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Thai companies aim to raise B15bn this year
SOMRUEDI BANCHONGDUANG
Several major Thai property developers are gearing up to issue up to 15 billion baht worth of Sukuk bonds this year, according to Dheerasak Suwannayos, an adviser to Krung Thai Asset Management.
Mr Dheerasak, a former chairman of the Islamic Bank of Thailand, said three large developers were now considering launching an Islamic property fund focused on attracting Middle Eastern investors.
The Islamic bonds would raise around five billion baht for each company, and was expected to be launched this year.
Middle Eastern investors have sharply increased their financing activities as the sharp rise in global oil prices has led to ''petrodollars'' flooding the market.
For issuers, the benefit of the so-called Sukuk bonds is lower funding costs, at around a quarter of a percentage point over similarly dated conventional debentures. Mr Dheerasak said demand and liquidity were driving growth in Islamic financing in Asia. He noted that the Industrial Bank of Japan and the Chinese government were both expected to raise $600 million each through the issue of Islamic debt instruments this year.
Islamic law prohibits the payment of interest. Sukuk instruments refer to financial assets that are structured in accordance with the Islamic law.
Financial experts from HSBC, PricewaterhouseCoopers, the Asian Development Bank and Zaid Ibrahim Law Office yesterday met in Bangkok to discuss growth opportunities in the Islamic finance market.
Mr Dheerasak said Islamic financing was a good option for authorities to consider for financing the country's infrastructure megaprojects.
''It's certainly an opportunity for Thailand now to tap into this market. But I think the private sector has an even greater opportunity to offer Islamic bonds, considering the government's policies and regulations,'' he said.
Pongpanu Svetarundra, the director-general of the Finance Ministry's Public Debt Management Office, said state enterprises such as the Electricity Generating Authority of Thailand or Thai Airways International could float Islamic bonds as early as the next fiscal year.
But a Sukuk issue by the Thai government could only be made after legal amendments were made with regards to the transfer of state property and tax obstacles were addressed, he said.
''Certainly the Islamic capital market is an attractive funding source, considering Thailand's plans to raise massive funds to finance the megaprojects,'' Mr Pongpanu said.
The government plans to invest up to 1.75 trillion baht in new mass transit, logistics, power and social service facilities over the next five years, with 500 billion planned for fiscal 2009 starting October.
Mohammad Faiz Azmi, a partner with consultancy PricewaterhouseCoopers, said the Islamic financial market offered opportunities for investors around the world.
Investors could diversify their funding sources and investment risk by tapping the Islamic market, he said, a key point considering the recent volatility in the global financial markets.
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