Asia-Pacific News

Foreign Control of Thai Banks Possible: Finance Minister

Thailand continues to welcome foreign capital and is willing to see foreign majority control in its banking sector despite existing curbs on foreign ownership, said Korn Chatikavanij, the country's finance minister.

Citing the $545 million stake sale of ACL bank to Chinese lender ICBC as an example, and with more of such deals in the pipeline, the minister said it reflected the country's commitment to liberalization.

Thailand Welcomes Foreign Investment

"We believe competition will be good for the Thai domestic consumer. We believe it will lead to a strengthened financial sector for the country," he said on CNBC. "FDI (foreign direct investment) is a very important element of economic growth over past decades, not withstanding occasional hiccups."

The two major owners of ACL Bank - Bangkok Bank and Thailand's finance ministry - are in the process of selling their shares to China's Industrial and Commercial Bank of China (ICBC), the world's largest bank by market value.

Addressing the issue of whether Thailand's stimulus spending can be channeled effectively, Korn said about 20 billion baht ($600 million) have been disbursed, with the bulk to filter into the economy next year.

"We think the disbursement rate will be higher than the normal budget. We are aiming for 80-85 percent of the 350 billion mentioned slated for 2010. So it will  be quite impactful."

The finance minister added that the majority of the investment plans are being made in the rural sector, which will boost the income and consumption of farmers, the bedrock of the Thai economy.

Kor, who is in Singapore for the APEC meeting, also stressed the need for large economies to maintain a free-trade policy, saying the free flow of trade is particularly important to Asia's developing economies, as they are still export-oriented.