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Wed, November 29, 2006 : Last updated 11:31 am (Thai local time)

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Home > Business > Finance plans major shake-up to hike income

Finance plans major shake-up to hike income

New agency would promote efficiency

The Finance Ministry will propose the establishment of a "super-holding agency" to oversee state enterprises and promote efficiency, as well as working for a target of state enterprises remitting a total of Bt80 billion in income to the government next year.

Vichai Jungrakkiat, director-general of the Finance Ministry's State Enterprise Policy Office, said the ministry planned to propose a draft law setting up the super-holding agency upon the recommendation of Deputy Finance Minister Sommai Phasee.

The plan was originated during the Thaksin government as part of a scheme to privatise state enterprises but never implemented.

The original plan provided for a super-holding agency that was 100-per-cent government-owned. It would hold shares in 15 state enterprises, including PTT, Egat, MCOT, TOT and Thai Airways International.

Vichai said the plan was aimed at improving supervision of the state enterprises and preventing political intervention.

The government would be entitled to oversee only the super-holding agency itself and not, for instance, to appoint board members to state enterprises.

However, he said the plan needed government approval.

Vichai was speaking after signing an agreement with the Thai Rating and Information Service (Tris), in which Tris will assess the operations of state enterprises during the fiscal years 2007 and 2008.

The State Enterprise Policy Office expects that state enterprises should be able to send Bt80 billion to Bt90 billion to the government in the next fiscal year. This is based on the assumption that the country's gross domestic product will grow 4.5 per cent and despite initial conservative estimates that state enterprises will be able to remit only Bt77 billion.

Vichai said the positive result was attributed to returns on equity and on asset rate.

Of all state enterprises, energy-related agencies like PTT and Egat are expected to generate high earnings for the government. However, the Bangkok Mass Transit Authority, the Mass Rapid Transit Authority of Thailand and

the Marketing Organisation for Farmers will continue to have high debt burdens, compared with their capital.

On the question of whether MCOT should be delisted from the Stock Exchange of Thailand

as demanded by an activist group, Vichai said the Finance Ministry had no plans to delist MCOT.

"I can assure you the listing of MCOT was duly done in accordance with the law," he said, adding that delisting would be inappropriate, "because the world's investors have already learned of MCOT's listing".

He also pointed out that MCOT's listing had created greater transparency in its operations.

Vichai said the fall in MCOT's share price in recent days was a temporary situation caused by recent incidents and that MCOT remained fundamentally sound.

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