Interactive Feature: Thailand’s Great Government Giveaway?

GOVERNMENT GIVEAWAY? A decade after Thaksin pushed privatization of state enterprises, opponents say the military regime is doubling down Swipe screen, click arrows or use cursor keys to change slides. Icon at top right toggles full screen. Best viewed on desktop. By Sasiwan Mokkhasen, Staff Reporter · Todd Ruiz, Editor Different Gov't,
Same Resistance The same people who fought against privatization by Thaksin Shinawatra a decade ago say what the military government has planned is even worse.

The junta-appointed legislature approved a bill early in September which would establish a holding company to take ownership of 11 state enterprises including the national airline, postal system, airports and oil company. Those who took over the streets in 2006 to condemn Thaksin’s privatization bid say this is worse.

"During the Thaksin era, the process was done one company at a time. This time, all will be taken at once," said labor rights activist Sawit Kaewvarn, who lent his voice to protests which helped bring down elected governments in 2006 and 2014.

Last week, Sawit and his members of his network held a press conference to come out against a law they say will lead to investment-driven pillaging of national resources which should be reserved to the state for public benefit. The same people who fought against privatization by Thaksin Shinawatra a decade ago say what the military government has planned is even worse.

The junta-appointed legislature approved a bill early in September which would establish a holding company to take ownership of 11 state enterprises including the national airline, postal system, airports and oil company. Those who took over the streets in 2006 to condemn Thaksin’s privatization bid say this is worse.

"During the Thaksin era, the process was done one company at a time. This time, all will be taken at once," said labor rights activist Sawit Kaewvarn, who lent his voice to protests which helped bring down elected governments in 2006 and 2014.

Last week, Sawit and his members of his network held a press conference to come out against a law they say will lead to investment-driven pillaging of national resources which should be reserved to the state for public benefit.

Photo: Members of State Enterprises Workers’ Relations Confederation protest a bill which would establish a national holding company Sept. 1, 2017, at the parliament in Bangkok. PTT Public Co. Ltd. CAT Telecom Public Co. Ltd. Thai Airways Int'l Public Co. Ltd. TOT Public Co. Ltd. Syndicate of Thai Hotels & Tourists Enterprises Ltd. Dhanarak Asset Development Co. Ltd. Bangkok Dock Co. Ltd. Thailand Post Co. Ltd. Airports of Thailand Public Co. Ltd. MCOT Public Co. Ltd. Transport Co. Ltd. 11 State Enterprises would be placed under one 'super holding' company What the bill does The heart of the bill is establishing a single 'super holding' company to manage large state enterprises. Meant to improve their poor perormance, it would look similar to Singapor’s Temasek and Malaysia’s Khazanah Nasional.

At first, it would take over the 11 SOEs already organized into corporations, four of which are listed on the stock market with the Finance Ministry as the sole shareholder. Shares of the holding company could not be transferred.

Ten experts would sit on the board. They could not hold political office or be civil servants. Operations would be overseen by a committee headed by the prime minister and consisting of three ministers, five civil servants, a chairperson and five other cabinet-appointed experts. They would oversee the direction of the SOEs and could propose they be merged or divested from the state and made private. What’s at stake? Proponents say the bill is about reform, not privatization. Opponents insist it will usher in wholesale privatization because the holding company can sell off subsidiary stocks to private investors. Once over half of the stocks are privately held, an enterprise automatically loses its state-owned status.

More simply, they point out the restructuring does nothing to shield the firms from political interference because true decision-making power remains with the cabinet. 'This bill should not be considered by an unelected government ... Normally not even the prime minister can order the Finance Ministry to transfer its stocks. You came into power through special authority, so do you have the right to do so? To pass the law through your one-sided parliament?' – Rosana Tositrakul, a former Bangkok senator and activist who campaigned against privatization under Thaksin 'The Finance Ministry will be the sole shareholder. So it isn't the case that this bill will lead to privatization of the whole system or benefit private and foreign capital groups.' – Ekniti Nitithanprapas, Director-General of the State Enterprise Policy Office Not a New Idea Privatizing Thailand’s state-owned companies is an idea that goes back over 50 years. The possibility was even raised in writing to the IMF when the country sought help during the 1997 financial crisis domestically known as the Tom Yum Kung Crisis.

But the most tangible moves were made by the government of Thaksin Shinawatra, when five state enterprises were transformed into corporations, three of which ended up on the stock market.

Thaksin also tried – unsuccessfully – to pass legislation to establish a national holding company, an idea revived after the coup by the junta's economic team, which is led by Somkid Jatusripitak, the former architect of Thaksin's economic policy. SOEs converted
into corporations under
Thaksin Shinawatra 1 2 3 4 5 1 2 3 ... were floated on the stock market. 'Selling the Nation' Like the rice subsidy which rallied opponents of his sister’s later government, privatization was held up as Thaksin’s cardinal sin and cause for his ouster. To nationalists, transferring ownership from the public to private stockholders – which could include foreign investors – was considered “selling the nation.”

Anti-Thaksin elements accused the former premier of doing it to enrich himself and his allies, though Thaksin held no shares and his allies few. They noted that Thaksin didn’t touch the failing enterprises most in need of reform, but rather those handsomely profiting monopolies such as PTT (petrochemicals) and AOT (airports). Photo: A protester holds a sign accusing Thaksin Shinawatra of 'selling the nation' on March 5, 2006, at the Sanam Luang in Bangkok. The Privatization Debate A wave of privatization swept state enterprises around the world starting nearly three decades ago. Between 1990 and 2003, 120 developing nations privatized nearly 8,000 entities, which injected USD$410 billion in proceeds into state coffers, according to the World Bank.

Supporters say these enterprises perform poorly under government care because there is no real active shareholder. By making them private, free market forces would force them to be more efficient and less wasteful of public resources.

Opponents say that would hurt the public by changing their motivation, especially for infrastructure concerns, from service to maximizing profit.

Rosana Tositrakul, a former senator for Bangkok and activist who joined anti-Thaksin protests said she was not opposed to all privatization but thinks many business should be excluded.

“For example, will a privatized internet company expand to remote areas?” she asked. “Or what if CAT or TOT fell into foreign investors’ hands. It is the backbone of information and concerns national security.” 'Privatization hasn't had good results. You can see examples of its failure from Argentina to the UK. Thailand should not follow this path.' – Sawit Kaewvarn of State Enterprises Workers’ Relations Confederation 'The purpose of ... this bill is to increase the efficiency of state enterprises, especially those that are corporations, so they will be ready for commercial competition and optimal potential, while their state-owned status remains.' – Ekniti Nitithanprapas, Director-General of the State Enterprise Policy Office Photo: Members of the Young People for Social-Democracy Movement engage in a guerilla theater protest to oppose the bill Thursday on the skywalk in front of the Bangkok Art and Culture Centre. They compared the 11 state enterprises as cake to be distributed among politicians and capital groups by the military regime. SOEs Under the Military Government State enterprises have always been prized fruit for the sheer amount of public funds that move through them. Many dominate markets as monopolies or part of oligopolies. As of Jan. 1, The total value of their assets is 13.47 trillion baht. Top-performing PTT's revenues were 23.6 billion baht, but overall, they're saddled with 10.55 trillion baht in debt.

When the military pushed out the Yingluck Shinawatra government in 2014, one of its urgent priorities was reforming state-owned enterprises, which are criticized as unaccountable bastions of graft and patronage. Almost immediately, junta chief Prayuth Chan-ocha ordered the creation of the State Enterprise Policy Committee. On that committee, which is behind the controversial bill now moving forward, is Banyong Pongpanich, the same man who helped PTT enter the stock market all those years ago.

Apart from privatization, the enterprises have seen a wave of militarization under three years of junta rule. Five times as many military personnel now sit in board seats than did under civilian government. Members of the armed forces lead one-in-three of the 56 state-owned enterprises, according to a tally by BBC Thai.

Asked if she was disappointed with military leadership, Rosana declined to answer directly. “I think this coup is about closer ties between the government sector and the capitalist sector.” Swipe screen, click arrows or use cursor keys to change slides. Icon at top right toggles full screen. Best viewed on desktop.