According to a source from the central bank, new and approved institutional investors are proposing to issue more FIFs abroad. The central bank will take two to three weeks to consider whether to approve their proposals.

"Last year, institutional investors who had earlier approved a certain amount of FIFs issued funds almost up to their limit. There are several institutional investors proposing more, but the amount is not large," the source said.

In 2003 and 2005, the BOT and the Securities and Exchange Commission allowed six types of institutional investors to invest in debt instruments issued overseas by both Thai and foreign issuers.

The eligible debt instruments that these six institutional investors are allowed to invest in include debt instruments issued by foreign governments or international organisations or foreign state agencies with an investment grade of credit rating. The eligible bonds include unit trusts of foreign mutual funds under supervision of relevant authorities.

The source said the central bank would allow institutional investors to have more choices to invest. This will build up their experience in overseas markets as an advantage for future financial liberalisation.

In addition, the approval of new FIFs will be granted to new investors, or approved investors that were issued almost up to their limit. Those investors who still have large room to invest will not be approved, the source said.

In addition, local institutional investors will not be too concerned about interest rates and foreign-exchange trends as they will focus more on long-term investment, the source said.

The source said some institutional investors are highly experienced in foreign markets, while others are new and invest only part of the approved amount.

In 2003 and 2005, the central bank approved FIFs of US$1.43 billion (Bt56 billion) but only $1.14 billion was invested.

Anoma Srisukkasem

The Nation