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Foreign Investment


          The office of the Securities and Exchange Commission has allowed provident funds to invest in foreign assets in order to have a diversified portfolio and the opportunity of higher return.

 

          At this preliminary stage, foreign investment is limited to investment grade assets and restricted proportion. Fund committee approval must be attained before investing in any foreign assets.

 
           Permissible Assets

           Limit and Other Requirements

           Allotment of Investment Amount

 


 0

Permissible Assets

Foreign Assets

Specifications

1. Bonds
dia_skyblue_2.gif    issued by government or        international organization

 
 
dia_skyblue_2.gif   The issue or issuer is rated as investment grade.
1

dia_skyblue_2.gif    issued by state enterprise

dia_skyblue_2.gif   The issue is rated as investment grade. 

dia_skyblue_2.gif     issued by private sector

 

       tn_a3.gif foreign entity

dia_skyblue_2.gif   Included in benchmark bond index accepted by the SEC       and the issue is rated as investment grade.
dia_skyblue_2.gif   Having information disclosed on website in English       language.

       tn_a3.gif foreign entity : with               remaining term of not               more than 1 year from the               investment date

dia_skyblue_2.gif   Having the first two issuer ratings.
dia_skyblue_2.gif   Having information disclosed on website in English       language.

2. Stocks

dia_skyblue_2.gif   Traded in an exchange which is a member of the World
       Federations of Exchange (WFE)
 or under the supervision
       of a regulatory body which is a member of the
       International Organization of Securities Commission
       (IOSCO).
dia_skyblue_2.gif   Having information disclosed on website in English       language.

3. Investment Units

 

dia_skyblue_2.gif Foreign Investment Fund (FIF)

dia_skyblue_2.gif   Established and managed in a country where the regulatory body is a member of the IOSCO or where the stock exchange is a member of the WFE.  

 

dia_skyblue_2.gif   Invest in the same type of assets as declared in the provident fund policy except FIF which is gold fund.

 

dia_skyblue_2.gif   The fund invested is retail fund.

 

dia_skyblue_2.gif   The fund invested is not classified as hedge fund.

4. Derivatives

dia_skyblue_2.gif  Traded in an exchange which is a member of WFE  or       under the supervision of a regulatory body which is a       member of IOSCO.
dia_skyblue_2.gif   Having information disclosed on website in English       language.
dia_skyblue_2.gif  Only for hedging purpose and the management company       must have proper risk management system.
 

5. Structured Note

dia_skyblue_2.gif   Issue or issuer is rated as investment grade.

dia_skyblue_2.gif   No obligation to pay debt in the amount greater than       investment value.

dia_skyblue_2.gif   Return on investment is not related to hedge fund or       commodity except for hedge fund index which is
      accepted by the SEC or gold and crude oil.

 1

Limit and Other Requirements

 

  1. Investment in financial instruments issued by a foreign company must not exceed 15% of NAV.
  2. In case the issuer is  a foreign government or an international organization or a foreign state enterprise, investment must not exceed 35% of NAV.
  3. No limit on investment in foreign government instruments which have the first two ratings.
  4. In case of feeder fund, it must invest at least 80% of NAV in only one foreign master fund and the management company is required to disclose all necessary documents to fund committee.
  5. For bonds issued by foreign government or international organization or foreign state enterprises, there is no issue size limit
  6. Management company may invest in short-term bank deposit or near-cash financial instruments for the purpose of fund operation and liquidity.
  7. Benchmark bond index accepted by the SEC are characterized as follow:
    *   The index is reliable with proper diversification.
    *   The index is prepared by internationally accepted providers with clear and transparent procedures.
    *   The index information is disclosed in English language through internet and information changes are easily
             accessible.
  8. Management company is bind to submit monthly investment report to the SEC within 15 days after the end of each month effective from 15 May 2005. Details of the report consists of the name of the provident fund, the amount allocated to each fund, and the investment date and the investment amount.

 2

Allotment of Investment Amount

          In 2006, the Bank of Thailand has allocated an amount of 1,800 million US dollars for retail mutual funds and provident funds to invest in foreign assets. The SEC has already alloted the amount for mutual funds and provident funds for the total of 930 million US dollars, with the rest of 870 million US dollars reserved for the next allotment.

green02_next_1.gif   Initial allotment of investment amount
          The SEC initially allocated the amount of 10 million US dollars to a management company for a mutual fund or a provident fund under management. Therefore, a management company that manage both mutual funds and provident funds was alloted the total amount of 20 million US dollars and could arbitrarily manage the total amount allocated for investment purpose either for mutual funds or provident funds.

green02_next_1.gif   Latter allotment of investment amount
          
circle03_blue.gif  The basis of allocation is the foreign investment records in the passing  year. A management company who can invest 50% or more of the allocated amount in the previous time will entitle to the next allotment of 10 million US dollars.

          circle03_blue.gif  A management company who cannot invest up to 50% of the total allocated amount (all the previous allotments and current ones) within 30 December 2006 will be recalled for the half of the total allocated amount (as of 30 December 2006) and this amount will be included in the reserved amount awaiting for the next allotment.


Main Page                                                                                                                                                      Last update : November 24, 2006 

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