Market listings of subsidiaries to be encouraged

STATE ENTERPRISES

Subsidiaries of state enterprises will be encouraged to list on the Stock Exchange of Thailand next year to add value to state enterprises, as well as spur the capital market, says the State Enterprise Policy Office (SEPO).

Focusing on subsidiaries could also reduce the risk of further confrontations with state enterprise labour unions, said Supa Piyajitti, the SEPO director-general.

Previous efforts by various governments to list or partially privatise state enterprises have been bitterly opposed by the unions, which see a threat to members' jobs and benefits.

The most high-profile recent attempt involved the Electricity Generating Authority of Thailand (Egat), which was one day away from making an initial public offering in 2005 when the Administrative Court halted the process.

This year, the State Railway of Thailand has been hit by strikes as workers fear the government intends to privatise it as a partial solution to resolving massive debts and improving its performance.

"The listing plan for subsidiaries of state enterprises, be it for those of water utilities, power and the state railway, would help create added value to state enterprises," Ms Supa said.

"As well, we believe this method would help reduce pressure from resistance from labour unions as subsidiaries' activities are mostly not the core businesses of state enterprises."

To further improve the capability of state enterprises, Ms Supa said SEPO planned next year to push three state enterprises - Thailand Tobacco Monopoly, the Liquor Distillery Organisation, and the Playing Card Factory - to become juristic persons to improve management flexibility and reduce obstacles to operations.

State enterprises, she says, should play a crucial role in improving the country's declining competitiveness, particularly in infrastructure efficiency.

"Next year, one of SEPO's priorities is to promote state enterprises, particularly in the transport sector to speed up their investments in projects such as double-track rail routes, inter-city high-speed trains and Bangkok's mass transit system particularly the Red Line (26 km from Bang Sue in Bangkok to Rangsit in Pathum Thani)," she said.