Govt turns eyes to list SEs' subsidiaries

The government is pushing for the listing of state enterprises' subsidiaries next year in the further move to boost the Thai exchange's attractiveness.

The move is seen as the government's attempt to boost the market without causing resistance, which would be the case if the enterprises are directly privatised.

The plan is part of the capital market development plan endorsed recently by the Cabinet, said a source from the Finance Ministry. The ministry is assigned to discuss with respective ministries overseeing potential state enterprises, over the listing of the state enterprises' subsidiaries or those with government concessions. Then, the listing rules will be amended during late this year and early next year to accommodate the listing. The listing process is expected to start in the first quarter next year.

Electricity Generating Authority of Thailand which faced strong resistance for privatisation recently set up Egat International for overseas investment. The State Railway of Thailand will also set up a subsidiary to run the Airport Rail Link.

In the third quarter, the Finance Ministry also launched a discussion with the Stock Exchange of Thailand over the share offering and categorisation of target companies.

"Few state enterprises are now listed on the market, because of resistance from the labour unions. At this time, we need to communicate with them, to assure them that the privatisation is not equivalent to the government's asset sale. However, privatisation is meant to boost the state enterprises' efficiency. Yet, we will start with the listing of their subsidiaries," the source said.

Aside from state enterprises' subsidiaries, the government is eying to list mega projects. It will be decided which project, particularly in the transportation sector, has potential to raise funds in the exchange. This will reduce the government expenditure and boost management flexibility, he added.

"The listing of state enterprises' subsidiaries will boost the number of products on the exchange and increase the market's capitalisation, as a way to draw more foreign investment. This would also help reduce the government's financial burden incurring from loan guarantees," the source stressed.

According to the source, under the market development plan, the infrastructure fund will be launched as well as annuity products and interest rate futures. Under study is the rules to accommodate the Islamic way of fund raising and venture capital companies.

Prime Minister Abhisit Vejjajiva said last week that under the Capital Market Development plan between 2010 to 2014, SET's market capitalisation should increase from 80 per cent to 130 per cent of the Kingdom's GDP. The accessibility rate of public participation in the market should rise from 2.4 per cent to 5 per cent, while a wide variety of products should be introduced.