MOF TO MULL OPTIONS FOR INFRASTRUCTURE FUNDS
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Ministry of Finance (MOF) plans to set up infrastructure funds to attract long-term capital from the insurance business into the government's mega-projects.
Finance Minister Apisak Tantivorawong said this might take the form of infrastructure funds for each project or just one infrastructure fund for all.
Setting up only one infrastructure fund would be advantageous, he said, as it would attract foreign capital. Currently, the finer points of each option, such as fund structure and size, are being scrutinised in detail.
Apisak said demand is high among insurance companies for long-term investment. If investments are short, that will not be worth gaining returns from insurance premiums.
The MOF may have to find measures, including returns and risks, to promote infrastructure funds as a means to attract long-term investors, he said. The ministry will attempt to have products for long-term investors to invest in, lessening the state’s burden at the same time.
Sara Lamsam, president for Thai Life Assurance Association, said the life assurance business is now worth Bt2.2 trillion, of which about Bt1.8 trillion is invested in assets.
Of that Bt1.8 trillion, more than 80 per cent is invested in debt instruments, including government bonds and debentures with BBB rating or higher.
“Companies need to invest in long-term assets to be in line with business expenses, while considering returns too,” Sara said.
FIRST KBANK ISSUE
Kasikornbank has issued its first guarantee on international credit after granting finance to a Thai solar-power project in Japan.
The bank has also issued a standby letter of credit for Premier Solution, which is developing solar-power projects worldwide.
The guarantee is for a 1.5-billion-yen (Bt450-million) loan extended by the Tokyo Star Bank to finance 10 plants in Japan with a combined capacity of 58 megawatts.
The electricity produced will be sold to Japanese power companies under a 20-year power-purchase contract.
It is expected that KBank will increasingly issue guarantees for international loans to enhance the foreign investments of Thai businesses.
KBank says its role as a loan guarantor cushions financial risk, boosting the confidence of trade partners and/or contracting parties, while also facilitating loans from Japanese commercial banks.
Pipit Aneaknithi, executive vice president of KBank, said Japan was seeking to accelerate its renewable-energy generation capability, targeting a 20-per-cent renewable-energy share of total power output by 2020.
Solar, biomass and geothermal energy represent 1 per cent of Japan’s total electric-power generation, so the government has adopted one of the highest feed-in tariffs in the world to encourage more renewable-energy investment.
This policy will pave the way for Thai investors – who have become skilled in solar-power management – to explore further opportunities in this sector there, KBank says.
