trace alternative modes for establishing and regulating global liquidity to better understand both the global significance for national public policy of transnational privately generated mechanisms of liquidity, and to understand the availability of alternative legal arrangements that might generate forms of liquidity with divergent effects on inequality and growth.
  • Financial Inclusion. We discussed the provision of banking services for the unbanked as an aspect of development policy, with the goal of moving beyond corporate social responsibility models to business viability, comparing alternative regulatory and business strategies for micro-lending, tele-banking, informal banking and credit/debit services. Our aim was to consolidate our understanding of the experiences with each of these models in various settings, and to facilitate south-south coordination and sharing of best practice successes. We are particularly interested in models which are able to address the poorest sectors of society in ways that remain commercially viable.
  • The Structure of Financial Services in Emerging Markets. We explored alternative paths to economic development and sought to identify and assess the impact of alternative regulatory and institutional environments, as well as the relationships between local and national banking models, “national champions” and state-owned monopolies, and international financial services providers in development strategy.

Three research memoranda on these themes were commissioned for the research mission. Click here to download “Financial Inclusion: Financial Services for the Unbanked” by Shunko Rojas, S.J.D. Candidate, Harvard Law School. Click here to download “Productive Financial Services in Emerging Markets,” by Ermal Frasheri, S.J.D. Candidate, Harvard Law School.  To read “Liquidity and Capital as Legal Institutions: Transformations in the Global Monetary Architecture and Alternative Theories of Money,” please send a request by email to the author, Nadav Orian Peer, S.J.D. Candidate, Harvard Law School.

During the mission, the participants held discussions with with colleagues and experts from the region, including:

  • Ms. Jiranan Pupat, Senior Vice President, Central Food Retail Company Limited

The Central Group is a family-owned business that is expanding. Participants interviewed Mr. Pupat about the pressures that the Central Group faced during the financial crisis of the 1990s, as well as those it faces today, and whether it has opened an opportunity for expansion. They examined the reasons for and challenges in expanding internationally, particularly in markets like Europe, and to what extent the government of Thailand facilitated this expansion.

  • Mr. Bandit Sotthipalarit, President of Islamic Bank of Thailand

The introduction of Islamic banking in Thailand is relatively recent. Mr. Bandit Sotthipalarit provided his overall assessment of the Islamic Bank of Thailand (IBT) after 10 years of operation. In particular, he elaborated on the challenges that the IBT faces relating to the Muslim population in Thailand, which is a minority (about 10%) that mostly lives in the poorest provinces of Thailand, which are also agricultural areas. They discussed the goals of the IBT and the reasons behind its success.

  • Mr. Yongyut Tariyo, Senior Executive Vice President, Government Savings Bank

Government Saving Bank (GSB) is the commercial bank wholly owned by government. The bank’s mission is to bring optimum benefits to Thais especially those who are in the grass roots level. The group discussed the  role of government intervention in stimulating savings and deposits in GSB, lessons learned from the National Village, People’s Bank, Asset Capitalization, and People’s Debt Restructuring programs.

  • Dr. Pansak Vinyaratn, Chief Policy Advisor of the Prime Minister of Thailand, Yingluck Shinawatra

Mr. Vinyaratn is a policy advisor to Prime Minister Yingluck Shinawatra (elected July 2011). He was previously an advisor to her brother, PM Thaksin Shinawatra (2001-2006), who was removed from office in the 2006 coup d’etat.  The group discussed three topics: (i) the set of economic policies taken by the administration of PM Thaksin Shinawatra; (ii) the ASEAN economic community and; (iii) Thailand’s regulation of capital flows during recent years.

  • Mr. Pornchai Prasertsintanah, Managing Director, Credit Suisse Securities (Thailand) Limited

The group  discussed the relationship between large foreign banks and development strategies in emerging markets; the type of regional integration model that the ASEAN is trying to emulate or create with regard to the liberalization of capital markets and movement; and the predisposition of large foreign banks in financing domestic actors.

  • Mr. Natee Khlibtong, Chief Executive Officer and Secretary-General, National Village and Urban Community Fund Office

The Village and Urban Revolving Fund (VRF) was established in 2001 by the Thaksin administration. It aimed to provide a million baht (at the time, about $22,500) to every village and urban community in Thailand as working capital for locally-run rotating credit associations. The group discussed Thailand’s experience with the VRF: what institutions dispersed the funds, what types of projects did the fund come to finance, whether the program is considered a success, and what lessons have been drawn from it. They also discussed how the VRF was conducted with respect to professional training to borrowers, whether the VRF helped to mitigate the problem of agricultural credit seasonality, and whether the Thai villages could be described as liquidity scarce.

  • Dr. Vorapol Socatiyanurak, Secretary-General, Securities and Exchange Commission, Thailand

The group interviewed Dr. Socatiyanurak on three topics: the SME bond project, the Asian bond market initiative, and the recent use of securities regulation as part of the Thai government’s capital account policy.

The SME bond project: The SMEs bond project was announced “to promote another fundraising channel and capital market knowledge for small and medium-sized businesses (SMEs).” According to the Thai SEC website, “The participants of this project will receive privileges, such as lower credit rating fee and discount on registration admission fee.”

Asian Bond Market Initiative (ABMI): ABMI is intended to encourage the issuance of bonds denominated in the local currency. One of the main purposes of ABMI is to reduce Asian countries’ reliance on credit denominated in foreign exchange. Such reliance gives rise to currency mismatches — in which revenues are denominated in the domestic unit of account, and obligations in a foreign one — and make the local economy vulnerable to shocks to the short-term external debt. The establishment of a robust Asian bond market requires a series of institutional reforms. Many of those reforms are at the level of securities regulation: revising secured transactions law in various contexts; creating legal frameworks, special liquidity facilities and trading systems for market makers (“broker-dealers”) for government and private bonds; standardization of bond issues, and more. Such reforms are part of the effort to create deep and liquid secondary markets in securities.

Securities law and capital account regulations: The group also discussed the recent developments in securities regulations, undertaken as part of the policy to prevent an undesired appreciation of the baht. These developments included certain relaxations of the restrictions on Thai investors from investing in foreign securities. They also included a relaxation of the restrictions on various forms of financial activities, required to hedge positions in foreign markets. Capital outflows were encouraged in order to reduce the upward pressure on the baht.

  • Mr. Krirk Vanikkul, Deputy Governor, Financial Institutions Stability, Bank of Thailand

The group discussed the importance of the regulatory treatment of microcredit and mobile banking for shaping their future development in Thailand. The regulatory position is important with respect to a host of legal contexts, including the following: integration into the payment system; a license to issue deposits; liquidity arrangements with the central bank and an alternative approach to capital requirements, that would take into account the uncollateralized nature of microcredit loans. In the case of mobile banking, the regulatory position towards holdings of (“real”) telecommunications activity and banking activity in the same holding structure is also of importance. They discussed the position of the BoT with respect to the Thaksin administration’s Policies that encourage banks to expand credit in ways that might be detrimental to lending standards and banking sector stability. They also discussed the policy rationals for the high foreign exchange reserve levels in Thailand.

During the final day of the research mission, the group participated in a roundtable discussion hosted by Professor Dr. Sakda Thanitcul, Dean of the Faculty of Law at Chulalongkorn University.

Our objective was to create an opportunity for scholars from different research institutions to exchange information about their current research projects and to be exposed to initiatives developed outside the legal academy, which might be a source of inspiration for future joint research.

The mission was generously hosted in Bangkok by the Faculty of Law at Chulalongkorn University through their Center for Global Law and Policy (CGLP).

Kerry Rittich, David Kennedy, Lau Masha and a representative from the Government Bank of Thailand.

Photos from the Research Mission and Workshop 

Participants in the research mission and workshop included:

  • John Barry, Head of Government Affairs, APCEMEA, Visa Inc.
  • Gabriel Davel, Director of Financial Inclusion Policy at the Alliance for Financial Inclusion, Bangkok, Thailand
  • Ermal Frasheri, S.J.D. candidate, Harvard Law School
  • David Kennedy, Manley O. Hudson Professor of Law & Director, Institute for Global Law & Policy, Harvard Law School
  • Lawrence Kego Masha, Partner at Ishengoma, Karume, Masha & Magai Advocates (IMMMA), Dar es Salaam, Tanzania
  • Scott Newton, Lecturer in Laws of Central Asia, SOAS, University of London
  • Nadav Orian Peer, S.J.D. candidate, Harvard Law School
  • Kanich Punyashthiti, Vice Dean for Foreign Affairs of the Faculty of Law, Chulalongkorn University
  • Kerry Rittich, Professor, Faculty of Law, Women and Gender Studies Institute and the School of Public Policy and Governance, University of Toronto
  • Shunko Rojas, S.J.D. candidate, Harvard Law School
  • Surakiart Sathirathai, Former Deputy Prime Minister, Foreign Minister and Finance Minister, Thailand
  • The Honorable Nicholas John Sherry, Former Labor Senator of Tasmania, Australia
  • Leopold Specht, Specht Rechtanwalt GmbH, Vienna, Austria
  • Erin Pham Steinhauer, Head, Corporate Responsibility, Asia Pacific, Central Europe, Middle East and Africa, Visa Inc., Singapore

Thai participants in the roundtable discussion at Chulalongkorn University included:

  • Ms. Nawaporn Maharagkaga, Senior Director, Financial Institute Strategy Department, Bank of Thailand
  • Mr. Enghug Nontikarn, Senior Executive Vice President, Thanachart Bank
  • Ms. Aweeon Hornoparat, Global Business Development Strategy Specialist, Kasikorn Bank
  • Ms. Suvilai Winaruksawongse, Vice President and Executive Officer, Planning and Budgeting Department, Krung Thai Bank
  • Ms. Sunisa Salahmad, Assistant Vice President, Asset and Liability Management Department, Krung Thai Bank
  • Mr. Prasook Juntason, Vice President and Executive Officer, Market Risk Management Department, Krung Thai Bank
  • Ms. Parichatara L. Siriwong, Executive Vice President, Small and Medium Enterprise Develpoment Bank of Thailand
  • Ms. Tanya Sornsilp, Plan and Policy Analysis, The Officer of National Economic and Social Development Board
  • Ms. Sawanrat Jitkasemsumran, Plan and Policy Analysis, The Officer of National Economic and Social Development Board
  • Dr. Benjarong Suwankiri, Team Head of Thai Military Bank Analysis
  • Mr. Charaewat Kunasuteerat, Team Head of Bank for Agriculture and Agricultural Cooperatives
  • Mrs. Samanee Mahattanasomboon, Assistant Director, Community Organization Development Institute
  • Dr. Visanu Vonsinsirikul, Director of Dhurakij Pundit University’s ASEAN Community Preparation Centre
  • Prof. Dr. Sompong Sucharitkul, Dean, Faculty of Law, Rangsit University
  • Mr. Somkid Boonlonlear, Director of Asean Cooperation Division, Fiscal Policy Officer
  • Ms. Benyapa Sukeenu, Economist, Fiscal Policy Officer
  • Ms. Boontaree Kositanurit, Senior Economist, Fiscal Policy Officer
  • Mr. Uaychai Khuhakarn, Dean, Faculty of Law, Huachiew Chalermprahiet University
  • Ms. Parada Kaewparadai, Lecturer, School of Law, Bangkok University
  • Ms. Pichayaporn Seangpoowong, Lecturer, School of Law, Bangkok University
  • Ms. Vareeya Yeukprasert, Lecturer, Faculty of Law, Bangkok University
  • Assistant Prof. Dr. Sukanda Lewis, Director of the Masters Program in Economics, Faculty of Economics, Chulalongkorn University

The IGLP is particularly grateful to Visa International, the Lead Sponsor of our Program on Global Financial Regulation and this research mission; Chulalongkorn University and  its Center for Global Law and Policy (CGLP) for hosting the roundtable and meetings; and Dr. Surakiart Sathirathai and the Saranrom Institute of Foreign Affairs for their oversight and support.