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NEWS UPDATES Asean Affairs        6  June  2011

THAI Airways takes first privatization steps

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The Finance Ministry has agreed to reduce its shareholding in Thai Airways International and eventually privatise the national carrier, according to Areepong Bhoocha-oom, the ministry's permanent secretary.

Thai Airways, while listed on the Stock Exchange of Thailand, is considered a state enterprise by virtue of the Finance Ministry's 51 percent shareholding.

Dr. Areepong said THAI management themselves were pushing for the idea to help give the airline greater flexibility in setting and executing strategy in the face of heavy competition within the aviation industry.

Airline executives and ministry officials are discussing various options and the most suitable shareholding level for the ministry. A reduction in the shareholding percentage could come about through a public offering of part of the ministry's shares, or through a new share issue that would dilute its existing holdings.

As a state enterprise, THAI is subject to a number of regulations, including government oversight of its annual investment plans, executive appointments and salary structure.

On the other hand, as a state enterprise, THAI also receives benefits in the form of lower funding costs as a result of explicit or implicit guarantees of state support in the case of financial difficulty.

Dr. Areepong said that even if the ministry reduced its shareholding below a simple majority, the government could still expect to play a key role in the airline's strategy as a major shareholder.

"Overseas, there are plenty of examples where even with just a 30% or 40% stake, [the government] essentially remains in control of the entity," he said.

Dr. Areepong said THAI executives were confident in business prospects for the airline, adding that the company had no expectations for the need of credit support from the ministry in the future.

Somchai Sujjapongse, the director-general of the State Enterprise Policy Office, said THAI's credit rating could be slightly impacted once it loses its state enterprise status.

But the airline's credit ratings on the other hand would rise in the future if the company can leverage greater management flexibility into improved financial performance.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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