The move is one of many that Exim is planning in order to take advantage of a changing global economic landscape and to provide regional opportunities for Thai businesses.

President Apichai Boontherawara said Exim was working with the Japan Bank for International Cooperation, the Asian Development Bank and other investment organisations from various countries, including Germany and France, to study the feasibility of a regional fund that will be used to finance investments in the region.

The bank successfully issued bonds for Bt3.2 billion in May to finance Thai projects in neighbouring countries. It plans another baht bond issue to support Electricite du Laos.

"Our next step is to help neighbouring countries issue bonds in their own currencies. [Issuing bonds] should be easier, wider and regionally based, or there will be no impact and issuance costs will be high," Apichai said.

Executive chairman Narongchai Akrasanee said the proposed fund would aim to draw the reserves of Asian countries back to the region. Nearly all these reserves are invested in the West, particularly in US paper.

"This will shift investment from the United States," he said, adding that this is in line with the changing global economic landscape where a large number of new economies, particularly in Asia, have emerged and have sparked a bigger demand for investment than that in developed economies.

"The huge [Asian] reserves pose opportunities for the issue of bonds to be used to support regional expansion," Narongchai said.

The Asian regional bond fund is the bank's strategy for improving Thailand's capital market - one of four strategies to turn Exim Bank into a bank for economic development and investment in the new global economic environment.

The other strategies are to promote Thai investment overseas, promote exports in old and new markets, and organise within.

Under the second strategy - promoting Thai investment overseas - Exim will focus on the financing of contract farming and factory relocation into other countries.

Apichai said that although contract farming could be difficult and slow, it represented a vast opportunity because Thailand has a huge demand for raw materials which can be produced in neighbouring countries and shipped here.

Meanwhile, Exim is also pushing for the development of industrial estates in neighouring countries, where Thai factories can be relocated. "We are pushing for the relocation of the entire production line, from upstream to downstream plants to make this relocation attractive," Apichai said.

The bank is also looking to increase its fee-based income because interest spreads will be narrow, partly through the provision of hedging and currency swaps for small and medium-sized enterprises, at times of rising volatility in foreign-exchange markets.

Achara Deboonme

The Nation