Thailand Sovereign Wealth Fund Proposal Strikes Again

Posted on 08/30/2013

The Bank of Thailand is once again giving thought to starting a sovereign wealth fund to handle its large foreign reserves. A Sovereign Wealth Fund Institute article from October, 2011, noted that the country would not be pursuing the development of a sovereign wealth fund with its then US$ 180 billion in reserves. New studies, however, are being conducted by the bank in order to gauge the wisdom of establishing such a fund. According to a document from the Bank of Thailand, as of August 16th, foreign reserve holdings are valued at US$ 172 billion, with liabilities of US$ 123 billion. The new proposed name is the New Opportunity Fund.

The Thai government and the Central Bank of Thailand have debated the issue of creating a sovereign wealth fund for quite some time.

The Bank of Thailand didn’t respond immediately to enquiries from the Sovereign Wealth Fund Institute regarding the likely investment strategy of the fund, but a speech given by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at The Stock Exchange of Thailand‘s “Thailand Focus 2013 – connecting to new investment frontiers”, might give a hint.

“Recognizing the short lived, though timely, nature of consumption-led stimulus, the government is embarking on a major infrastructure investments [sic] in logistics, communication, water management and transportation.”

The central bank governor then went on to outline how private firms could involve themselves through PPPs or joint ventures.

This investment aim would echo that of the Russian Direct Investment Fund and the Nigerian Infrastructure Fund.

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