New fund proposed to manage stocks held by Finance Ministry

INVESTING

The State Enterprise Policy Office has proposed establishing a new fund to help manage the more than 785 billion baht worth of stocks held by the Finance Ministry.

Supa Piyajitti, the SEPO director-general, said the concept of managing the ministry's stock portfolio through a fund was outlined in a new draft law aimed at setting a framework for the regulating and developing state enterprises. It is currently being reviewed by Finance Minister Korn Chatikavanij.

Current law imposes a number of restrictions on policymakers in managing the ministry's portfolio. The rules were drafted decades ago and reflected fears that the government would negatively affect the market or the public interest if it actively traded in the exchange.

For the most part, the ministry relies on outside experts to manage its shareholdings, including asset management firms such as MFC Asset Management or Krungthai Asset Management in the oversight of the Vayupak Fund. The fund was established in late 2003 by the Finance Ministry as a 10-year flexible fund holding stocks such as PTT, Thai Airways International, Krung Thai Bank and Siam Commercial Bank.

The Finance Ministry's investment portfolio includes both listed and non-listed companies, ranging from majority shareholdings in listed state enterprises such as Krung Thai Bank to minority stakes in non-listed firms.

The ministry's total portfolio has a par value of 297 billion baht and a current market value of 785 billion, and includes 50 billion baht worth of stock held in private companies and another 70 billion held through the Vayupak Fund.

Ms Supa added that the ministry expected to complete a new set of regulations for personal investment by government officials by early 2010.

The rules would cover personal investment by bureaucrats if they were directors of listed companies, cases where explicit permission by supervisors is required, such as serving as an adviser to a private firm, and disclosure regulations.

She said the ministry may restrict share purchases for officials serving as company directors to guard against conflicts of interest. The regulations will cover officials at the C-9 level or higher, covering deputy directors-general, department directors and higher positions.

Officials working at SEPO, the Fiscal Policy Office or other agencies may also face specific restrictions to safeguard against the use of privileged government information. SEPO officials, for instance, may be prohibited from trading in listed state enterprise shares, while FPO executives could be prohibited from investing in financial institutions to eliminate conflicts with their own regulatory duties.