Thai finance minister assures investors in Hong Kong

The mass of red-shirted protesters in Bangkok is not a serious concern for foreign investors, assured Korn Chatikavanij, the Thai finance minister, at Credit Suisse's Asian Investment Conference in Hong Kong yesterday.

Two weeks of protests by supporters of deposed prime minister Thaksin Shinawatra have raised fears of a return to violence and political upheaval, but Korn said that the demonstrations remain peaceful and are under control. "Broadly speaking, we're not seeing any signs yet that investors are staying away because of the political situation," he added.

Korn went on to soothe the fears of the investment community not so much with his words, but simply with his presence. A former investment banker who once headed J.P. Morgan's Thai operations, he is a man that the international financial community recognises as one of its own -- youthful, smartly dressed and confident. He scarcely glanced at his notes as he detailed the highpoints of the Thai economy and even won a round of spontaneous applause for his witty response to protesters who accuse him of propping up the stock market with government money. "If it was as easy as that, I wouldn't need to come here," he joked.

And, political turmoil aside, Korn had a relatively upbeat story to tell -- much the same as he told investors in Japan last week. The economy will grow by more than 4% this year, he said, and the recovery is now strong enough that the central bank will likely raise interest rates at its next policy meeting. Last week, he had said he "would not oppose" a rate rise and yesterday he said that he "would not be surprised" if the central bank reversed its low interest-rate policy.

But some in the audience were more interested in how to invest in Thailand, rather than why. One fund manager complained during the Q&A session about his investments in Thailand being converted into foreign shares, "which both trade at a huge discount and are fairly illiquid". The finance minister looked understanding, sympathetic even. "I have been frustrated in my attempts to buy and own Thai companies," the investor continued. "Before Thailand can re-emerge as a true Asian tiger, she must first address some serious policy impediments."

Korn admitted that easing foreign ownership restrictions was central to the development of the country's capital markets, but that it was outside the scope of the securities law. "What we can do, what we will do, is review ownership restrictions on an industry-by-industry basis and relax them as we can," he said.

He cited the government sale of Siam City Bank and ACL Bank to foreign owners as a signal of its intent on the issue of foreign ownership. On the capital markets front, he said there were many policies directed at improving Thailand's competitiveness, including the privatisation of the stock exchange by as early as 2011. Again, Korn accepted Thailand's short-comings: "We have politics that are impossible, frankly, to understand; we have a stock market that is too small; [and] we have a government that doesn't borrow in the international capital markets," he conceded.

But his acts of contrition were not enough for some members of the audience. One delegate spent close to five minutes detailing his many and various problems with Thailand Inc, and even asked the finance minister to "have a word with the securities commissioner" about the state of local rights offerings.

Even faced with some tricky questions, Korn had no problem convincing the room of his financial competence, but it was a question about a single Asean currency that marked Korn as a politician as well as a banker.

"I would like to see Asean host the World Cup," he said. "I say it half in jest, but I cannot think of anything better to put Asean in the hearts and minds of the [region's] people."

Such populism would put Thaksin to shame.