Move comes as Korn takes another step to balance the 2016 budget
Another piece has been placed in the jigsaw to help the government achieve a balanced budget in 2016, with Cabinet’s approval yesterday for the Finance Ministry to divest its stakes in over 60 non-listed private companies – including Boon Rawd Brewery and Bangkok Broadcasting Television (BBTV).
Eligible for the divestiture are companies acquired under asset seizure and transfer from other government units, and companies deemed unnecessary for economic development.
Finance Minister Korn Chatikavanij said there was a long list of such companies – including Boon Rawd, in which the ministry owns 5 per cent, BBTV with a 4 per cent stake, and those formerly belonging to Field Marshal Thanom Kittikachorn and frozen by the government.
According to the State Enterprise Policy Committee, the ministry holds stakes in 17 non-listed state enterprises with a market value of over Bt100 billion, and 69 non-listed companies with value of Bt3.7 billion. This is in addition to over Bt750 billion in holdings in listed companies.
Thailand is running a budget deficit of Bt350 billion this year and is expected to run further deficits over the next four years, due to increasing expenditure, particularly on the social front.
With little investment, valued at less than Bt400 billion this year, the government is being urged to invest more – particularly on infrastructure to raise the country’s competitiveness.
To raise much-needed funds for investment projects, it initiated the public/private partnership programme to draw private investment.
Another plan, to be completed by SEPO this month, involves divesting listed companies like Thai Airways International, MCOT and Airports of Thailand.
Separately, in the move to increase competitiveness in the building sector, the Cabinet yesterday approved a financial package to assist construction companies chasing projects overseas, with Bt1 billion budgeted to reduce their costs for posting contract bidding guarantees.
Korn said the measure would enhance Thai operators’ financial competitiveness and help construction and related industries penetrate new markets. This would raise the credibility of Thai operators among the international community.
“Thai contractors now can’t directly obtain bank guarantees from foreign banks, required as a project guarantee. They have to get the guarantee from a Thai bank, before obtaining a foreign bank’s counter guarantee. This increases their costs. The measure will reduce the cost charged by the foreign banks and reduce their operating costs,” said Watchara Kannikar, a deputy government spokesman.
The Export-Import Bank of Thailand would work with the Budget Bureau on implementation, he said. The Foreign Affairs Ministry would raise this issue in discussions with countries where Thai contractors operate.
The government will help with up to 2 per cent of a project guarantee, or Bt50 million per project, to make Thai companies more competitive abroad.
Companies involved in engineering and architecture, construction and maintenance services would be eligible for assistance, while guarantee issuers must be banks that are financially stable and possess a network that could support Exim Bank’s operations. The banks must also quote a reasonable fee.
Construction companies are now expanding aggressively outside the country, due to political instability at home, which has slowed infrastructure investment in the past years. The most active are the top two players – Italian-Thai Development (ITD) and Ch Karnchang. ITD recently unveiled a plan to develop a giant industrial port in Dawei, Burma. It also won a Bt38-billion expressway contract in Bangladesh.
Ch Karnchang is busy building power plants in Laos. It is looking for the contract for the Xayaburi Dam hydropower plant, which could be worth tens of billions of baht.
Sino-Thai Engineering and Construction, owned by Interior Minister Chavarat Charnvirakul’s family, is relatively inactive overseas.
The Cabinet also approved the establishment of a construction institute directly under the Industry Ministry’s supervision, with Bt496 million allocated for the first four years of operations as well as support for procuring the site, staff and equipment.