Announcement of Financing in Thailand on March 11, 1964

International Bank for Reconstruction and Development International Finance Corporation 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 64/5 Subject: Financing in Thailand IFC Press Release No. 64/6 March 11, 1964 The World Bank and its affiliate, the International Fina.nee Corporation, have agreed to join with American investment institutions, as well as investors in Thai- 1~1. and seven other coui1tries in making loan and share capital available to the Indu~·~rial Finance Corporation of Thailand ( IFCT), a privately-o'Wlled company which provides financial assistance to private industrial enterprises. The American institutions are Bank of America, Chase International Investment Corporation, International Basic Economy Corporation (with its Thai affiliate, the Thai Invest- • ment Fund), Manufacturers Hanover International Finance Corporation, Wells Fargo Bank International Corporation and Western Bancorporation International Bank. The World Bank will lend $2.5 million and IFC will invest Baht 4 million ($192,300) in capital shares of IFCT. The two transactions are part of a series of measui~es being taken to increase the financial resources of IFCT to B 190 mil- lion ($9.13 million), considerably more than those previously available to it, and thereby enable it to make a more significant contribution to the industrial growth of Thailand. Four foreign investment and banking institutions are making their first in- vestment in IFCT and in addition, seven of the existing 12 foreign shareholders of'IFCT are increasing their holdings in the company. In addition to the American institutions, the new investors and the existing foreign shareholders making addi- tional investments in IFCT are as follows: • Bank of' Tokyo, Limited The Chartered Bank Commerzbank A.G. Hong Kong and Shanghai Banking Corporation Mitsui Bank Limited 'M  - 2 - The foreign institutions participating in the scheme were willing to take up ~ considerably more than the total number of shares available to them, and the biggest Thai shareholder, the Government-owned Agricultural Bank Ltd., has offered to dispose of a part of its holdings in ord~r to permit somewhat larger allotments to foreign investors. IFCT was founded in 1959 to assist in the establishment, expansion and moderni- zation of private industrial enterprises in Thailand, and to encourage the partici- pation of private capital, both domestic and foreign, in such enterprises. Its paid.- in share capital, originally B 6.1 million, was raised to B 17.4 million early in 1963 and is now being increased to B 30 million. IFCT's shares are widely held in Thailand, mainly by banking and insurance institutions. When the present expansion of IFCT's share capital has been com- pleted, domestic investors, together with IFC, will hold approximately 59% of the company's share capital. for IFC's investment, amounting to B 4 million, will account 13% of the total. Total foreign participation in IFCT will amount to approxi- • mately 41% of its total share capital. The Board of Directors is being enlarged to reflect the new pattern of ownership. In addition to its paid-in share capital of B 30 million, IFCT Will have loan capital amounting to B 157 million ($7.55 million). Of this amount, B 48 million has been provided, on favorable terms, by the Government of Thailand, partly from counterpart funds arising from United States Government assistance; the equivalent of B 57 million ($2.74 million) has already been arranged in the form of a DM 11 million loan available in foreign exchange by the Kreditanstalt fUr Wiederau:fbau, Frankfurt, Germany, under an agreement signed on December 20, 1963; and the equi- valent of B 52 million will be made available through the World Bank loan. •  - 3 - • ' ' In addition to the companies subscribing additional equity at this time, the following institutions are also shareholders of IFCT: Banque de l'Indochine Foreign Commerce Bank, Inc. Indian Overseas Bank, Limited Mercantile Bank Limited Sze Hai Tong Bank, Limited IFCT is the main institutional source of medium and long-term finance in Thai- land, able to provide private enterprises with both loan and share capital. The increase in its total resources and the capital reorganization will provide the company with the capacity to make a more effective contribution to industrial de- velopment. In providing industry with medium and long-term finance, on suitable terms, IFCT will fill a gap in the framework of the country's financial institu- tions. Industrial output and investment have expanded rapidly in Thailand in recent • years. This development has been encouraged by a satisfactory .level of economic growth and by political stability. In addition, the Government has provided direct incentives, such as tax and tariff concessions, and tariff protection where appro- priate. It is expected that the manufacturing sector of the economy will continue to grow, with industries ancillary to agricultural and forestry production, to- gether with industries manufacturing articles which are now being imported, leading this development. The World Bank loan of $2. 5 million will help to provide foreign exchange in various currencies for the purchase of equipment, materials and services im- ported into Thailand. The loan will be used by IFCT to relend for industrial projec~s. It will be committed, in parts, for individual projects to be agreed upon from time to time by the Bank and IFCT. Each part of the loan will bear • interest at the World Bank's rate current at the time when the funds are com- mitted for an approved project. The repayment of each part of the loan will  ., \ - 4- • t ·be in semi-annual installments 0'1er a period of not more than 15 years, indivi- dual repayment schedules being established at the time of the commitment in accordance With the nature of the project. The World Bank loan is guaranteed by the Kingdom of Thailand. • •