Business
Thailand’s Fat Cats Lick their Lips over Fresh Era of Privatisation
Thailand’s largest energy firm PTT Pcl appointed a new chairman on Friday as part of the military government’s attempts to reshuffle the company and reform the country’s state enterprise system.
BANGKOK – Among the biggest challenges for the National Council for Peace and Order (NCPO) is to reform the state enterprises and the energy sector. In the first instance, NCPO chief General Prayuth Chan-ocha has appointed a “Super Board” of all the big names of finance and the stock market, such as Banthoon Lamsam, Dr Prasarn Trairatvorakul, Rapee Sucharitkul and Banyong Pongpanit.
Thailand boasts 56 state enterprises, with combined assets of Bt5 trillion. Korn Chatikavanij told me the other day that during his tenure as finance minister it was very difficult for him as an outsider to intrude on the turf of the state enterprises. Korn added that Dr Somkid Jatusripitak had told him that he also ran into difficulties in handling the state concerns, which had their own way of doing things. It seems that the state enterprises have formed, collectively, a small empire of their own. So how should the Super Board proceed on a blueprint for their overhaul?
There are now two schools of thought on how the state enterprises should be handled. One school believes they should not be in the hands of the politicians but should instead be privatised to improve their efficiency and transparency. As such, politicians would no longer have vested interests. This school of thought appears to contradict what former finance minister Korn and Dr Somkid experienced during their tenures as finance minister.
Another school of thought argues that privatizing the state’s assets amounts to transferring public wealth into private hands. The general public would not benefit from privatization because they do not have money to buy the shares. State assets, after privatization, would thus end up in the hands of well-to-do investors, politicians or foreign investors, all of whom are profit-oriented. The result would be increased income inequality.
Past experience does not bode well for further privatization. Let’s examine the cases surrounding the PTT, Thai Airways, TOT, CAT and Egat. Certain politicians, whose names I do not want to mention, colluded to create a big mess in Thailand’s privatization and non-privatization program. The privatization of PTT, completed under the Thaksin Shinawatra administration, massively enriched the bank accounts of the politicians, management and bureaucrats involved. Did the public benefit from PTT’s privatization? Has PTT improved its transparency, particularly in its dubious overseas investments? Does PTT look after the interests of the Thai people or those of its shareholders?
Is Thai Airways better managed now than before it was privatized? There is no proof to suggest so. The airline faces the same old problems that it had before going public. There are even rumors of deep-seated financial problems.
The TOT (Telephone Organisation of Thailand) and the CAT (Communications Authority of Thailand) have been corporatised, ready to go public. But they have not been able to do so. Why? At the same time, private firms AIS, DTAC and TRUE have become major players in the Thai telecom market while their state-owned counterparts have been stripped of their assets or real potential and cursed by an obsession with efficiency. We all know who the big telecom tycoon is. Fortunately, the privatization of Egat has been blocked by the courts, otherwise the telecom tycoon would have both PTT and Egat in his pocket.
It will now be interesting to see how the Super Board advises the military regime on state-enterprise privatization. I guess the aim is to privatize the ones with potential for capital gains after stock-market listing, while the poorly managed ones will be left for the taxpayers to continue to foot the bill. Either way, the public will lose out.
Look at what Vladimir Putin, Russia’s president, has accomplished with that country’s natural resources. Russia would not have emerged as a superpower had it privatized its energy resources to the extent that the government lost control over state enterprises. Putin has smartly used Russia’s clout in supplying one-third of Western Europe’s natural gas needs as a tool to advance his foreign policy in Ukraine. Elsewhere, Latin American companies from Venezuela to Argentina have been trying to reclaim state assets from predatory foreign companies.
Thailand has abundant natural and energy resources. Yet, strangely enough, General Prayuth has surrounded himself with advisers who believe that Thailand has scant energy resources and that state
enterprises are dinosaurs in a modern economy and should succumb to big money. – Thanong Khanthong
