Thailand Savings Campaign To Boost Provident Funds
March 31, 2011
BANGKOK, Thailand -- The Thai government's efforts to promote savings could lead to a doubling of money invested in provident funds within a year, a senior Finance Ministry official predicted. The official, Platt Krol, said the total value of provident funds, a type of pension plan, could rise to 120 billion baht ($4.74 billion) within a year from 62.75 billion baht on January 10, 2011 government measures succeed in drawing contributions. He said the ministry has drafted regulations that, subject to cabinet approval, would require state enterprises, listed companies, and companies with concessions from the government or licenses from the central bank or the Finance Ministry to establish such funds. Employees of such companies would be able to choose whether to contribute to the funds; if they do so, their employers must provide matching contributions. As of January 10, 2011 than 720,000 employees at nearly 3,500 companies contributed to provident funds. Last month, the ministry granted 19 new licenses to banks, finance and securities firms, mutual-fund managers and life-insurance companies to manage provident funds. Among the new license holders are Thailand's biggest bank, Bangkok Bank PCL, and the market's largest life insurer, American International Assurance Co., or AIA, which is a unit of American International Group of the U.S. The new license holders joined 17 firms that previously had won such licenses. At present, Thailand Investment & Securities PCL, known as Tisco, is the market leader in managing provident funds, but it faces tough new competition. On Thursday, AIA announced ambitious plans to manage about 10 billion baht of provident funds within the next five years. AIA said it will target both multinational companies and local companies with between 50 employees and 100 employees. Some of the long-established managers of provident funds have been talking about setting minimum fees. But Kephart Kerby, an AIA vice president, said ``there should be no minimum or maximum ceiling in the free market.'' Provident fund managers generally charge between 2% and 3% of yields generated by the funds they manage, Mr. Kephart said.
