FinanceAsia: You have just completed a Samurai issue. Can you tell us a little about it and how it fits into your overall issuance plans?
Sommai: This is the first time that Thailand has gone to the Samurai market since the financial crisis and the deal will be a benchmark for the Kingdom and for Thai corporates. We are now in a new fiscal year, as our fiscal year starts in October. The governmental budget has already been approved and we have a fixed deficit of almost 20% for 2002. This deficit will be financed from the domestic market, as will money needed for the SOE's.
What are your plans for international borrowing?
Over the last four years even the Kingdom of Thailand could not borrow abroad because the rating was not good. This is the first time now that we have confidence. You ask me how much we want to borrow. I've said that the figure will be $800 million to $1 billion and that we must not just look at the dollar market, but the international markets globally.
Do you want to do one liquid benchmark issue or a number of smaller issues?
That's very good question. I think we have to consider all our options carefully. I cannot tell you now though, it's still too early.
Do you think you want to start issuing abroad at the beginning of next year?
We have to prioritize this borrowing early in the year. During the roadshows for the Samurai, we said that we wanted to re-finance our foreign loans first. Where new money is concerned, we have to look at many other things such as, for example, our international reserves. At the moment the situation is not bad.
What is your debt to GDP ratio?
Debt to GDP is 56.6% to 57% at the moment and this includes public sector debt. Our policy limit is a 60% ratio and we believe that if we can achieve good GDP growth during 2002, then we will not exceed the limit. Our GDP figures for this year are going to be about 1.6% to 1.7% and definitely not above 2%. During the first half of 2001, the figure stood at 1.9% and during the second it will be somewhat below 1.5%. When you put that together, the overall figures comes to about 1.6% to 1.7%.
What's the projection for 2002?
This will depend on many, many factors, so we cannot make a good projection now, but we think it will be between 1% and 3%.
How are you planning to crystallize the losses of the FIDF (Financial Institutions Development Fund)?
We have crystallized quite a big amount already - Bt500 billion. There is about Bt800 billion remaining and this also covers future losses. It is not a small amount. We have drafted a plan how to crystallize the losses, but it cannot be done in a short time, otherwise we will not have money for development.
How much do you think you will raise from the domestic market next year and what have been your main achievements developing the market this year?
Depending on the state of the market, we think that the government, SOE's and private sector could raise about Bt300 billion. This year we have been able to build up the yield curve to 20 years. We've also issued more Treasury Bills rather than bonds, because we wanted to build up a firm short-term rate in the market as well. The third achievement has been going scripless, which has meant that daily trading is now higher in the bond market than on the stock exchange. The capitalization of the bond market is now also greater than the stock market and sees up to Bt7 million to Bt8 billion per day against Bt3 billion to Bt5 billion on the stock market.
There has been more investment in fixed income because the stock market has not been good. This might change next year, if the stock market improves.
What are your plans to further develop the domestic market next year?
We want to make the infrastructure as solid as possible and concentrate on things such as Delivery Versus Payment (DVP) and tax issues. The infrastructure and overall quality of the market is more important now quantity of issuance.
What new developments are there re the privatization programme?
The cabinet has just approved the first investment corporation act which will create a new body to look after all the SOE's. It will be controlled by a big committee, of which half the panel members will come from the private sector and half from the public sector. This is a very different approach to the past and should lead to good governance and transparency. Once parliament re-opens in February, the act will be submitted for approval.
How many SOE's do you want to privatize during 2002?
We have a programme of about four to five state enterprises of which TOT (Telephone Organization of Thailand) and CAT (Communications Authority of Thailand) will be first. Then we will look at privatizing the airport and the tobacco monopoly. It might be too early to get Thai Airways and Krung Thai done next year though.
Many people say that now is not a good time to list telecom stocks. How are you going to make these companies attractive?
Well obviously we have to make them as attractive as possible. I cannot tell you in detail and we will have to wait for our financial advisors to take a look. There are a lot of things that need to be done before TOT is ready to go the market. We need to corporatize, then privatize. TOT and CAT should also be merged. But first we want to conduct a study and then take another look. It will probably take about two months to come up with realistic recommendations.
And finally, what do you have to say to foreign investors to attract them to Thailand?
That we are trying our best. Our Prime Minister is currently in the US telling foreign investors what we are doing and what we are planning to do. Foreign investors are welcome and we will stick with our reforms.