InfoQuest News Agency (31 July 2023)
Kasikorn Research Center stated that in Thailand, the value of the issuance of financial products for sustainability continues to grow steadily. This was caused by the issuance of debt instruments. Government Sustainability Bonds to be used in projects to heal and recover the economy from the COVID-19 outbreak, followed by the issuance of Sustainability Finance products in the Green and Sustainability-Linked categories. as well as abroad
For the first half of 2023, the issuance of sustainable finance products is worth US$ 2.4 billion. 108% higher than the same period last year, mainly from the government’s issuance of Sustainability Bonds.
While during the remainder of 2023, the Kasikorn Research Center It is expected that the launch of financial products for sustainability chances are lower than the previous year due to political instability As a result, government investment and investment decisions of the private sector slowed down.
However, when a new government was formed And various investment projects can go forward under the policy to promote the reduction of greenhouse gas emissions (GHG) in various dimensions, including the awareness of the private sector. It would be an opportunity to come back to see activities in the development of financial products for sustainability that are more active.
Sustainability finance challenges in Thailand
1. Sustainability finance products are less attractive
Kasikorn Research Center viewed that Thailand’s sustainable finance market still has low liquidity. And most of them are issuing debt securities by the government sector. While investors are more interested in renewable energy projects from the private sector. As a result, sustainability finance products are less attractive.
The proportion of the value of sustainability finance issuance in 2022 is 1.7% of the total value of debt securities in the country. Compared to the global share of 6.6%, while most of the issuance of sustainable debt securities. from government agencies, including the Ministry of Finance, state enterprises, and specialized financial institutions which uses government operations such as payment for relief from the spread of COVID-19 Eua Arthorn House, etc., which accounts for 58% of the issuance of sustainable financial products in the country in 2020 – 2023, while investors are interested in investing in renewable energy projects and environmentally friendly transportation such as electric trains.
2. Complex bond offering process and has a higher cost of issuing than normal debt instruments
in issuing debt securities for sustainability There will be additional processes to be taken, such as determining the purpose of the use of funds in a given project. annual performance reports, etc., including having to be certified by an external verifier, which will incur additional costs.
However, the Securities and Exchange Commission (SEC) waives the application fee for sustainability bonds, including ThaiBMA and the Capital Market Development Fund (CMDF). There are measures to support such expenses to date. on June 30, 2024
3. Benefits from issuing debt securities for sustainability Slightly higher than normal bonds Not worth the additional process and cost of issuing.
Overseas Sustainable Bond The credit spread is 15 – 20 bps lower than normal bonds, while Thailand’s yield spread is only 10 bps lower. and the period for obtaining permission to offer bonds for sustainability It is not different from the issuance of normal debt instruments, causing the borrower to choose to issue more normal financial products.
4. Lack of projects that meet the objectives and clear regulations for issuing sustainability bonds
A survey of the Thai green bond market by the Asian Development Bank on factors that hinder investing in green bonds, with 38% agreeing that there are few projects that are suitable and interested in investing, and 20% do not see clear benefits during investment. Invest in regular bonds
However, Kasikorn Research Center views that there are still factors supporting finance for sustainability in Thailand as follows:
1. The Financial Sector Regulatory Authority has issued the 1st edition of the Thailand Taxonomy to categorize activities that meet environmental targets. This will make it easier to organize activities to request sustainable financial products.
2. National Greenhouse Gas Emission Reduction Plan Achieving net zero greenhouse gas emissions by 2065 will encourage greater investment in sustainability.
3. Government support and large investors It plays an important role in promoting sustainable financial markets, such as exemption or reduction of investment tax. interest expense support Reducing the approval period, etc., will help issuers see the benefits of turning to more sustainable financial products.
Kasikorn Research Center stated that although the above actions It will promote sustainable finance in the early stages to become more popular. But it also has to take into account the limitations of sustainable operations of small and medium-sized businesses like SMEs, which may rely on other financing mechanisms, such as low-cost funding support. Including a mechanism to guarantee credit from the government through commercial banks.
It may start with the change to use clean energy. or renewable energy which must be carried out in conjunction with providing knowledge and understanding of sustainability practices Providing entrepreneurs with information that can be used to make business decisions, such as measuring the footprint and reducing greenhouse gas emissions technology, etc., which will help make the transition towards sustainability goals more efficient, continuous and smoother.
By Kasamaporn Kittisamphan/Ratchada Khongkhuntien
2023-07-31 05:28:17
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