Thailand eases offshore investment rules

PARISTA YUTHAMANOP

The Bank of Thailand has eased restrictions for institutional investors to invest in offshore securities.

Suchart Sakkankosone, director for the central bank's Strategy and Exchange Control Department, said the investment rules have been eased to let insurance companies, the Government Pension Fund, the Social Securities Fund and specialised financial institutions invest in offshore government bonds, bonds issued by international organisations or overseas state enterprises with investment grade rating.

Institutions can also invest in mutual funds under the supervision of members of International Organisation of Securities Commissions or World Federation of Exchange. Institutions are prohibited from investing in hedge funds.

The total amount of overseas investment permitted for all investors is $1.5 billion, with applications to be submitted to the central bank by the end of the month.

Mutual funds and provident funds will also be permitted to invest up to $500 million total in offshore securities. Approval must also be received from the Securities and Exchange Commission.

The central bank allowed the institutional investors to invest in offshore securities for the first time in 2003 with the maximum outstanding of $500 million, against the total application outstanding of $2.4 billion.

Mr Suchart said the central bank expected investors would invest more in the overseas assets due to ample liquidity.

The central bank approved $2.99 billion worth of overseas investment last year for institutional investors, but actual investment amounted to just $400 million, with the bulk of the investments made by insurers, the GPF, the SSF and specialised financial institutions. Mutual and provident funds invested only around $40 million in overseas assets last year.

The central bank said in its statement that the criterion and conditions set for the offshore investment have been eased to give investors more choices to enable them to have more flexibility in the management of their assets, the statement said.

It said the aim of the expansion is to enhance expertise of the local fund managers and increase saving channels for retail investors.
Bangkok Post