Harmony via sufficiency economy
Striking a balance between the profit motive and sustainable development are at the heart of the late King’s developmental approach, write Darana Chudasri and Nuntawun Polkuamdee
Capitalism has been the mantra driving many stages of Thailand’s development in recent decades. But the ideal of maximising profit and unrestrained wealth accumulation has been kept in check by the late King Bhumibol’s sufficiency economy philosophy, where long-term sustainability and good governance are core maxims applied as practical business guidelines.
Some may wonder how the concept of a sufficiency economy can practically be applied to the business sphere, which has long been associated with profit-making.
But constant challenges in the global financial markets have shown that the late King’s principle of sustainable development is more relevant than ever in the context of establishing ethical values for longterm development.
PRACTICAL VALUES
“It is fortunate that Thailand values the late King’s sufficiency economy philosophy, which consists of three key components: moderation, reasonableness and self-immunity, based on knowledge and ethics,” said the Stock Exchange of Thailand (SET) president Kesara Manchusree.
Businesses can operate prudently and cope with all types of changes and obstacles sustainably under this rubric.
These values work perfectly for any organisation, including the SET, particularly in regards to the bourse’s Corporate Governance Master Plan and risk management, said Mrs Kesara.
“This enables companies’ business operations to be conducted in a reasonable manner, fixing weaknesses and boosting strengths, while the management can implement policy-based decisions aiming for long-term immunity rather than short-term profits,” she said.
“Embracing the sufficiency economy philosophy, the SET is following the path of moderation, reasonableness and self-immunity, while enhancing all Thai companies to conduct business with a keen sense of responsibility and ethical conduct.”
Listed companies have been urged to consider the best interests of their stakeholders as well as adhering to sustainability principles to safeguard the balance of the environment, society and governance in all dimensions, along with finding balance in the use of material resources.
“The Asian financial crisis was a big lesson for the country and business sector in realising the importance of risk management and preparedness in resources and work systems to cope with crises and change, as well as disasters that may cause disruptions to businesses, both directly and indirectly,” said Mrs Kesara.
“It is crucial that operations can continue in an efficient and prudential manner. As the late King’s philosophy points out, one needs to have immunity and efficiently manage risks.”
She said the SET has worked hard to make sure all members, executives and staff alike, are aware of what constitutes risks and how to deal with them. “We have monitored all relevant risk indicators and conducted risk assessments for efficient risk management. All of these efforts are [examples] of how the sufficiency economy philosophy is implemented to really good effect,” said Mrs Kesara.
She said the SET has actively encouraged listed Thai companies to embrace the late King’s philosophy in recognition of its myriad benefits.
“Thai firms and their boards of directors have been nudged into achieving good governance,” said Mrs Kesara.
“Moreover, we support the Thai Institute of Directors Association in conducting corporate governance reports for listed Thai companies. This annual report is useful as it keeps listed companies focused on corporate governance.
“I would like to point out that if one embraces the late King’s sufficiency economy philosophy, one will definitely enjoy self-reliance, credibility and sustainability.
“As the philosophy benefits the SET and listed Thai companies, it also contributes to the [overall] Thai economy.”
DEBT-FREE GROWTH
Business conduct based on the corporate governance principle is important as it centres on ethical standards applied to consumers, business partners, society and the environment.
This approach in turn gives long-term credibility and sustainability to a company, said Pichaet Wiriyachitra, chief executive at MAI-listed Asian Phytoceuticals Plc (APCO).
The company produces dietary supplements, cosmetics and personal care products made from natural plants and botanical extracts.
“APCO has also teamed up with anti-corruption organisations to stand by its virtuous principle of ethical business conduct,” said Mr Pichaet.
For risk management, the company is cautious in refraining from engaging or investing in anything that carries a lot of risks, he said.
Though the company has been investing since its inception in healthcare R&D, APCO has never encountered any debt problems, said Mr Pichaet.
The company uses its own accumulated profits for investment, currently valued at 400 million baht. This investment amount is sufficient for both business expansion and R&D.
“The debt-free condition has made the company’s business growth slow at some points, but [our business] has long-term stability and sustainability,” he said.
FINANCIAL SECURITY
Capitalism has been institutionalised as the main course for production and finance around the globe, with Thailand among the nations embracing such an economic system.
Voravan Tharapoom, chairman of the executive board at BBL Asset Management Co Ltd (BBLAM), said fund management companies have undertaken the capitalist approach and BBLAM is among them.
“But we have always used the sufficiency [economy] philosophy of the late King for our work,” said Mrs Voravan.
She said the late King’s philosophy is fundamental for Thais to survive in the midst of globalisation, capitalism and liberalism, where “big fish eat little fish”.
“When issuing a [financial] product or offering an investment fund, we consider the investors as our primary group, so we can offer [financial] products that are suitable for all ages and provide product knowledge through our sales representatives,” said Mrs Voravan.
“The key performance index for us and our sales representatives is not as important as making a customer succeed in his investment, whereby the money is earned from accumulated savings and vigorous work.”
This business approach is in line with the late King’s sufficiency economy philosophy, whereby the success of the company rests on customers’ successful long-term investment plans, she said.
“We have also set a mission reflecting our core principles. Such a mission is to make Thai families financially secure,” said Mrs Voravan.
“We have made our clients self-sufficient by learning how to determine their financial goals, create their own portfolios and balance the proportion of their investments in different types of assets.”
When families are financially stable, society will become more contented, she said. Such an ideal is built from the microeconomic stage and expands to the macroeconomic level, said Mrs Voravan.
If one embraces the late King’s sufficiency economy philosophy, one will definitely enjoy self-reliance, credibility and sustainability. KESARA MANCHUSREE President, Stock Exchange of Thailand