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Published on November 30, 2007

Should PTT proceed with its privatisation or go back to state control?

You can read the letter on this very same page.

The question is whether PTT should be maintained on the stock market or should the government buy back PTT stock to retrieve 100-per-cent ownership.

Privatisation is obviously good. But Montree wanted to propose his personal ideas on "whether we should withdraw PTT from the Stock Exchange of Thailand".

First, could we buy the stock back at Bt35 per share, he asked.

If we buy back PTT shares at the initial public offering price, the country will lose all credibility.

The real cost would be to investors in PTT, as the market price is now Bt360-Bt370 per share. If we force shareholders to sell as if we are delisting the company, global investors would see that "Thailand is like a kid playing with toys". They might stop all trading with the Kingdom due to a lack of trust.

Second, the impact on the stock market doesn't mean only the 700,000 to 800,000 accounts of investors in the stock market. There are also more than 10 million investors whose money is in provident funds, the Government Pension Fund and the Social Security Fund.

Third, the stock market would suffer a huge psychological impact. Therefore, any decision has to be cautious.

Then Montree asked what purpose would the buyback serve.

To buy PTT back at the market price to keep its credibility, the government "needs more than Bt500 billion".

Then there's the question of where can the government find the money.

Should it borrow? If so, wouldn't that be against the sufficiency-economy policy? While the country needs the money to develop the entire economy, why should government spend it to buy back PTT stock? Is this worth losing the opportunity to use the money to develop other parts of the economy?

Montree wrote that PTT had already offered its shares to the public and that the price had risen significantly. The problem of PTT is much harder to solve than that of the Electricity Generating Authority of Thailand, whose privatisation process was ended in the courts. In order to make a decision, the government must consider the consequences with responsibility, he said.

So the choice is between buying PTT at the IPO price, which will destroy the country's international image, or the market price at a astronomically huge cost. Either way, the government would be badly damaged.

Now we will have to see whether the Supreme Administration Court agrees with Montree today.

Busdsk@nationgroup.com

The Nation