Opening Remarks
Bangkok Sustainable Banking Forum 2018
Veerathai Santiprabhob, Governor of the Bank of Thailand
Monday, 23 July 2018
Bank of Thailand
Distinguished guests,
Ladies and gentlemen,
A very good morning to you all.
I am delighted to welcome all of you to the Bank of Thailand for
our very first Bangkok Sustainable Banking Forum. This forum aims to
enhance greater awareness of sustainability practice in finance by
bringing together leaders in the area of sustainability, showcasing
best practices and efforts taken by participants from the financial
sector, and identifying areas we can improve. This event is a part of a
series of conferences organized throughout this year to
commemorate the 75th Anniversary of the Bank of Thailand.
Ladies and gentlemen,
In 1987 the United Nations first defined sustainability or
sustainable development as "development that meets the needs of
the present without compromising the ability of future generations
to meet their own needs1." Since then, this concept has served as a
guiding principle for various long-term global development agendas.
Yet, the principal ideas of sustainability, especially of moderation,
responsibility and maintaining long-term focus, hardly takes the
center stage in popular media, most notably in the economic and
financial headlines-where we often focus our narratives on
shortterm indicators, like GDP growth, shareholders' earnings, stock
prices, or bonus paychecks. Whatever it takes today to maximize
these short-term indicators is believed to be the best course of
action. We often forget that our short-sighted actions also dictate
and impact the path for our long-term development and well-being.
We at the Bank of Thailand believe in the pursuit of
sustainability, that it can be achieved if we maintain our focus on
long-term goals. The past year we have seen many welcoming
developments in our financial sector. These include,
First, a number of measures were introduced to improve
financial institutions' responsibility, such as regulations on credit
cards and personal loans to address the issue of household debt,
new regulatory framework on market conduct, regulations to
enhance financial institution's corporate governance, and a new
code of conduct for banks developed by the banking community;
Second, the debt clinic was set up to facilitate multi-creditor
debt settlement for indebted individuals so that they can exit from
the state of perpetual debt distress; and
Third, a number of key financial infrastructures were
established to help promote financial inclusion and transition the
Thai economy towards the digital era. One in particular is the
introduction of PromptPay, which provides efficient access to
electronic payment at no cost and has served as a catalyst leading to
complete elimination of electronic fund transfer fee by banks.
These developments have contributed to efficiency
improvement in the financial system; wider access and affordability
of financial services, especially to those underserved; and mitigation
of the impacts of several long-term issues. Essentially, they help
ensure that our financial system can sustainably serve the well-being
of the Thai people.
Ladies and gentlemen,
Despite our progress, we should not settle for what we have
achieved thus far. Much more can be done and need to be done to
improve the sustainability of the Thai society as a number of
challenges remain. Some of which leave us to question our collective
actions as a society on how we allow these challenges to get out of
hand.
Allow me to highlight four challenges in particular:
First, despite a more broad-based economic growth and a
number of government policies targeting low income households,
Thailand remains among the world's most unequal countries in
terms of wealth, with the richest one percent owning more than half
of total household wealth2. Meanwhile, low financial literacy and
high household debt level continue to hamper the ability of
individuals to pursue new opportunities and secure long-term
financial security. These have curbed individual's chance to improve
her socio-economic status in the long-run. Essentially, widening
wealth and income inequality is a major contributor to the fragility of
the Thai society and is frequently used as an excuse to draw public
support for a number of costly and unsustainable populist policies.
Second, our labor productivity growth is moderating and
should be emphasized. As an aging society with declining labor force,
enhancing productivity is critical for the Thai economy to maintain
growth. And yet a number of public policies have focused on
creating short-term stimulus rather than on encouraging the
necessary adjustments to address long-term productivity issue.
Moreover, our educational standards have not been able to prop up
our low productivity level and lag behind in many important areas.
Without the necessary adjustment now raises the question of how
Thailand could maintain our competitiveness going forward.
Third, we have been too negligent on environmental and
ecological issues. As a large portion of the Thai population remains in
the agricultural sector and all of whom rely on quality natural
resources for food and income, preservation of environment and
natural resources should be our top priority. Our irresponsible
actions-from massive burning of fossil fuels to excessive use of
plastic containers-contributed to the overall deterioration of the
global environment. And, as we have observed, climate change has
resulted in increasing frequency as well as severity of natural
disasters. The painful experience of the great floods of 2011 should
be a case in point, as these floods were the result of rampant
deforestation, new developments blocking natural water ways, and
clogged drainage system from careless waste disposal.
Many other environmental issues continue to highlight our
negligence. These include a recent report detailing Thailand as the
new dumping ground for global electronic wastes; or the fact that
paraquat, a toxic herbicide (plant killer) banned in 48 countries
around the world, including our neighbors Cambodia, Laos and
Vietnam, is still widely distributed and used in Thailand3.
Fourth, entrenched corruption remains a major obstacle to
achieving long-term focus. Paying bribes and granting favors are
harmful practices that incur unnecessary costs and create distortions
in resource allocation. Distorted policies and actions aimed at
political or personal monetary gains can limit the ability of future
generations to meet their own needs. Despite years of
anticorruption campaigns, Thailand's level of corruption has been largely
unchanged4. In addition, practices in the financial sector have also
been the culprits of corruption. Insider trading, market manipulation,
money laundering, favoritism in credit decision, and misselling of
products are just some of the corruptive practices that have led
regulators, including the Bank of Thailand, to tighten our code of
conduct and market conduct supervision.
Ultimately, these challenges are byproducts of actions taken
without regard for moderation, responsibility, and long-term
consequences, and they should serve as a wake-up call for all of us.
For without a proper remedy, we would be transferring unfair
burden to future generations, thus impairing long-term sustainability
and prosperity.
How did we allow these challenges to get out of hand? That is
because we take for granted that someone else will step up to
resolve them when in fact they are our collective problems and our
collective responsibilities to take action.
Ladies and gentlemen,
Our financial sector can take the lead in making impactful
changes with regard to sustainability as all of us play key roles in
allocating one of the most important resources-that is the financial
resources. As stated earlier, a number of welcoming developments
are taking place in our financial sector. But, much more can be done
and need to be done to foster an ecosystem that promotes the
overall sustainability-that will discourage misallocation of
resources, limit corruptive practices, and help preserve our
environment.
Adoption of best practices in sustainability is not just about
making positive impacts to our society, but it can also be beneficial
to financial institutions in a number of ways.
First, it can help ensure long-term sustainability of financial
institutions themselves. Growing acceptance of sustainability
practices globally has encouraged new standards and practices and
raised the expectation of our society. Early adopters of sustainability
practices can meet society's ever-increasing expectation; take lead in
setting new industry standards; and make timely and necessary
adjustment to their business models. These sustainability practices
will help financial institutions mitigate strategic, operational, and
reputational risks.
Second, financial institutions can better attract and retain a
new generation of talents, especially the millennials, who are
increasingly more attracted to firms with sustainability and
philanthropic practices5. This is no surprise because these young
individuals are becoming more concerned of sustainability issues and
want to take part in making positive impacts. Therefore, firms with
strong sustainability values and practices can attract these talents by
offering the additional satisfaction beyond remuneration benefits.
Third, adoption of sustainability can help financial institutions
gain access to increasing pool of capitals, given the increasing
volume of funds and investment products based on sustainability
criteria. It is estimated that more than a quarter of assets under
management globally are now invested using the Environment,
Social, and Governance or ESG principles6.
Ladies and gentlemen,
It is now up to all of us-financial institutions, policymakers,
and leaders-to embrace sustainability and incorporate its guiding
principles in our daily lives and business practices.
The objective of the Bangkok Sustainable Banking Forum is to
raise awareness of the various issues of sustainability and identify
gaps within our financial sector. Seeing much enthusiasm from our
high-level participants this morning, I am certain we can make
positive changes for our future generations.
I would like to take this opportunity to thank all of you for
taking the time out of your busy schedules to be here with us. I
would also like to thank the speakers, some of whom have traveled
from different parts of the globe, for being here to share to with us
their insights and best practices.
Let me, once again, urge all of us to think wisely, maintain long-
term focus, and take responsible actions now so that in the next
decade we would not be standing here asking ourselves again how
we have allowed these challenges to get out of hand.
Ladies and gentlemen,
The Bank of Thailand looks forward to collaborating with all of
you on our sustainability journey.
Thank you very much for your participation.