tarisa watanagase : creating sustainable financial inclusion welcome remarks by dr tarisa watanagase, governor of the bank of thailand, at 1st afi start - up committee meeting, bangkok, 10 july 2009. * * * deputy governor, director - general, dr. hannig, colleagues, it is a pleasure to welcome all of you to bangkok, which for some of you, i know is a long way from home. thank you for making such an effort to be here. i cannot tell you enough how much your presence and participation in this meeting is appreciated. though we have work to do this morning, i hope that you will also have a chance to enjoy your stay in bangkok, including our sight - seeing tour this afternoon. at the afi public announcement back in april where president babatz and i had a chance to address the meeting as members of our start - up committee, i was delighted to see the kind of positive response and enthusiasm shown by policy makers from a broad spectrum of countries. many of whom, i learned, have decided to jump on board with us, making afi membership grow to more than fifty countries, worldwide. this only confirms that among many agenda laid on the table in international policy forums today, financial inclusion is the one agenda that we can all agree and give our full support to. as i said in that meeting, there are challenges ahead that, together, we must address in a cooperative manner, namely creating sustainable financial inclusion and ensuring the linkage between greater financial access and improvement in wellbeing. please allow me to offer my initial thoughts on the subject. with wellbeing as the ultimate goal of policy makers, many policy building blocks need to be woven together. examples include policies on career development, education, macroeconomic stability and so on. while these policies do not necessarily fall under the mandates of financial regulators, efforts should be made to ensure that policy directions of all relevant institutions, government and private, are aligned. closer to our hearts though, are policies that aim to improve the poor ’ s capacity to be financially included. in this regard, i believe that there must be at least three key policy ingredients, namely financial access, financial literacy and consumer protection. first, for access, there is a need to ensure that the range of basic financial services provided can address financial needs of the poor in all important aspects of their lives. for instance, we need to consider an “ inclusive package ” of credits, savings, transfers, and insurance that

group that aims at promoting governance and improving the distribution of economic opportunity. the amended securities and exchange act, which was effective since december last year, would boost governance in the capital market. in particular, enforcement mechanism to punish market misconduct will be more effective. the law expands coverage of wrongdoings and seals several loopholes of the previous law to prevent malpractices including front - running of client orders and usage of insider information. moreover, a perpetrator is no longer subjected to only criminal punishment, but is also responsible for civil liability, which makes the punishment process more efficient. overall, with this revision, investors should expect the thai capital market to have better governance and fairer trading environment. another sector undergoing significant governance upgrade is the state - owned enterprises or soes in short. it is important to acknowledge that soes are the driving force behind several strategic sectors of the thai economy, including energy, transportation, and telecommunication – with a total annual spending budget twice that of the central government. there is no denying that improving the governance of the soes will lead to more efficient resource allocation in many sectors. on the other hand, not doing so may lead to greater contingent liabilities for the government and higher costs of doing business in thailand. one key challenge with the current soe system lies in its complex governing structure that is prone to conflicts of interest. this is because government agencies or senior government officials involved with soes often assume multiple, and at time, conflicting roles – namely, the roles of policymaker, regulator, operator, and owner. the bill on the governance of the state - owned enterprises aims to tackle this problem head on ; it sets forth principles that dismantle these roles into separate governing entities. going forward, operation of the soes will be supervised by the state enterprise policy committee, who will also set the soes ’ five - year strategic plans. a separate entity – the holding corporation – will be established to act as the owner of incorporated soes to ensure long - term competitiveness and financial viability. furthermore, operation of soes will become more transparent with a better check and balance system. the bottom line is, this new law will lay a path for structural changes in the governance, the management, and hence the performance of the soes going forward. the new governing structure will also be more immune to political intervention. note that, while this new legislation on soes is expected to be effective in the coming year, some soe reform initiatives