Announcement of the 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 / fJH1\ z~l!!!J ~ ~ "- ~ ~ s,, 0"' -11_ FJ :-:A>C,"-' Bank Press Release No. 64/5 Subject: _Financing in Thailand IFC Press Release No. tJ.+/6 March 11, 1964 The World Bank and its affiliate, the International Finance Corporation, have agreed to join with American investment institutions, as well as investors in Thai- land and seven other countries in making loan and share capital available to the Industrial Finance Corporation of Thailand ( IF;CT), a privately-owned 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 HanovEir International Finance Corporation, Wells Fargo Bank International Corporation a.11d 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 pa.rt of a series of measm.. 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  I - 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 tn order 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 13% of the total. IFC's investment, amounting to B 4 million, will account 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 ·- 1, counterpart funds arising from United States Government assistance; the equivalent of B 57 million ($2.74 million) has already been arranged in the form of a DM 11 million loan available in foreign exchange by the Kreditanstalt filr Wiederaufbau, Frankfurt, Germany, under an agreement signed on December 20, 1963; and the equi- valent of B 52 million will be made available through the World Bank loan. •  -·3 - • In addition to the companies sub$cribing 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 financf in Thai- la.nd, able to provide private enterprises with both loan and sb~e capital. The increase in its total. resources and the capital reorganization will provide the comp8'lly with the capacity to make a more effect;i.ve contribution to industrial de- velopment. In providing industry with medium and long-term fin@ce, on .suitable terms, IFCX will fill a gap in the framework of the country's financial institu- tions. Industrial output ~d investment have expanded rapidly ;i,n 'I'he,iland ;i.n recent • years.. This development has been encouraged by a satisfactory .level of economic growth and by political stability. In addition, the Government has provided dir.ect incentives, such as t~ 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 ancill1;3.ry to agricultural and forestry production, to- gether with industries manufacturing articJ.es which are uow being imported., leading this devel~ppment • Tne World Bank loan of $2. 5 million will help to provide foreign exchange in various currencies for the purchase of equipment, materials a.pd .services i.m.. ported into Thailan(l. The loan will be used by IFCT to relend for i.ndustrial project;s. It will be commj.tted, in parts, for individual project.s to be agreed upon from time to time by the Bank and IFci. Each part of the loan will bear • il)terest at the World Bank's rate current at the time when the funds ar.e com- mitted for an approved project. The repayment of each pa:rt of the loe,n Will  - 4- • :be in semi-annual installments over a. period of not more than 15 years, ind.:i.vi- i' dual repayment schedules being established a.t the time of the commitment in accordance with the nature of the p;roject. The World Bank loan is guaranteed by the Kingdom of Thailand. • •