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Published on August 16, 2007

While the government is hopeful that foreign funds will flow out of the country to slow the appreciation of the baht, company managers are scratching their heads over where they should put their money: a safe place where the investment won't turn sour.

For success, overseas investment requires a complete jigsaw. First, investors need to consult the legal aspects. Then should they invest overseas alone on their own or team up with local partners? Will the partners be faithful? Even in this borderless world, checking all these details is time-consuming and sometimes unexpected events turn up.

One famous example is Temasek Holdings' takeover of Shin Corp. Who could have thought that it would entail such a long list of difficulties? A year and a half has passed, but the investment is still in trouble. While the nominee investigation is still continuing, Temasek had to register an accounting loss from the investment due to the continued drop in Shin Corp's share price.

Meanwhile, dividends are being squeezed because of the poor performance of the entire Shin group, hurt by political instability and economic problems triggered by the takeover.

Indeed, this should have discouraged Singapore, the owner of Temasek, from investing in other Asean countries.

But Prime Minister Lee Hsien Loong sees it differently.

On Friday, in response to questions from Asean journalists on Temasek's troubled investment and whether he thought companies should avoid politically unpopular moves, Lee said that Asean companies should not let potential controversy derail them from investing in other countries as this would work against economic integration.

"On the other hand, I would say that if we all take the opposite approach and don't want to invest in one another because it may become controversial, then you will have an Asean where there will be no economic integration, interdependence or cooperation," he said.

 He made the point that countries would have to manage the fallout from investments which became "politically sensitive".

While saying that investors will have to decide what is a good opportunity and whether they will be welcome, he said Singapore, for its part, was open to investors from other Asean countries.

Thai companies may be interested in the invitation. But they are relatively poorer than Singapore companies. Moreover, in an arena of cut-throat competition, how can they survive out there? Problems are guaranteed, as even a seasoned and rich investor like Temasek found out.

achara_d@nationgroup.com