In our April newsletter, we looked at female leadership at State Investors. Only two Asian funds are led by women today: KWAP and GPF. We had the great pleasure of speaking with Dr. Srikanya Yathip, the Secretary General of Thailand’s GPF, which has been evolving and growing very rapidly and could become a significant investor at global scale in the next few years.
[GSWF] Could you please explain us Thailand’s pension system incl. SSO and GPF?
[GPF] Both are very different organizations: SSO was created in 1972 as an occupational compensation fund under the Ministry of Labor, and it has grown to 24 million members as a defined benefit scheme. GPF was established under the Ministry of Finance in 1997 and is a defined contribution fund only dedicated to government officials, so with a much lower member base. I believe we are sustainable because each member has their individual accounts and can encourage savings and provide welfare and other benefits to members.
[GSWF] Do you think Thailand has basis for a SWF, given the US$ 200 billion in reserves held by the Central Bank?
[GPF] There is a lot of sensitivity in the region because of the 1MDB case, as proven by the current discussions in the Philippines, but I believe SWFs are good vehicles for the government to pursue opportunities. In my opinion, Thailand would benefit from having a SWF because it could come from different sources of income including commodities and privatizations; and it would reduce its dependency on taxes, tourism, and Chinese capital flows. That said, I believe it is still a bit early for us and we must learn from other successful funds in the region such as Temasek, GIC, and INA; being mindful of transparency, political influence, and other risks.
[GSWF] As of March 2023, GPF manages $13.2bn in fund value plus $22.5bn in reserves. Are these two managed separately?
[GPF] The core fund is managed on behalf of the members according to risk profiles. The reserve account can be used by the government for emergency situations. And the government shall allot the budget to compensate the money in the following fiscal year. Such emergency has not happened in the 25 years of GPF, so I believe this pool of capital could be managed more aggressively, like a SWF.
[GSWF] GPF has options other than the default plan – does this respond to a sophistication and demand of your members?
[GPF] Last month the law was amended to change the default choice, and to make it possible for younger members to invest in a riskier plan. The lifepath plan is now the default choice and will remain so for that 90% of member who does not change plans over time. Once they retire, the profile will automatically change. Also, younger members prefer to be riskier and hence our offer of several options.
[GSWF] The cap on foreign investments was recently raised from 40% to 60% - where do you see growth going forward? [GPF] We increased the % of foreign investment because we want to have the flexibility of choosing the right balance in our portfolio. We have three different horizons: short term (1-2y), medium term (3-5y) and long term (10-15y). In the short term, we are looking carefully at inflation, tactical thinking, and pivoting away from the US given the current financial distress. However, we try to be very granular and not to generalize. We like emerging markets such as Thailand and China because they are normally less volatile that advanced markets.
[GSWF] Can you share how you managed to integrate ESG considerations into the investment decision process at GPF?
[GPF] We are universal owners, and we therefore have a responsibility that should come before anything else. After believing in it, you must commit to it and put it in writing. Execution and integration are complicated at first because you have to understand very well your portfolio and work close with OECD, PRI, WB, etc. We need to be qualitative but also quantitative; and due diligence (before and after investment) is crucial. I don’t personally believe in divestment, which should be the last resort if nothing else works. We have signed a commitment with 42 investment organizations in Thailand, so that we can influence the market and companies positively.
[GSWF] Only one in 10 State-Owned Investors has a female CEO globally – what do you make of this statistic?
[GPF] Only 38% of our staff are male, but they hold more leadership positions. Women have to take a look at the way we speak and look and avoid any gender bias. We can handle more things and should be able to foster a collaborative environment with stakeholders, media, ESG, etc. Also, women should have multi-language skills and more self confidence in order to have more chances of succeeding.
[GSWF] You are an excellent role model, with experiences in the UK and Japan and 13 years at GPF – what is your advice for young females?
[GPF] You should be reliable and have a positive attitude; communicate effectively according to your audience; show leadership skills at any level and initiative; have a strong relationship with people and empathy; continuously improve, read, and seek opportunities; and be able to take constructive feedback. Importantly, my advice would be not to give up and foster trust in your organization – being a role model takes time, patience, and hard-work.
