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Thaksin's power grows in
Thailand
By David Fullbrook
BANGKOK - When the Shinawatra family's Shin Corp
teamed up with Malaysia's AirAsia last week, stock
analysts cheered, while others worried about Prime
Minister Thaksin Shinawatra's growing power. Conflict of
interest? Thaksin thinks not.
There may be more
to this man than just looking after family business.
Shin Corp has been looking to jump into
entertainment, finance and transport, industries it
believes have plenty of room to grow, for much of this
year. It is a strategy that analysts applaud.
"I
think what Shin is doing is good for shareholders. It's
a good investment. Low cost and a lot of upside for
earnings, but this will depend on availability of
regional routes," says Piyachat Ratanasuvan, a telecom
and entertainment analyst at SCB Securities.
Timing is everything, they say. Well Shin Corp,
under Thaksin's leadership, had an uncanny knack of
getting into computers, pagers, satellites and mobile
phones at just the right time. It may be so with
airlines. Regional routes should be unlocked over the
next few years, with the Association of Southeast Asian
Nations leaders having agreed when they met in Bali last
month to seriously pursue open-skies within Southeast
Asia.
With 2 billion baht (US$50 million)
stacked up in cash and growing, Shin Corp must act to
satisfy shareholders' insatiable appetites for bigger
returns. "The current investments have growth
limitations, such as cellular telephones - it's reaching
saturation point, becoming a cash cow only," says
Piyachat.
Shin Corp's other big plays, satellite
and television, are not expected to generate healthy
returns for a few years yet. Its iPSTAR satellite is not
expected to beam cheap broadband Internet to homes and
offices until mid-2004. Attracting bandwidth-hungry
customers will take time.
Television cannot be
turned around overnight either. iTV, in which Shin
Corp bought control amid outcry over threats to
media independence, needs to draw viewers and thus
profit-making advertising, by lightening up with more
game shows, soaps and comedies.
Shin Corp's
AirAsia tie-up will not be the last. Piyachat expects a
move into lease-financing and consumer credit next.
Bringing its management expertise to established players
is seen as safer and quicker than establishing companies
from scratch.
However Shin Corp's desire for
management control is unattractive for some potential
partners, reducing the scope for commercial deals, but
not politically motivated ones. "I think the investment
opportunities are politically related," says another
analyst at a Thai bank requesting anonymity.
Thaksin has built his party, Thai Rak Thai
(TRT), in a similar fashion, forging deals with old
parties, eventually absorbing or crushing them. Last
week's defection of Korn Dabbaransi from Chart Pattana,
which he formerly led, is a case in point.
But
as Shin Corp, other Shinawatra companies and TRT grow,
so does the suspicion. "Shin Corporation is a very big
economic power in the country and increasingly in the
region. The concern is about the conflict of interest.
It is a problematic issue," says Surachai Wangaew,
chairman of the Campaign for Popular Democracy.
Thus, despite Thaksin relinquishing all
corporate posts and placing his shares in family hands,
it would be an unusual family indeed that did not
discuss business over tom yam and som tam
dinners. Especially about a business he built and which
propelled him to the point where his party could seduce
so many other politicians.
"The cash flow from
the business has been the stabilizing influence. He has
stumbled before and he has recovered. He has done
remarkably well," says a Thai businessman with irons in
various fires who has closely observed Thaksin's
meteoric rise to power and who prefers to remain
unnamed.
Thaksin's apparent failures to
adequately separate business interests and family from
politics are not unusual in East Asia. Two of the most
glaring examples were the dictators Ferdinand Marcos of
the Philippines and Suharto of Indonesia who, unlike
Thaksin, pillaged government coffers. Even today, South
Korea's elected president has seen sons and associates
jailed for failing to draw the line.
Such antics
and conflicts of interest were common in Europe and
America during the industrial revolution. It took over a
century of lawmaking to curtail these practices. As such
what passes in Thailand and much of the East, is a sign
of tumultuous times.
Thaksin's climb to the top,
which began when he left the police force almost 25
years ago to dabble in silk before entering
communications and becoming a greenback billionaire,
also reveals power shifts in Thai society brought about
by new technology and greater world trade.
"Thailand is in a period of transition. The old
capital, in the form of the banking groups, is going. We
used to have 15, now there are only half that. New
capital groups are emerging. But they cannot survive and
expand on their own, so they are latching on to the
prime minister's group," says a political scientist at
Thammasat University, requesting anonymity.
More
telephones, radio and television mean voters are now
better informed than they have ever been. The media's
growing role in politics, which may herald a decline in
effective vote-buying, has not been lost on TRT, but is
something the divided Democrat Party, lost in the chilly
political wilderness, struggles to grasp.
That,
coupled with wealth and success, make Thaksin Thailand's
most powerful elected leader since 1945. "They are
gaining control of every facet of life in the country.
They are entering all sectors, the latest of which is
airlines. He has his own people at the top of the army,
the air force, etc," says a Thai businessman. "When this
sort of thing happens it's rarely a good thing for a
society."
With his growing grip on power, it is
easy to write Thaksin off as just another politician
bent on enrichment, but a constant theme since he won
the election in 2000 has been his dreams for a better
Thailand. "I think he is determined to improve the
country and guide society to a better place. But at the
same time he is advancing his interests. The may be his
downfall," the businessman says.
That downfall
may be a long time coming. Thaksin is working to form a
one-party government after the 2005 election for the
first time in Thai history. A TRT-heavy coalition would
suffice for pursuing current policies and protecting
family business interests. But with a one-party
government, this keen student of Singapore's Senior
Minister Lee Kuan Yew and Malaysia's recently departed
prime minister Mahathir Mohamad, will be in a better
position to emulate them.
(Copyright 2003 Asia
Times Online Co, Ltd. All rights reserved. Please
contact content@atimes.com for
information on our sales and syndication policies.)
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