Thai mutual fund companies’ assets under management doubled to 1.53 trillion baht (US$45 billion) in the past five years with government incentives and as investors turn to stocks after interest rates fell. The number of investment companies increased to 21 last year from 14 in 2003, according to the data on the trade group’s website.

“The new agency will improve supervision because mutual fund companies have better knowledge of which players are outside the rules,” Voravan said. “The SEC has probably been slow in chasing those because it has many other areas such as stocks, bonds and derivatives markets to look after.”

Thai investors still have most of their money in commercial banks, which are guaranteed by the government, Voravan said. Thai banks’ deposits totaled 9.55 trillion baht as of May, an increase from 9.2 trillion at the end of last year, according to the Bank of Thailand.

Self regulation

The association has sent its members to countries such as Australia and Malaysia to study self-regulatory frameworks for the industry, Voravan said.

The Securities and Exchange Commission, the country’s capital markets regulator, has been working closely with mutual fund companies to create the new agency, said Charuphan Intararoong, the SEC’s spokeswoman.

“Self regulation in the other countries has played a significant role in overseeing the fair play of mutual fund industry,” Charuphan said. “They help develop and improve the industry supervision because their codes of conduct and punishment practices are better accepted among the members.”

Source: Bloomberg