Updated: Bhumibol’s business

Forbes have taken the opportunity provided by the publication of King Bhumibol Adulyadej: A Life’s Work, which they describe as a “semi-official biography,” to reassess the king’s wealth.

The article points out that Forbes has previously listed the king as the world’s richest monarchy “by a comfortable margin,”  and last year estimated his net wealth in excess of $30 billion. Forbes observes that

Bhumibol’s top ranking is controversial in Thailand, to say the least. Republicans grumble that the monarchy is wasteful and inefficient. Others are horrified that foreigners have the gall to turn a lens on their deified ruler. Royal courtiers insist that Forbes has it all wrong, that the billions on the balance sheet belong to the crown, not the man. They also contest the property valuations on which much of our estimate is based. Yes, they say, the monarchy is sitting on prime tracts of land in Bangkok and central Thailand. But it leases land and rent properties at subsidized rents that no commercial agency would tolerate. So the king isn’t loaded, just landed….

The article then turns to “the royal money machine” as set out in a chapter in the new book that discusses the Crown Property Bureau (CPB).

It first notes that the chapter “confirms the vast land holdings that Forbes used as the basis of its estimate: “In central Bangkok, the king owns 3,320 acres; town and country holdings stretch to 13,200” acres.

Forbes, however, disputes the “CPB’s line” that the combined value of all this land and property “is less than a third” of the Forbes estimate for the Bangkok holdings. Even so, it is revealed that the  “CPB says it has 40,000 rental contracts, of which 17,000 are in Bangkok.” The CPB claims it doesn’t get a lot in rental income.

As is well known, the CPB holdings include substantial holdings in corporate giants: “a 23% stake in Siam Commercial Bank” and a 32% stake in the Siam Cement Group. Forbes says:

Add those together and you have stock worth $7 billion. In 2010, these companies paid $184 million in dividends to the bureau. In fact, according to the book’s authors, the CPB’s total revenues have averaged 9-11 billion baht a year since 2008. So even when times were hard (Thailand’s economy stalled in 2009), the crown collected a cool $290 million.

It is added that the chapter “doesn’t mention that the CPB also has a majority holding in German hotel group Kempinski AG. Another unit is Bangkok-based Deves Insurance. In 2008, this and other holdings were valued at $600 million.”

Forbes says that “Bhumibol’s biographers are at pains to point out that the CPB isn’t his personal piggybank (a separate agency handles the royal family’s private assets) and so it’s incorrect to label him as ultra-rich.”

Of course, this is royalist double-speak, for the the wealth

is in Bhumibol’s hands. His anointed successor, Crown Prince Vajiralongkorn, will inherit the keys to the safe. In other words, it’s a family enterprise in which the assets are gifted to the next generation.

The article asks: “what exactly is the CPB?” The book chapter’s answer is:  “It is not part of the palace administration, nor is it a government agency, nor is it a private firm. It is a unique institution.”But unique what? A special arrangement for managing the royal wealth without paying much tax:

the bureau pays no business tax, and nor does Thailand have a land tax. Its tax-exempt status is enshrined in law. Yet it’s not a charity or a public agency (or a sovereign wealth fund). It’s not obliged to issue an annual report. It answers only to the king, whose investment strategy isn’t up for public debate.

That’s not to say that firms like Siam Cement and the Siam Commercial Bank don’t pay tax. They do, but the CPB itself is exempt.

In addition, the state and taxpayer fork out a huge amount each year to “maintain” the monarchy.

Whereas the CPB is claimed to hand over “9-11 billion baht from the portfolio of assets managed” to the expenses of the monarchy, in 2011, taxpayers ladled over $84 million to the Bureau of the Royal Household, and that isn’t the bulk of state funds poured into the monarchy. The new book comments on this:

once security costs are factored in, the government spends around $194 million a year on the royal family and its courtiers. This is in addition to the CPB’s income (minus its costs). This implies that in an average year, the Thai crown burns through half a billion dollars.

Forbes compares this to other royal families and says this is huge. For example, the far more transparent British monarchy “gets nearly $50 million” from taxpayers “but remits most of its crown property income to the treasury.”

In other words, even ignoring the British monarchy’s contributions to public funds, the smaller Thai monarchy in a poorer country, takes about seven times more from the public purse.

The new book doesn’t attempt to justify this except that the whole book is a grand justification exercise for the monarchy.

We imagine that even with the book being published, the Forbes article will not be welcomed.

Update: A reader points out that we stupidly forgot to include the now current estimate of the CPB’s brimming coffers: it is US$37 billion.

Another reader calculates the yearly cost of the estimated $500 million for keeping the monarchy show on the road: it is about $8 or 240 baht for every man, woman and child in Thailand. It is 500,000,000 cheap bowls of noodles at a sidewalk vendor. It is 50,000,000 days of the proposed 300 baht a day minimum wage. It is 0.15% of Thailand’s total GDP. As long time readers will know, PPT doesn’t include any mathematics wizards, so we won’t dare vouch for the figures. What we do know is that it costs a lot to keep the royals safe and (presumably) happy.