Thailand Official Says Fund 'Won't Distort' Capital Market Operations.

Aug. 2--The new Vayupak Fund, to begin operations over the next several months as a government investment arm, would not distort operations of the local capital market, according to Finance Minister Suchart Jaovisidha.

However, the government would not hesitate to use the fund to intervene in the market if the national interest, or a business essential to the national interest, faced a serious threat, he said.

He stressed that the new Vayupak Fund was not aimed at propping up the stock markets, but rather as a mechanism for increasing public participation in the capital markets.

The new fund, modelled in part after the Government of Singapore Investment Corp, would also serve as a state investment arm, allowing the government to offer assistance to strategically important companies to head off economic crises.

Mr Suchart said the Vayupak Fund could also help in periods of extreme market volatility. He noted that in 1997, both the Chinese and Hong Kong governments intervened in the Hang Seng exchange to help stem a market panic. Ultimately, the intervention fund generated a profit.

Hundreds of market participants attended a seminar on the Vayupak Fund at the Queen Sirikit National Convention Centre yesterday, hosted by the Finance Ministry, the Stock Exchange of Thailand, Krung Thai Bank Plc and the Small and Medium Enterprise Development Bank of Thailand.

Virabongsa Ramangkura, a former finance minister, questioned in a taped interview presented at the seminar whether the Vayupak Fund would interfere in the Thai market mechanism, given the relatively small size of the local markets.