Thai privatization plans revived

Thai privatization plans revived

BANGKOK (Reuter): Thailand's severe economic problems have nudged its politicians into reviving the sluggish privatization of state enterprises as the government seeks funds to tackle a growing fiscal deficit.

Former prime minister and current chairman of the government advisory board Chatichai Choonhavan has called on the government to speed up plans for licensing private participation in profitable state enterprises.

Chatichai said the injection of private capital would earn more revenue for the cash-strapped government and spare it the need to finance expansion of state enterprises.

Thailand is expecting heavy fiscal deficits, its first in 10 years, in the current and 1997/98 (October-September) fiscal years.

Analysts said on Wednesday Chatichai's Chart Pattana Party, a senior partner in Prime Minister Chavalit Yongchaiyudh's six- party coalition, was the prime mover of government plans to liberalize and divest assets of state-owned utilities.

Chart Pattana controls the transport and communications ministry that supervises phone, telecommunications, rail and highway agencies as well as national carrier Thai Airways International Plc.

Officials at the state-owned Telephone Organization of Thailand (TOT) said the government was finalizing a plan to restructure the highly profitable phone monopoly that would lead to a public offer of up to a quarter of its equity.

"We do not oppose privatization in principle but the government still has not clarified how it would allow private participation in our operation," said Karvee Chitkaew, vice president of TOT Labor Union.

He said TOT, with assets estimated at 200-300 billion baht ($6.67-10.0 billion), earned about 20 billion baht in revenue a year -- of which about half was contributed to government coffers.

Karvee, however, told Reuters that his union would resist attempts by politicians with business connections to exploit privatization for their personal interests.

"Eighty percent of past phone concessions were awarded through questionable process," he said.

Thailand has since 1992 granted a two-million-phone concession in Bangkok to TelecomAsia Plc and a one-million-line rural phone project to Thai Telephone and Telecommunications Plc.

Analysts said TOT and Communications Authority of Thailand (CAT), which operates overseas phone and postal services, were two state enterprises whose privatization had been eagerly awaited by private investors, especially foreign telecom firms.

They said CAT operated a lucrative business that earned an estimated 18 billion baht in revenue a year from 50 billion baht in assets.

Thai Airways, which went public in 1992 with a seven percent initial share offer, announced last week it planned to publicly offer another 250 million shares late this year. The move would further trim government ownership in the carrier to 76 percent.

Thai Airways chairman Mahidol Chantrangkun said his firm would further cut state equity holdings to 47 percent by 2000, with foreign investors being allowed to take a combined maximum 25 percent in the airline.