Updated: Royal wealth and the squeeze on the taxpayer

13 09 2017

Academic Pavin Chachavalpongpun has recently published an op-ed at The Japan Times. “A very wealthy monarch grows wealthier” examines the July “reorganization of the Crown Property Bureau, to pave the way for his [King Vajiralongkorn’s] control of this financial wing of the monarchy.”

Pavin observes that:

The new legislation was approved by the military government of Gen. Prayuth Chan-ocha, which appointed Vajiralongkorn as the sole authority over royal wealth. This dismantled the traditional mechanism put in place by his father … who appointed a government official to manage the crown property. Instead, under the new bill, Vajiralongkorn will set up a board of directors to oversee his assets.

We don’t think this is entirely accurate. It is odd to call the previous arrangement “traditional.” Rather, laws that have been revised a couple of times since 1932 established that the Minister of Finance would chair the CPB (as Pavin later notes). It is that governmental link that has been removed and the CPB made the preserve of the king. Pavin is right to note that:

There are two key characteristics of the legislation. First, the king is entitled to appoint the board members, as well as to remove them, at his discretion. Second, the law prohibits the taking away of royal assets without the king’s approval.

As others have noted, this new arrangement means the “Crown Property Bureau is the corporate arm of the monarchy, performing as the major shareholder of the kingdom’s biggest cement company and one of the largest commercial banks.” It’s also correct that “the most valuable assets owned by the royal family are huge swaths of land, much of it in prime areas in central Bangkok.”

Pavin is also correct to argue that “the financial status of the monarchy [the CPB and private wealth combined] has dominated Thailand’s economic landscape. The super-rich status of the king played a vital part in buttressing the political power of the royal family.” Likewise, it is certainly true that part of the CPB’s business success “derived from special privileges granted to the monarchy in conducting business” without transparency or accountability.

Then there’s the capacity of this fabulously wealthy monarchy to leech off the taxpayer. Not only does the CPB pay no taxes (its listed companies do) but there’s a seemingly bottomless money pit that takes money from the taxpayer and redistributes it to the richest of Thailand’s rich.

The much touted “royal projects” are funded by the taxpayer – thank General Prem Tinsulanonda for that redistribution when he was unelected premier. And then there is the cash spent on the “operations of the Bureau of the Royal Household and the expenses of the monarch and his extended family members,” along with bags of money for “promoting” the monarchy.

Despite the wealth of the Crown Property Bureau, the monarchy is allocated generous funds from the government for private and public expenses. Around $170 million annually in state funding covers the salaries of staff working in the Royal Household Bureau and other palace offices, including protection provided for the royal family by the security forces.

Pavin reckons the “budget for the promotion of the dignity of the monarchy,” was almost $400 million in 2003, increasing to $438 million in 2015.

We looked at the 2016 and 2017 budget years in documents available from the Budget Bureau (Thailand’s Budget In Brief), and we think the figures are striking. In 2016, the amount for “upholding, protecting and preserving the monarchy”under the National Security Strategy, on its own, comes to about $555 million. As can be seen in the attached snip, there’s more in the budget for “unified reconciliation.”

The interesting thing is that when one goes through the budget lines provided it is decidedly unclear if the strategies listed as 2.1 and 2.2 overlap the roughly $340 million for royal projects, royal travel, royal bureaus, royal vanity projects and so on. Given that every ministry and department will spend oodles on royal promotion not covered under the programs above, we are thinking that, in 2016, the monarchy cost Thai taxpayers something like $700-800 million.

How does this look in 2017? The format provided is different, but we located this:It seems highly unlikely that the programs have changed this much. Rather, the changed format is suggestive of covering up the huge amount on “upholding, protecting and preserving the monarchy” in 2016. What we do observe is that the second program has gone up by about 60%. In looking at details of funding to royal projects, royal travel, royal bureaus, royal vanity projects and so on, there has been a 37.8% increase, thanks mainly to the creation of a budget line for the Chulabhorn Research Institute (about $115 million). The total budget in these lines in 2017 was $472 million. We might guess that the total taxpayer bill for all things royal is around $1 billion.

(Correct us if you think we are wrong in our calculations.)

Whatever way you look at it, this fabulously wealthy king and royal family, worth perhaps $50-60 billion, also leeches off the taxpayer to the tune of another $1 billion a year.

Update: Somsak Jeamteerasakul wants to challenge some of the points made by Pavin:

Pavin’s article contains some significant errors or misleading statements, and this post doesn’t correct them, even repeats them. For instance. it’s not “right to note” the “two characteristics” of the new legislation. Those two were already there in the previous law. In fact, the second ”characteristic” is quite misleading to put it that way, both in the case of the previous law (article 7 which was more suit to describe as Pavin does, but still isn’t entirely apt) and the new law (article 8 last para., which doesn’t really mean what Pavin says; it is not about [others] ‘taking away’ royal assets at all, just saying that the king-appointed committee couldn’t sell or make any transaction of the asset without his formal approval). Pavin was also wrong to say the late king “appointed a government official to manage the crown property”. The next sentence is also mistaken: “instead, the – no, it’s not something King X does ‘instead’; his father also did. Pavin was wrong again to say “Under King Bhumibol, the board of directors for the royal assets answered to the finance minister.” In both the letters of the old law (read carefully article 4, nothing about ‘answered to’ at all) and in practice (for 70 years, finance ministers of all successive governments did have any say in the management of the CPB). In consequence and in this context, Pavin’s next sentence is also incorrect: “NOW, it is independent of the government.” It isn’t “now” that the CPB is ‘independent of the government.’; it had always been since 1948.

As we said above, there were some problems with Pavin’s characterization of the new law, but Somsak is rather picky on this stuff, being immersed in the detail. We don’t believe that Pavin states that the “two characteristics” are new in the new law. Somsak prefers a very careful reading, and that’s fine. We pretty much agree with his other points.

However, we were more interested in taxpayer funding to the monarchy. As we said above, we are keen to know if our calculations are wonky.


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