High-potential state enterprises should be privatised to boost their efficiency as their return on assets is much lower than that of large listed companies, Supavud Saicheua, managing director of Phatra Securities, said yesterday.

State enterprises excluding Krung Thai Bank have total assets of Bt4.36 trillion - close to the Bt3.98 trillion of listed non-finance companies, he told a seminar on the position of the Thai economy in the world.

These state enterprises posted a combined net profit over the first nine months of 2005 of Bt123.5 billion, less than half of the Bt276.4 billion that listed firms earned.

During that period, the return on assets of these state enterprises was 2.8 per cent, while listed firms turned in 6.9 per cent. The state enterprises' return on equity was 4.3 per cent, while listed companies enjoyed 15.6 per cent. The state enterprises' leverage was also higher at 2.6 times compared to 1.2 times of listed firms.

Privatised state enterprises would be forced to disclose more information, enhancing transparency.

The government should allow state enterprises that can manage on their own to go public. Then the government will be freed from the financial burden of guaranteeing the debt of these state enterprises.

Other regional markets attract new listings to appeal to investors, but the Thai stock market has lacked new products so far. The bourse's price-earnings ratio is nine times, still cheap compared to the 12 times of other emerging markets.

While the dividend yields of local stocks are quite high and economic fundamentals are quite strong, the stock market has not fully recovered for three years, he added.

Ninnart Chaithirapinyo, vice chairman of Toyota Motor Thailand, said Thailand was still attractive for foreign investors.

He cited a survey of the United Nations Conference on Trade and Development that ranked Thailand third among the most attractive destinations for investment in Asia, following China and India.

The survey covered 325 multinational companies. In terms of the most attractive destination for investment in the world, Thailand was ninth.

Foreign investors view Thailand as the hub and gateway for Asean with its population of 500 million.

Anoma Srisukkasem

 The Nation