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Published on July 18, 2007

The Association of Investment Management Companies (AIMC) wants the central bank to allow individuals and companies to invest abroad in private funds not exceeding US$1 million (Bt33.3 million) and $50 million, respectively.

Vice chairman Teeraphan Jittalarn said that the association would also propose other guidelines to the Bank of Thailand (BOT) for investment overseas of private funds.

Teeraphan, who is also Krungthai Asset Management's chief investment officer, said private funds had never been allowed to invest abroad. The association is initially asking only for guidelines, he added.

"The ceiling of the overseas investment can be flexible, depending on the circumstances," he said.

"The BOT has the authority to do so. All we are asking for right now are just the guidelines. More details relating to the amount of approval will be further discussed later."

The central bank, the Stock Exchange of Thailand and the Securities and Exchange Commission (SEC) have agreed in principle to permit individual investors to directly invest abroad as part of measures to stem the baht's appreciation. At present, only institutional investors are allowed to invest abroad on a case-by-case basis.

SEC secretary-general Theerachai Phuvanatnaranubala told reporters yesterday that the securities watchdog, the central bank, the Finance Ministry and the private sector would jointly discuss the issue.

"Initially, we will discuss if the central bank should approve individual investors to invest overseas and what is the maximum amount. The meeting could assign a working panel to conduct a study, but the final approval would depend on the BOT. The SEC has no mandate to make such a decision," he said.

Investment in Thailand at the moment accounts for 20-25 per cent of the country's gross domestic product (GDP), well below the figure of 40-45 per cent ahead of the 1997 financial crisis, and the liquidity surplus should be allowed to invest overseas, he said.

Separately, the securities watchdog will brainstorm with asset-management companies and privately owned firms to allow mutual-fund operators to launch funds to invest in non-investment grade bonds.

If the idea is viable, it would help small companies to raise funds through debt instruments and increase their financial liquidity, while savers would have alternative investment options in addition to investing only in grade bonds issued by large companies, said Theerachai.

Regulations, process and procedures would be discussed in the discussion panel, he said.

Earlier, the International Monetary Fund (IMF) suggested to the SEC that Thai companies should be allowed to issue non-investment grade bonds. The SEC is conducting a hearing about the issue until the end of this month.

Theerachai said the securities watchdog had an idea to allow international companies or joint-venture companies with overseas partners who are engaged business in Thailand to sell baht-denominated bonds to Thai investors.

"In the past, baht-denominated bonds were issued exclusively by international agencies including the Asian Development Bank, so we had an idea to allow international companies to issue such bonds as well. But initially they would be allowed to raise funds from such bonds to invest only in Thailand as that would not need approval from the central bank," he said.

"We have already discussed the issue with the Finance Ministry and it agreed in principle. Details would be discussed before any decision."

Siriporn Chanjindamanee

Piyarat Setthasiriphaiboon

The Nation