Thailand's change in tone

The Straits Times, February 21, 2007


After weeks of confusing signals, the Thai authorities have clarified that they are not about to nationalise Temasek-controlled Shin Corp's satellite unit.

After saying last week that he wanted 'my assets back, especially the satellites', General Sonthi Boonyarataglin, head of the Council for National Security, said on Tuesday that the military would not seize control of the satellites. 'We will do no such thing,' he said. 'That would hurt the system of international trade.'

Thailand's leaders have obviously learnt that the politically inspired hard line they had adopted on Temasek Holdings' ownership of Shin Corp was having an adverse effect on foreign investor confidence.

It is unclear, however, the extent to which their new-found rhetorical moderation indicates a real change in attitude.

Even as he was sounding conciliatory on Tuesday, for instance, Thailand's Minister for Information and Communication Technology Sitthichai Pookaiyaudom said that the on-going investigation of whether Temasek had contravened Thai laws in acquiring Shin Corp would have a bearing on the outcome. If it could be shown that Temasek had ran afoul of Thai laws, he suggested, Shin Corp's contracts could be voided and there would be no need to pay market price for its assets.

One wonders: If the real purpose of the legal investigations is to 'get back' the satellites, what confidence can international investors have in Thailand's legal proceedings? Rule of law means applying the law fairly and objectively, not using the law to accomplish a predetermined political end.

Some of Mr Sitthichai's other proposals were also curious, to say the least.

For example, he said that his ministry would conduct a poll to ascertain if Thais wanted the satellites 'back'. If more than 75 per cent said yes, the Thai government would acquire them. If only 50 per cent said yes, it would not do so.

Does that mean that if only 50 per cent or less wanted the satellites, they would no longer be a critical national security asset? And if more than 75 per cent wanted them, the Thai government would pay any price, bear any burden, to acquire them?

Whatever one might think of the wisdom of the Shin Corp deal in retrospect, it is clear that Temasek's decision, when it was made, was motivated by confidence in Thailand's economy. Proof that it is not possible for investors to take a long-term view of Thailand will affect the confidence of all investors in the country.

Is Thailand an open economy, fully intent upon welcoming globalisation? Or is it a country where investments are at the mercy of shifting political winds and straw polls?