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THAI should exit state-enterprise status

Thai Airways International should shed its status as a state enterprise so the government would stop meddling in its affairs, advocates a think-tank for the Finance Ministry.

Somchai Sangsubhan, director of the Policy Research Institute, an independent academic body under the ministry, said THAI needed greater flexibility to run its business to weather fierce global competition and low profit margins.

THAI is supervised by the ministries of Finance and Transport and is subject to cumbersome state enterprise rules.

“In fact, the government should never have ownership in businesses with fierce competition and margins of merely 2-4% on sales,” he said.

By simply trimming the government’s stake to 49.9% from 51%, THAI could transform its status but still allow the ministries to regulate the airline’s operation, said Dr Somchai, who also sits on the airline’s board.

However, it is essential the control not impede THAI’s flexibility, he noted.

By having retired all loans guaranteed by the Finance Ministry and replacing them with bond issues as well as raising capital, THAI is in a position to exit state enterprise status.

Somchai Sujjapongse, director-general of the State Enterprise Policy Office at the Finance Ministry, said he was prepared to see any proposal from THAI on its status. “The airline should submit a formal proposal (to leave state enterprise status), but it needs to make sure it is really ready and can be more efficient,” Dr Somchai said.

It is also important the management is able to make employees who disagree with this change for fear of unemployment understand the move, he warned.

Source: Bangkok Post

ThaiVest Editorial Team