Transcript Getting to know Thailand`s State Owned Enterprises

ARGC Task Force on Corporate Governance of SOEs
The Case of Thailand
Dr. Pallapa Ruangrong
State Enterprise Policy Office, Ministry of Finance, Thailand
20 May 2005
CONTENT
I. Thailand Economic Outlook
II. The Roles of SOEs in Thai economy
III. SOEs Financial Snap Shot
IV. SOEs Governance Structure in Thailand
V. Future Governance Structure of SOEs
State Enterprise Policy Office, Thailand :
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I. Thailand Economic Outlook
Thailand Real GDP Growth, GDP and Public Debt
Million USD
% of GDP
200,000
8.0%
6.8%
180,000
160,000
6.3%
5.4%
140,000
120,000
6.0%
4.8%
4.4%
7.0%
5.0%
100,000
4.0%
80,000
3.0%
2.1%
60,000
2.0%
40,000
1.0%
20,000
0
0.0%
1999A
2000A
Public Debt
2001A 2002A
GDP
2003A
2004A
Real GDP Growth
• Thailand GDP* is represented approximately
157,000 M.USD in 2004 that increasing at
average 5% during 1999-2004
• Real GDP Growth in 2004 is 6.3%,slightly
decreasing from previous year.
• Public debt is approx. 75,000 M.USD in
2004 that slightly increasing about 0.8%
per year since 1999
• The proportion of Public Debt and GDP is
47.67% in 2004 that reduce from 62.5% in
1999 since Thai government has released
the Fiscal sustainability Obligation to keep
this rate not exceed than 50%.
Source: NESDB, BOT, SEPO
*Real GDP
State Enterprise Policy Office, Thailand :
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II. The Roles of SOEs to Thai Economy
After Thailand economic recovery began in 1999, State
Owned Enterprises (SOEs), One of the economic
stimulator, has performed as the key role for Thai
government to recover its economy. Apparently, the
developing SOEs performance has become one of
economic development strategy as a substantial
provider for the fundamental economic infrastructure in
order to regain the prosperity of Thai economy, to
contribute the competitiveness for private sector
and to ensure the sustainable in Thai economy.
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II. The Roles of SOEs to Thai Economy
SOEs are now playing the important roles to contribute both minimizing
damage from economy recession and maximizing prosperity of Thai
economy. Thus the roles of SOEs have many several issues as followed:
1. Providing fundamental economic infrastructure: such as
Transportation, Energy, Water Supply and Telecommunication.
2. Contributing for the country competitiveness: provide the basic
strength for private sector and real sector productivities with both
economic and social values.
3. The Source of Funds for supporting fiscal budget: Both
remittance and income tax from SOE is contributed for the sustainable
prosperity of fiscal budget.
4. The enormous source of employment: approximately 280,000
employees represented as 12% of total government employees.
State Enterprise Policy Office, Thailand :
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III. Thailand’s State Owned Enterprises Structure
MOF
State Enterprise Policy Office
Energy
Transportation
Telecomm.
Infrastructure
Industry
Agriculture
Service
Social&
Technology
Financial
•
There are 9 sectors and 60 SOEs with 6 Listed companies in 4 sectors
•
State ownership is classified into three categories:
 Full ownership (100%)
 Majority Shareholder (more than 51%)
 Minority Shareholder (less than 51%)/Portfolio Investor
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III. SOEs Financial Performance
Asset and Debt in 1999-2004
Million USD
140,000
130,000
• SOEs Asset value 135,000 M.USD. in 2004,
increasing at average 7% per year since 1999
120,000
110,000
100,000
• SOEs Debt value 103,000 M.USD. in 2004,
increasing at average 5% per year since 1999
90,000
80,000
70,000
60,000
1999
2000
2001
2002
Asset
2003
2004
Debt
Revenue ,Expense and Net Income in 1999-2004
Million USD
Million USD
50,000
40,000
30,000
20,000
1999
2000
Revenue
2001
2002
Expense
2003
8,000
6,000
4,000
2,000
0
-2,000
-4,000
-6,000
2004
• SOEs Revenue value 45,000 M.USD. in 2004,
increasing at average 8% per year since 1999
• SOEs Debt value 38,000 M.USD. in 2004,
increasing at average 8% per year since 1999
• SOEs Net Income value 4,300 M.USD. in 2004,
increasing at average 4% per year since 1999
Net Income
Source: SEPO
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III. Thailand’s State Owned Enterprises listed companies
Thailand SOEs Privatization History
• There are 6 SOEs listed in Stock
Exchange of Thailand (SET)
•TOT (Telecom)*
• CAT (Telecom)**
• Thai (Transport.)
• KTB (Bank)
• PTTEP (Energy)
• BCP (Energy)
• MCOT
(Telecom)
• SOEs Portfolio represented 25,000
M.USD. or 21% of Thailand Stock market
Capitalization (110,000 M.USD) at the
end of 2004
• AOT (Transport)
• PTT (Energy)
Before
1999
2000
2001
2002
2003
2004
Source: SEPO
•,** TOT & CAT are planning to distribute shares in 2005
•BCP status is no longer SOE
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III. Thailand’s State Owned Enterprises listed companies
PTT Public Limited
Company (PTT)
• PTT is Thailand’s fully integrated oil&gas and petrochemical
complex, with a fully-fledged operation covering upstream
(exploration and production), midstream (refining and production of
olefins feedstock) and downstream (retail oil distribution).
Thai Airways
International (THAI)
• Thai Airways International Public Company Limited is the national
carrier. It operates domestic, regional and intercontinental flights
radiating from its home base in Bangkok.
AOT Public Limited
Company (AOT)
• Airport Authority of Thailand is the operator of national airports of
Thailand. There are 5 airports under AOT, locating in Bangkok,
Chiang Mai, Hat Yai, Phuket and Chiang Rai.
MCOT Public Limited
Company (MCOT)
Krung Thai Bank Public Limited
Company (KTB)
PTTEP Public Limited
Company (PTTEP)
• MCOT is a mass communication operator. Its service include
Television operators, Global television network, radio and news &
entertainment.
• Krung Thai Bank is financial assistance service provider.
• PTT Exploration and Production Company Limited or PTTEP, has the
mission to explore, develop, and produce petroleum reserves to maximize
Thailand’s highest possible benefit from energy resources.
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III. Thailand’s State Owned Enterprises listed companies
Name of SOEs
Major shareholder
Par value
(USD)
No. of Paid up
capital
(Million share)
Stock price
(USD/share)
Mkt. Cap.@
31 Dec 04
(Million USD)
1. PTT
MOF 52%
0.25
2,797.25
4.33
12,098.11
2. PTTEP*
PTT 64%
0.13
653.33
7.25
4,736.64
3. KTB
FIDF 56%
0.13
11,179.75
0.23
2,515.44
4. THAI
MOF 54%
0.25
1,692.08
1.21
2,051.65
5. AOT
MOF 70%
0.25
1,428.57
1.29
1,839.28
6. MCOT
MOF 77%
0.13
687.10
0.56
381.34
Market capitalization of 6 SOEs @ 31 Dec 04
Total Market capitalization of the Stock Exchange of Thailand @ 31 Dec 04
23,622
113,047
* Holding by PTT
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IV. Current Governance Structure
Ministry of Labor
•
Budget Bureau
MOF
SOEs
Line
Minis
try
•
These entities exercise state
ownership through different laws and
registrations governing them.
There are three areas of monitoring
1. Employment
2. Finance and Accounting
3. Management
Committee
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IV. Current Governance Structure : Rules and Regulations
(Full Ownership)
Employment:
Act on Standards Qualifications for Directors and Employees of State
Enterprises
Act on State Enterprise Labour Relations
Act on Offense of Employee in State Organization or State Agency
Cabinet Resolutions
Finance and Accounting:
Act on Public Debt Management
Organic Law on State Audit
Regulation on Accountency and Finance of State Enterprise
Regulation on State Enterprise Investment Policy
Regulation on State Enterprise Internal Audit
Cabinet Resolutions
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IV. Current Governance Structure : Rules and Regulations
(Full Ownership)
Management:
 Law on State Enterprise Establishment
 Act on Private Participation
 Regulation on Procurement
 Regulation on the Disposal and Purchase of Shares of the Government
 Cabinet Resoultions
State Enterprise Policy Office, Thailand :
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IV. Current Governance Structure : Rules and Regulations
(Majority Shareholder)
• Continue to follow some of the State Enterprise Laws and Regulations
such as Organic Law on State Audit, Act on Standards Qualifications for
Directors and Employees of State Enterprises, Regulation on State
Enterprise Investment Policy, etc.
• Comply with Corporatization Act and Commercial Act
• SEC Rules and Regulations
(Minority Shareholder)
Follow Commercial Act and SEC Rules and Regulations
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IV. Current Governance Structure : Roles of Ministry of Finance
Issues
Full Ownership
(100%)
Majority
Shareholder
(<51%)
Minority
Shareholder
(>51%)
Board & Director
Appoint
Appoint
Depending on % hold
CEO Selection Process
Approve
Approve
Select by Board
Remuneration
(Director,CEO andEmployees)
Review and approve
Performance Evaluation
Secretariat: set up KPI
and monitor SOEs
performance
Secretariat: set up
KPI and monitor
SOEs performance
NA
Reports
Review
Review
NA
Strategic Plan and
Investment Plan
Review and approve Approve by the Board
Review and propose to Review and propose
the cabinet
to the cabinet
State Enterprise Policy Office, Thailand :
NA
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V. Future Governance Structure
We are studying the possibility of establishing a State Holding Company
to centralize decision making process.
• Controlling SOEs with more efficient and effectiveness, (there
are different objectives of SOEs)
• Achieving of synergies through integration within a given sector
or activities
• Being as “the tangible arm-length” management of SOEs
• Increasing financial returns to government’s investment in SOEs
• Entrusting the task of rescuing loss-making SOEs
• Increasing general public ownership in SOEs
• Undertaking the state’s representative in SOEs until their
divestiture to private owners
State Enterprise Policy Office, Thailand :
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V. Future Governance Structure
• The government has ranked good governance as its top priority
agenda.
•Thailand has conducted Report On Standard and Codes (ROSCs): selfassessment Questionaire on Fiscal Transparency issued by IMF.
• Good Governance will be used as one of the criteria of selection for
SOE Awards Night .
State Enterprise Policy Office, Thailand :
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