Monday, March 10, 2008

Soveriegn Wealth Funds and Hypocrisy of the Thai Government

$5-bn Sovereign fund in pipeline

Anoma Srisukkasem

The Nation

Investment is part of central bank efforts to utilise swelling coffers

The authorities are considering starting up the country's own sovereign wealth fund to invest some of the US$100-billion (Bt3.15 trillion) foreign reserves in high-risk securities, beginning with $5 billion or $10 billion.


But through its currency reserves account, the Bank of Thailand has accumulated altogether more than $100 billion in international reserves from running current-account surpluses and buying up the US dollar to rein in the baht.


The Thai sovereign fund would be weighted in riskier assets such as stocks, which have proven to generate more impressive returns than fixed-income instruments over the long haul, although they are volatile in the short term, Suchada said.

This is unbelievable.

I remember when Thaksin sold off his assets to a sovereign wealth fund, Singapore's Temesak, ten of thousands hit the streets because he sold off national resources to the evil foreigners.

But now that the Thai government is pulling a Temesak, that is OK. WTF!

Further, many on the Thai left cry that the government doesn't have enough money to buy drugs from the US and other foreign drug manufacturers to fund its national health care system. The government, however, seems to have a lot of money to invest in foreign stock markets though. Hey, here is a good idea, the Thai government can just buy foreign drug companies and they will have all the resources they need.

I normally have liberal economic outlook, but I think sovereign wealth funds open a can of worms that just can't be closed again.

What if one day the US and the EU decided one day to start using their treasury to buy companies in the developing world?

Russia, China, Korea, Thailand and the Middle Eastern emirates would be crying about imperialism, wouldn't they?

I think it is ironic that poor countries are always whining about evils of western multi-national corporate imperialism and its affect on national sovereignty, but when their governments do the same thing, all is good. The hypocrisy never ceases to amaze me.

1 comment:

fall said...

US CL drug and Thai sovereign wealth fund.
Ouch, you definitely hit the spot there.

What are the BOT thinking when wanting to invest in high-risk securities (junk bond?) when US economy in decline?