Saturday, February 17, 2007

While General Sonthi Bangs the Drums of Bang Rajan, Singapore Wonders What's Up

Govt downplays Gen Sonthi's remark over satellites

The government downplayed on Saturday the junta leader's latest remarks, where he stated a desire to retrieve national assets, especially satellites, sold to the city state by ousted prime minister Thaksin Shinawatra.

Government spokesman Yongyuth Maiyalarp said Gen Sonthi Boonyaratglin was just expressing his opinion.

"Gen Sonthi just expressed his opinion which I think many Thais agree. However, details have to be discussed if we really want to retrieve the satellites from Singapore to see whether it would be worthwhile. The Ministry of Information and Communication Technology will be in charge if we decide to do so," the spokesman said.

Both Yongyuth and Foreign Minister Nitya Pibulsonggram said Sonthi's remarks would not harm relations with the island state, although Nitya admitted matters were strained between the two countries.

Foreign Ministry spokesman Kitti Wasinondh said: "What Gen Sonthi said has to be taken in context. The remarks were made for that particular audience. The whole issue should just fade away."

In his speech to defence students on Friday, Sonthi said: "I want to get back the national assets that were bought for Bt140 billion, particularly the satellites."

Singapore seeks clarification of Thai junta leader's remarks

SINGAPORE - Singapore wants Thailand to clarify remarks made by its junta leader that he plans to take back control of satellites run by a firm sold to the city-state's Temasek Holdings, the foreign ministry said.

"Singapore is surprised at what Council for National Security Chief Sonthi Boonyaratglin was reported to have said about getting back Thai national assets which have been sold to foreigners," a foreign ministry spokesman said late Friday.

"We should wait for the Thai Government to clarify what those remarks meant."

Nitya: Sonthi 'tests' Singapore ties

Foreign Minister Nitya Pibulsonggram declined to comment on Friday's remarks made by Council for National Security chairman that he wanted to bring the Shin Corp satellite firm sold to Singapore, but conceded that bilateral relations are now being tested.

Speaking during a live television broadcast Saturday, Nitya Pibulsonggram said he did not have details on yesterday's remarks by Gen. Sonthi Boonyaratkalin but that he had followed the issue through the media and the remarks should be clarified first.

He admitted that relations between Thailand and Singapore are still being tested.

I don't get Singapore. Singapore is the only First World country in Southeast Asia. It is an incredibly successful country. It has good universities with smart professors. Why it went through with the Shin Group deal without doing a political/economic risk analysis is beyond my imagination.

Stupid Mistake #1. Why would Singapore trust Thaksin and the Thai government? Thaksin is not an honest man. The Thai Government is a corrupt institution. Both have never shown any signs of integrity. Why would Singapore give two billions dollars to Thaksin when he obviously was a man who could not be trusted on any level?

Stupid Mistake #2. Why would the Singapore Government engage in a risky nominee scheme regarding 2 billion dollars worth of assets? The Temasek/Shin deal smelled. That kind of deal should have been legally transparent. Unfortunately, this deal was not the only one of its kind. Many foreigners and foreign companies, with the advice of Thai lawyers who make millions designing these agreements, were using the nominee loopholes to get around the foreign ownership restrictions. Foreigners have been using these loopholes for years without problems. Unfortunately, Thaksin was the John Mark Karr of Thai politics, so he got the spotlight shined onto the whole sordid nominee mess.

The new FBA is supposed to close the loopholes, but what about the thousands of foreign companies that are structured using the dodgy nominee loophole scheme?

Thais will use the excuse of clarifying the law to cheat foreigners, which is the primary motive behind the reform.

And this is why so many foreigners are upset.

What exactly will happen to all those companies that will be forced to reorganize? They either have to sell outright or find a legitimate Thai partner. But what if they can't sell or find a legitimate Thai partner? What happens then? Many foreigners will be forced to sell their companies and assets at fire sale prices or end up dumping everything at a huge loss. Guess who will be around to pick up the pieces? The same forces that are promulgating the new FBA and their military backers.

If foreigners don't get that the FBA is a conspiracy against them by greedy reactionary right-wing forces, then they are dumber than I thought and they deserve to lose their money.

In a way a feel bad for Singapore because their primary intention was to do a business deal and make money, but before it signed the papers it should have done its due diligence. Thailand has a long history of screwing foreigners out of the their money. For Chrissakes, it is the national pasttime.

This is my prediction for the Shin Group companies. I will read between the lines and translate for my audience.

This military junta will go after Singapore's Shin Groups assets by using the law and with some wild eyed nationalism. They will make it so unbearable for Singapore to do business that it will be forced to sell the assets back to Thailand or a group of Thai businessmen who are front men for the junta for a cheap price. Just pay attention to what is happening with iTV presently. The scam has already started.

After the junta has finished screwing Singapore, Thaksin will come back with his 2 billion in the bank. All will be forgiven. Of course, he will have to pay a forgiveness fee to the generals. But, in the end, Thaksin and the generals will have made billions off of Singapore and will get the Shin Group assets back to boot. And while the world looks on with a mixture of horror and admiration, Thaksin, the generals and their cronies will be in a high end massage parlor laughing themselves silly about how they screwed the dumb foreigners.

This is the nature of Thai politics and business. If foreigners are too lazy to do their homework concerning how the Thai mind works, they deserve to lose their shirts.

Foreigners should know better. From the minute they get off the plane to the minute they go home, the Thais are trying to rob them blind in every way imaginable. It is the nature of the Thai beast.

So it always surprises me when foreigners are surprised that they have been scammed.

And the current Thai/Singapore spat is nothing but another Thai scam--except on a much larger level.


anon said...

I'm not sure the mistakes were so stupid.

#1. Did anybody seriously expect a coup? We expected that maybe Thaksin would leave and make way for Somkid or somebody else, but never that the entire government and constitution would fall. Policy continuity was a given.

#2. Did anybody seriously expect that Thailand would shoot itself in the foot with regards to foreign investment? Every major foreign investor in Thailand has used nominees for the past few decades. That's what Telenor did for DTAC. That's what the big semiconductor and electronics factories do. That's what the petrochemical/energy giants do. Why shouldn't Temasek have done it?

Fonzi said...

You have a good point.

But if you look over Thailand's long history, going back as far as the mid Ayutthaya period, the Thai government--after anti-foreign elements came to power after a coup against the king or a succession crisis)--would re-nationalize the parts of the Thai economy the crown had previously sold to foreigners.

Remember after the Bowring Treaty, many anti-foreigner elements in Thai aristocracy were trying to rescind the parts that hurt certain Thai interests.

King Vajirayudh started this whole tradition of lambasting foreigners in the economy, notably the Chinese. Wasn't it his seed money that started Siam Commercial Bank and Siam Cement as a reaction to foreign dominance in the Thai economy?

The coup in 1932 was not only about democratization but also about how much British and Chinese interests had control over the economy.

Pridi and Plaek were economic nationalists who wanted to eliminate foreigners from the Thai economy. Pridi wanted to get rid of the farang; Plaek wanted to get rid of the Chinese.

The Thai economy wasn't opened up again until General Sarit came to power in the late 50s, then the economy was restricted to foreigners again under the 1972 FBA.

My point is that there really has never been stability. There has always been a struggle between liberal and right-wing nationalist elements in Thai politics.

What if I told you that I had predicted the coup?

I got into a screaming match with two very famous Thai professors about this. They thought I was crazy. This is what they told me, "There will never be a coup again. Thailand has come a long way, politically."

And I said this right after the first election long before any of the Thaksin problems began. "I said never in the history of Thailand has so much political and economic power, private and public, been concentrated in the hands of one man. The military will eventually have to check Thaksin. There will be a coup."

Those were my exact words.

I said, "Also Thaksin will systematically root out the old order and fill the police, military, and bureaucracy with all his cronies in anticipation of the death of the king, which will cause a lot of problems."

And that is exactly what he did.

Also, remember Thaksin came to power saying that Chuan sold out to the foreigners and he was going to rescind all the IMF traitor reform laws that were put into place.

Thaksin didn't become a neo-liberal until later in his term.

If I had a huge foreign multinational coming to me for a political/economic risk analysis, I would have told them not invest in the Thai economy for all the reasons I mentioned.

Also, the Thai economy is too politicized.

Foreigners get attacked all the time for partnering or working for the wrong people.

There is not as much stability as you think.

As for Singapore, it probably thought that Thaksin would be in power for 20 years and that its investments would be safe because Thaksin probably gave his personal guarantee that nothing would happen. From the outside, Thaksin looked like he was invincible.

Lastly,I think the difference between the telecom and petrochemical and the electronics companies is that the latter are given Board of Investment treatment, which have different laws for foreign ownership.

In the end, I think what I wrote before will happen.

1. The junta will drive the Singaporeans nuts to the point where they will sell everything back for pennies on the dollar.

2. I think many foreigners who have
"nominee" companies will also be forced to sell off cheaply.

3. Thaksin will come back.

4. The generals and Thaksin will have a good laugh about how they screwed all the foreigners.

anon said...

In addition, Sonthi's claim that no country lets foreigners own their domestic satellite providers is either dumb or a lie. An Australian own BSkyB, which in turn owns US, British, and Japanese satellites. While Singapore owns the Optus satellite fleet of Australia.

Was your confrontation with the academics at a public seminar (that can be quoted as a citation/reference) by any chance?

I agree with your conclusions 1 and 2. Specifically, the end winner of the whole Shin Corp deal will be the largest Thai shareholder of Shin Corp. Which is..... well, it just happens to be a commercial bank, owned by powerful backers of the junta, and its name begins in "S." :-)

I don't know if 3 will occur. It's not impossible. After all, Obote was bad and was overthrown by Idi Amin, who turned out to be so much worse he made Obote seem like a champion of liberty. And eventually, Obote reclaimed power to the exhausted applause of the Ugandan people.

I really doubt that 4 will occur, although the cynic in me says that anything can happen in this sad sad country.