Sepo backs PTT privatisation move
The State Enterprise Policy Office (Sepo) supports the idea of selling at least part of the government's stake in PTT, arguing that it would make it much easier for the company to do business if it became a private firm instead of having state-enterprise
However, there is opposition to the move on the grounds that it would have a negative impact on the public interest.
Sepo director-general Prasong Poontaneat yesterday said he agreed with Virabongsa Ramangkura’s recommendation concerning the Vayupak Fund purchasing shares in PTT in order to privatise it.
Virabongsa, chairman of the government’s committee on post-flood reconstruction and future development, floated the idea of selling the government stake in PTT, in which the Finance Ministry currently holds 51 per cent, turning the state energy enterprise into a private firm.
If implemented, the plan would enable the government to offload up to Bt700 billion from the public debt account.
Virabongsa, who also wants to sell the government’s stake in the national carrier, Thai Airways International, reasons that lower public debt would allow the government to borrow more to finance infrastructure projects to prevent future severe flooding and upgrade the overall economy.
Prasong said the idea of using the Vayupak Fund to buy PTT shares was a good one, since the government could use the fund to raise money from the public.
If the Finance Ministry decided to divest its holding to below 50 per cent, PTT would become a private enterprise and be able to improve its business after freeing itself from regulatory red tape, he said.
"Some regulations are not conducive to PTT making investment overseas. For example, under anti-graft law, directors of PTT’s joint-venture partners abroad have to submit details of their wealth to the National Anti-Corruption Commission, which is not convenient for foreign boards of directors," he said.
Prasong played down concerns over the reduction in the dividend paid by the PTT to the Finance Ministry that was implicit in a lower state holding, saying it would not have a great effect on transfers from the company as the ministry would still hold a large amount of shares in PTT.
The Vayupak Fund, whose term is set to expire next year, now has assets worth Bt300 billion, up from Bt100 billion originally. The 10-year fund was launched in late 2003 by the then-Thaksin Shinawatra administration, as the government wanted to provide alternative investment tools for the public, which had been adversely affected by unusually low bank deposit rates.
The public response at the time was, however, below government expectations.
Sepo has conducted a study into whether to extend the lifespan of the country’s biggest mutual fund, and the findings will be submitted to the new finance minister, said Prasong.
The leading candidate to take up the post is Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong, who agrees with Virabongsa’s idea concerning the effective privatisation of PTT.
Prasong suggested that a practical solution for the Vayupak Fund would be to transform it from a closed-ended fund into an open-ended one, thus enabling it to raise money from the market for investment in government projects.
Otherwise, it could take time if the government opted to set up a new fund, he added.
The Vayupak Fund, which is part owned by the Finance Ministry and partly by investors, mainly holds shares of listed firms previously held by the ministry. It has to sell those shares back to the ministry when it closes next year.
Former finance minister Korn Chatikavanij is opposed to Virabongsa’s recommendation.
He said the government could borrow as much as Bt2 trillion without first bringing down the level of public debt, which is currently at 41 per cent of gross domestic product. The maximum permitted debt level is 60 per cent of GDP under the current framework of fiscal discipline, he said.
Korn is worried that the monopoly power enjoyed by PTT would be transferred to private hands, resulting in unfair competition among private firms and adversely affecting the public interest.
Abhisit Vejjajiva, leader of the Democrat Party, has also voiced concern, saying that the current issue is that the government uses PTT as a key tool for implementing economic policies at the same time as the company is obliged to respond to the interests of investors.
If PTT were to be transformed into a private firm, it must be regulated by competition law to make sure there is fair play and the public interest is maintained, said the former PM.
