Canadian insurer Manulife Financial has hired Alan Kam, former CEO at Aberdeen Asset ManagementÆs Thai unit, to launch a mutual funds business in Thailand. This marks the first entry by a foreign player into the Thai market since 1997.

John Spence, senior vice president for regional development at Manulife in Hong Kong, says he hopes the funds business will receive the necessary licenses by the end of the year from the Thai Securities & Exchange Commission.

The new business was made possible by ManulifeÆs 2004 merger with US-based John Hancock Financial Services, a global deal that saw it inherit Interlife John Hancock Assurance, a joint venture in Thailand. That unit was renamed Manulife Insurance in 2005, and Manulife controls 97.51% of the company.

ôItÆs a small life insurance company,ö Spence says. ôWe looked around and saw there werenÆt many foreign players in the mutual funds market.ö He says by starting a funds business, it will give the life company a step up in its bancassurance operations, and will allow Manulife Insurance to offer unit-linked investments if local regulators allow them.

But the firm would not have decided to enter the funds business without having the insurance piece already in place.

ôA foreign player needs a small base here,ö says Kam. ôItÆs difficult to start from zero. You have to acquire something, but thereÆs nothing for sale. IÆve looked for years but no one wants to let go.ö

Of the marketÆs 18 existing fund management companies, only three involve foreigners.

The two most recent foreign entrants set up shop in 1996 and launched their first products in 1997: ING Mutual Funds Management, in which ING Investment Management now owns a majority, and Ayudhya JF Asset Management, a joint venture between Bank of Ayudhya and JPMorgan Asset Management.

The oldest is Aberdeen Asset Management, which dates back to a 1994 joint venture between Nakornthon Bank and Schroders. During the Asian financial crisis of 1997, the JV changed hands, with Schroders exiting the market, Standard Chartered Bank taking over Nakornthon and Aberdeen coming in to a minority position. Last year under the terms of the deal, the local Wanglee family, which had owned Nakornthon and which still owned a plurality of the funds JV, opted to sell out completely and Aberdeen became the first foreigner to own 100% of a Thai funds business.

At that stage, Kam, a member of the Wanglee family, resigned and AberdeenÆs regional managing director, Singapore-based Hugh Young, took over.

Kam says a newcomer must offer innovative products in order to compete. He says he and Manulife have some creative ideas, although initially the product offering will remain vanilla.

Kam will report to Peter Tan, general manager of ManulifeÆs Thai life business, and to Spence, who runs wealth management regionally. The firmÆs main task now, aside from obtaining the necessary licenses from the Thai SEC, is to hire a local CIO.