Sovereign fund likely to be ready by 2015, says Ampon

Sovereign fund likely to be ready by 2015, says Ampon

The Bank of Thailand remains committed to moving ahead with plans to establish a sovereign wealth fund, pledging it will be up and running by 2015, says Ampon Kittiampon, the central bank's newly appointed chairman.

He said the fund is being studied by a working panel in order to make the best use of surplus foreign reserves and ease the government's burden for international borrowing to finance state spending.

But the fund should come with clear regulations, a good governance process and transparent working mechanisms, said Mr Ampon.

He insists such a foreign fund would not affect the portion contributed by donors.

At present, Thailand has an estimated US$160-170 billion in foreign reserves, said Mr Ampon.

The government and the central bank have tussled over the establishment of a sovereign wealth fund for years.

In 2011, then-finance minister Thirachai Phuvanatnaranubala asked the central bank to study the possibility of setting aside a portion of foreign reserves to set up one to invest in infrastructure projects abroad.

Mr Ampon did not provide any further information on the fund or its size, saying only that he will try his best to push for the fund's establishment during his tenure.

In a related development, Mr Ampon said he expects the economy will remain inactive next year, as he has reservations about the economic recovery in the US and EU.

Thailand must still closely monitor foreign capital inflows due to possible risks from any tapering of the US Federal Reserve's quantitative easing programme.

But Mr Ampon is bullish on prospects for private investment and foreign direct investment next year, with growth driven primarily by the government's 2-trillion-baht infrastructure and 350-billion-baht water management plans.

"Public and private investment will be the core engines boosting the economy next year," he said.

Mr Ampon received cabinet approval on Aug 6 to become the new chairman of the central bank, replacing Virabongsa Ramangkura.

Mr Ampon, 58, will serve the remainder of Mr Virabongsa's term, until May 2015.

Mr Virabongsa, who took over the post in June 2012, retired on July 31 after turning 70.

Mr Ampon earned a doctorate in economics from Clemson University in South Carolina and is a former secretary-general of the National Economic and Social Development Board.

He is currently a member of the central bank's Monetary Policy Committee (MPC), the chairman of Thai Airways International Plc and an independent director of PTT Exploration and Production Plc.

But Mr Ampon said he intends to resign from the MPC as soon as it finds someone to replace him.

He is non-committal about joining the MPC meeting scheduled for Oct 16, the first one to be held after the cabinet approved his new appointment.

Mr Ampon said even though the Bank of Thailand Act does not require the chairman to quit the MPC, for the sake of ethics he will do so.

"As chairman of the Bank of Thailand, I promise to foster confidence in the organisation and its independence," he said.

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