Bangkok open to Islamic bank tie-up with KL

Thailand is open to the idea that Malaysian firms own a stake in Islamic Bank of Thailand to help provide Islamic banking especially to people in southern Thailand.

THAILAND will consider allowing Malaysian firms to own a stake in Islamic Bank of Thailand to help provide Islamic banking particularly in the southern region, its Finance Minister Korn Chatikavanij said.

Korn said this could be a way to channel money from the government's stimulus package to help resolve the political and social unrest in the southern provinces where Muslims predominantly reside.

"An important factor of restoring peace in southern Thailand is to ensure that there is access to financing.

"We are open to the idea," the Finance Minister said, in reply to whether Malaysia can help provide Islamic banking especially to people in southern Thailand.

Korn said this during a dialogue with some 40 members of the Kuala Lumpur Business Club on its first visit to Bangkok from October 15-16.

There are several million Muslims in Thailand, with the majority living in the southern provinces such as Yala, Pattani, Narathiwat, Songkla and Satun located at the Malaysian border.

Hence, the population here is easily exposed and influenced by the Malaysian Islamic banking system.

The Islamic banking system in Thailand first started when the "Islamic window" concept was introduced by the Government Savings Bank in 1998.

It gained more support from the government through the establishment of Islamic Bank of Thailand in 2003.

The Islamic bank is partly owned by Middle East investors but control remains with the Thai government, Korn said.

If Malaysia does get a stake in the Islamic Bank of Thailand, it will not be the first pact between the two countries in the banking sector.

Thailand, Korn pointed, had already allowed CIMB Group to own a majority stake in BankThai Public Co Ltd.

The bank was a legacy of the 1997/1998 financial crisis, he added.

Now known as CIMB Thai Bank Public Co Ltd, CIMB Thai is the 11th largest commercial bank in the country with branches in 147 locations.

CIMB owns 92.04 per cent of the bank.

Meanwhile, Korn said the Thai government was also receptive to allowing state-owned firms especially those related to transport and infrastructure operations to be managed by foreigners.

This is to help the government execute various development projects under its multi-billion dollar stimulus package.

However, majority ownership must remain with the government.

Link: http://www.btimes.com.my/articles/slamm-2/Article/

The country has "the money and best plan in the world" but lacks expertise and know-how in project delivery and execution, Korn added.