Jul. 21–Proposals aimed at encouraging the growth of venture capital funds would also benefit the Market for Alternative Investment (MAI) as well, according to Chanitr Charnchainarong, a director atVNET Venture Capital.
The Finance Ministry is currently considering proposals to ease capital gains taxes charged to venture funds selling off their investments outside of the capital market.
Other proposals would offer special income tax incentives for funds with long-term investments in small- and medium-sized enterprises (SMEs).
Mr Chanitr said the government was already giving support to SMEs through some five billion baht channelled through venture capital funds to invest in high-growth industries.
Some 260 million baht has already been invested in promising firms in the auto industry, with other industries such as food and exports are being considered.
But Mr Chanitr said stringent definitions of SME sizes was often a barrier to growth, as income tax incentives were lost once assets exceeded a set limit.
Venture capital funds also incurred capital gains taxes if they sold off their shares outside of the stock exchange.
“But revising the tax incentives and easing current rules on SMEs would help expand the opportunities for the companies to grow, as well as help venture capital funds more easily exit their investments,” he said.
“This in turn will help the overall economy in the long run.”
Sopawadee Lertmanaschai, chairwoman of the Capital Market Opportunity Center, a unit of the Stock Exchange of Thailand, agreed that extending tax incentives for SMEs and eliminating current asset limits would help small businesses to grow more easily as well as support the MAI.
The MAI was established specifically to cater to small businesses. Current regulations require MAI-listed firms to transfer to the main board once paid-up capital exceeds 200 million baht.
Ms Sopawadee said that the exchange would allow listed firms to decide on their own whether they wished to transfer to the main board.
She said the MAI was expected to double in market capitalisation to six billion baht by year-end, with 30 newly listed companies entering the exchange in 2003. Companies in the fashion, furniture, jewelry and decorative industries were ideal candidates to seek listing.
The MAI currently has eight listed firms, with average daily turnover of about 150 million baht.
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(c) 2003, Bangkok Post, Thailand. Distributed by Knight Ridder/Tribune Business News.
