Fears over military's role in Thai economy

The Straits Times, February 12, 2007

THAILAND'S coup leaders have begun to expand their economic clout steadily, stoking concerns that the country's military could be staging a comeback into business.

Since ousting Prime Minister Thaksin Shinawatra in September's bloodless putsch, the coup leaders have taken control of several key state enterprises that oversee strategic economic sectors such as telecommunications and airports.

For the moment, the management revamps at these government-linked entities appear aimed at diluting the vast network of patronage and power that Mr Thaksin wielded over the economy.
'The situation does not appear to be like in the early 1990s, when the military was out to line its pockets,' said Mr Manu Bhaskaran, a regional Singapore-based strategist at Centennial Advisory Group, referring to the once pervasive influence Thailand's military had over the economy.

Still, many Bangkok-based financial executives caution that the situation could quickly change.
Many Thais, who warmly embraced last September's coup, are growing increasingly disenchanted with the military's lack of progress in combating corruption and reforming the country's political structure to pave the way for the return of democracy.

The New Year bombings and the series of botched economic measures in recent months have only deepened concerns over the military's ability to govern.

Faced with these public pressures, analysts and financial executives say the efforts by the coup leaders to flex their muscles on economic issues could easily morph into a purge against business personalities aligned to Mr Thaksin.

'Many businesses with close ties to the military are on the lookout, especially for opportunities to take over businesses aligned to Thaksin on the cheap,' said the chief executive of a local stockbroking firm in Bangkok.

The meshing of military and business is a sensitive issue in Thailand.

And any hint that the country's armed forces are seeking a more active role in business could undermine confidence in the Thai economy, several analysts said.

'There is unhappiness over the way things are moving in Thailand, and it won't take very much to get people angry (with the coup leaders),' said political science professor Thitinan Pongsudhirak of Bangkok's Chulalongkorn University.

Thailand's military has deep roots in the country's economy. Shortly after the 1932 coup that established a constitutional monarch in Thailand, the country's armed forces established state enterprises run by military men.

During the 1940s and 1950s, the military moved into private business, a development that saw competing factions within the army taking control of banking and finance companies and commercial concerns, such as Thai Airways International and the Thai Military Bank.

This far-flung business empire, which also bred corruption within the armed forces, fuelled a patronage system that kept the military in power for six decades.

It also stoked public hostility towards the country's military that reached a boil in 1992.

A bloody crackdown on civilian protesters on the streets of Bangkok led to the establishment of an interim civilian government headed by respected former premier Anand Panyarachun.

Mr Anand succeeded in freeing many large state enterprises from military control and that helped transform Thailand into one of South-east Asia's most dynamic economies.

Since deposing Mr Thaksin, the military has once again taken a keen interest in business by wresting control of state agencies and initiating probes into the affairs of the previous managements.

The state agencies swept by management overhauls included Airports of Thailand, the state company which oversees the country's airports, the powerful Telephone Organisation of Thailand, which regulates the telecommunications sector, and MCOT, the country's leading listed broadcasting and media group.

General Saparang Kalayanamitr, one of the six military men behind the recent coup, has taken a lead role in pushing for change at these state agencies.

He is chairman of Airports of Thailand and the Telephone Organisation of Thailand, and has been leading the charge in uncovering corruption in the country's problem-plagued new Suvarnabhumi Airport.

He has also directed an investigation into telecoms concession awards by the Thaksin administration.

For example, the pro-military directors at the Telephone Organisation of Thailand are scrutinising the satellite operations of Shin Corp, a conglomerate controlled by a consortium led by Singapore's Temasek Holdings.


By Leslie Lopez