Officials hope to sell water-management plan to foreign insurers

“Foreign insurers have stopped taking in flood reinsurance, as they lack confidence in Thailand’s water-management system,” Finance Minister Thirachai Phuvanatnaranubala said yesterday. “This is crucial. No matter how much the government is doing in rehabilitating industrial estates, investors need all-risks insurance or they could relocate their investment.”
 

Finance permanent secretary Areepong Bhoocha-oom has been assigned to lead a delegation to meet foreign insurers, when the government’s water-management plan will be unveiled in a bid to win back their confidence. In a recent discussion, Singaporean insurers suggested the need for an effective water-management plan.
 

Areepong will visit Japan first, and then head to London to meet insurers, Thirachai said.
According to the Finance Ministry, factories in seven inundated industrial estates are insured for a combined Bt600 billion. Some of them have filed flood-damage claims worth Bt200 billion, 60 per cent of which is reinsured by Japanese insurance companies.
 

Individuals have insured their properties to the tune of about Bt200 billion, Areepong said.
Thirachai said the government planned to invest an initial Bt15 billion to rehabilitate flood-hit industrial estates.
 

He also said farmers in the Central region might have to grow only two rice crops a year, so that their land could be turned over to reservoirs during the rainy season. They would be compensated by the government if this change were to be implemented.
Meanwhile, more dams should be built, preferably within a year, the minister said.
“It’s a must that the government unveils the water-management plan as soon as possible,” he added.
 

Meanwhile, Areepong said he believed the government could manage things, as everyone knows where the water comes from and where it will go. It is predictable, unlike tsunamis or earthquakes, he said.
 

Thirachai did not agree with Deputy Prime Minister Kittiratt Na-Ranong, who said the government might act as insurer if private insurance firms did not provide flood coverage. “The key is how [quickly] private insurers can resume their services,” he said.
The finance minister also asked the Bank of Thailand to bear the cost of exchange risk, about 3 per cent annually, for yen-denominated loans from the Japan Bank for International Cooperation.
 

The JBIC has promised to offer soft loans worth Bt50 billion to Japanese firms and joint-venture projects between Japanese and Thai investors that have been hit hard by the flooding.
The loans will be allocated via local banks that have business with the affected manufacturers.
Thirachai said BOT Governor Prasarn Trairatvorakul was unsure whether the law allowed the central bank to do so. Prasarn has promised to look into the matter, he said after the two met yesterday.
 

The cost to the central bank of shouldering the exchange-rate risk would be about Bt1.5 billion annually over at least three years.
 

“The central bank may bear some of the cost and the rest should be shouldered by firms, or firms may pay back such cost when they can stand on their own feet,” Thirachai said.
 

The government has negotiated with commercial and state-run banks for their cooperation to lend about Bt300 billion to support flood victims.
 

It is expected to come up with details of rehabilitation projects soon, he added.