Economists against Wealth Fund plan
BUSINESS: Most economists disagree with the government’s plan to set up a National Wealth Fund, fearing income losses and corruption, according to a Bangkok poll.
Thursday 15 September 2011, 06:15PM
The survey was conducted earlier this month by Bangkok University and polled the opinions of 67 economists from 29 leading economic research and analysis bodies.
The majority of the respondents or 53.7 percent opposed the idea of having the fund for investment in energy sources, such as oil fields. On the other hand, 50.8 per cent supported the use of the fund for infrastructure development in the country.
When asked whether they agreed with the plan to bring the fund into existence immediately, 50.7 percent said no, pointing out that the global economy was still volatile and there were high risks of investment losses.
Another main reason cited is persistent corruption in the Thai political system which could affect the efficiency of the fund. That said, 44.8 percent were confident that Thailand already had adequate personnel with the capability and readiness to manage the National Wealth Fund should it be set up.
Finance Minister Thirachai Phuvanatnaranubala has pledged to press on with the establishment of the national wealth fund, and has pledged that the process will be transparent.
The minister explained that the fund will be set up by separating a small amount from the international reserves. The money and gold donated by disciples of the Abbot Phra Dharmavisuddhimongkhol, also known as Luangta Maha Bua, will not be touched, he added.
Mr Thirachai stated that he wants the Bank of Thailand (BoT) to study the pros and cons of the establishment of the fund and bring the various parties together in order to draw conclusions before pressing ahead with the operation.
The minister noted that if the fund is profitable, the BoT will be allowed to deduct expenses on interest costs by issuing bonds to reduce cash flow and liquidity in the market; however, if the fund faces a loss, the government will have a budget to cover the burden.
Mr Thirachai admitted that investment comes with risks and profits. He said that so far the BoT has been investing in bonds in the US and EU markets and faced a loss of 260 billion baht last year, plus an additional loss of 100 billion baht on exchange rates.
The minister said the total loss now stands at over 400 billion baht, but the BoT has not yet asked the government to cover the loss because it is considered the bank’s internal responsibility. – NNT