King’s reward

Usually the monarchy and military get most of our attention. But we have long posted about the tripod of oligarchy and power in Thailand, with the third leg being Sino-Thai tycoons. They’ve given billions to the monarchy and lots of ideological support and they’ve done the same for Thailand’s nasty military regimes.

In an announcement a couple of days ago, the king provided rewards for quite a bunch of the plutocrats.

The Bangkok Post reports highlights that “Suthikiati Chirathivat, chairman of the board of Bangkok Post Plc and chairman of the board of Central Plaza Hotel Plc. He is one of seven people awarded the Knight Grand Cordon (First Class) of the Most Noble Order of the Crown of Thailand.” The capitalists love these awards because they show acceptance and put them close to the monarchy and all the benefits that provides and has provided them for decades.

It reports that others who were repaid for their “loyalty” included:

Prasert Prasarttong-Osoth, the founder of Bangkok Dusit Medical Services Plc; Santi Bhirombhakdi, executive chairman of Boonrawd Brewery Co; … Chattip Tanthaprasas, president of Nitipeerachat Law Office; Polapee Tulyasuwan, managing director of Nitipeerachat Law Office, and Aswin Techajareonvikul, chief executive officer of Berli Jucker Plc.

We are not sure what services the Nitipeerachat Law Office provided. Maybe a reader knows?

But this report is somewhat sneaky, leaving out the big names. Prachatai (in Thai) reproduces the Royal Announcement and the names include all the whales of the Sino-Thai tycoons. First listed is CP’s Dhanin Chearavanont, second is Charoen Sirivadhanabhakdi of ThaiBev, third is Charoen’s wife, Wanna, and the others on Thailand’s rich list follow: a bunch of Lamsams, more Chearavanonts, more from the Sirivadhanabhakdi clan, more Bhirombhakdis, Pornpraphasand so it goes on.

Whole families seem to have been royally anointed. This appears as a thank you award for Sino-Thais supporting the king.

We wonder if those not listed aren’t being urged to do more?

 

 

Gorging on state funds

Reading the media the past couple of days and we feel like the regime, its ministers and its buddies are engaging in gluttony, seemingly gorging on state coffers.

One deal we posted on them recently got more press coverage:

The Eastern Economic Corridor (EEC) Office’s Eastern Special Development Zone Policy Committee yesterday signed the [290-billion-baht] deal with winning concessionaire, U-Tapao International Aviation Co, an offshoot of the BBS Joint Venture that won the bid to develop the “aeropolis” in Ban Chang district of Rayong Province….

…[T]he BBS Joint Venture comprises Bangkok Airways, which owns 45% of the shares, BTS Group Holdings which owns 35%, and Sino-Thai Engineering and Construction (STEC) which owns 20%.

So we can identify two conglomerates involving two of the countries wealthiest Sino-Thai tycoons – the Prasarttong-Osoth family at Bangkok Airways and the Kanjanapas clan at BTS. It was Forbes lister Prasert Prasattong-Osoth giving advice to Gen Prayuth Chan-ocha recently. It seems advice doesn’t come cheap. Then we have Sino-Thai Engineering and Construction:

Interesting. But what can we expect from people who are used to having with state officials in their pockets.

Then we saw that idea from convicted heroin smuggler and Deputy Agriculture Minister Thammanat Prompao for seizing land  illegally occupied by resorts and hotels, and then renting it back to them. Brilliant! Thammanat is already a baht billionaire and this looks like a surefire way to double money and pay for more of his big brother’s parliamentary seats and maybe even some watches. A Bangkok Post editorial commented that the scheme “is so outrageous that it should be dropped immediately…”.

And what about the news that the “Finance Ministry is ready to consider retail operators’ proposal for tax breaks on shopping to stimulate domestic spending…” with 50,000 baht per shopper! Now, who could that help most? We suggest it would throw shiploads of money into the big retailers, like the Chirathivat and Umpujh clans who are also Forbes listers.

It also potentially helps out the royal family and specifically Princess Sirindhorn, a member of the country’s wealthiest family that already scoops up billions in taxpayer funds. It was Chadatip Chutrakul, chief executive of majority royal-owned Siam Piwat Co, the operator of Siam Paragon, Siam Center and Iconsiam, that “said the government should come up with measures to compel people to leave the house and spend more.”

Happy to grab more loot

An academic once calculated that Princess Sirindhorn’s shareholding in Siam Piwat provided more than US$55 million per year from her property in the Siam-Ratchaprasong alone. She may be a bit short this year, so the state purse becomes a surrogate source of wealth.

Such “private” deals seem to be gathering pace under the virus crisis and rehabilitation plans. Recall how just a few weeks ago, the biggest of the business whales, multi-billionaire Dhanin Chearavanont was urging the regime to turn the country into a ‘safe haven’ for wealthy visitors.” His wish seems to be the regime’s command, with Tourism Minister Phiphat Ratchakitprakarn declaring that the “government’s tourism-revival strategy is to target big spenders seeking privacy and social distancing in the Covid-19 era, rather than try to attract a large number of visitors…. He added that the virus “provides an opportunity to reset the sector, which had become reliant on Chinese groups and backpackers…”. With 11 million Chinese tourists in 2019 and a total of almost 40 million, it seems there’s a determination to crush most of the industry and all that flows from it to every other part of the service sector, which before the virus accounted 46% of total employment and 57% of GDP.

And, these “private” deals are being institutionalized, with the regime reviving a Prem Tinsulanonda-era idea, agreeing with the private sector “to revive the Joint Public-Private Consultative Committee (JPPCC) as a core forum for the two to work together on solutions for the country’s social and economic rehabilitation after the pandemic.” That was first suggested a year ago but looks increasingly likely to become a processing terminal for turning state funds into private gains.

Finally, we may have missed the announcements, but it seems that the long-delayed contracts for the Sino-Thai high (probably medium) speed railway are being doled out. If the reporting is right, it suggests smoke-filled rooms and cosy deals. We quote the Bangkok Post:

SRT governor Niruj Maneepun yesterday told the media that Contract 2.3 is worth 50.6 billion baht, which includes funds for the railway system, rolling stocks and staff training….

The signing of the contract will be carried out in October as planned, Mr Niruj said.

Contract 2.3 is one of seven railway contracts worth a total of 179.4 billion baht for the Bangkok-Nong Khai High-Speed Train Project. Contract 2.3 would cover the project’s first phase, which is a 253-kilometre stretch from Bangkok to Nakhon Ratchasima….

The construction for the whole project has been ongoing since 2018 and it is expected to finish in 2023. [In fact, very little construction has occurred, apart from a very short section near Nakhon Ratchasima.]

So far, the SRT has said the project is making progress, noting it is finding contractors to develop all seven phases. It said a few have already agreed and signed some of the contracts.

That doesn’t look like open tendering, not that such systems stand in the way of the transfer of funds to private sector cronies and giant corporations.

Updated: Giving and receiving

While giving is often considered a way of making merit in Thailand, there’s also a strong effort to use gifts to gain favors or to cement alliances. Giving away a daughter to a powerful royal or aristocrat was one such strategy.

This makes the storm over Gen Prayuth Chan-ocha’s dealings with the richest – the Sino-Thai tycoons – interesting. As the first linked story observes: “Donation culture in Thailand has never been about altruism or humanitarianism.”

Pointedly, that linked article asks:

Do you think politicians and the rich elite call newspapers or post on Instagram every time they donate because of notions of the greater good? No, it is to satisfy a PR need or to show the world what a great person they are.

How else would you explain personal or party branding on hand sanitizer bottles?

In case you are wondering who is doing the branding look to one princess. Princess Sirivannavari is a shameless self-promoter. Her brand is given all kinds of preferences.

That story continues with this observation:

So if Prayut is really going to approach the 20 richest families in Thailand, the question he will have to ask himself before doing so is whether or not he is giving them anything in return.

It doesn’t have to be anything as overt as tax breaks or special zoning rights, it can merely be an opportunity for the super-rich to super-flaunt their super-niceness for those super-likes.

Thailand has one of the largest rich-poor gaps in the world with the top 1 per cent owning more than the bottom 90 per cent combined.

If Prayut goes bearing no gifts then he will unlikely get anything in return. That is not how donation culture in this country works.

Gen Prayuth has recently been “receiving” these donations from the filthy rich. He is reported to have “witnessed the delivery ceremony of cash donations from the private sector.”

And what did he see? The “Mall Group has donated 20 million baht, and the Thai Bankers’ Association has donated 50 million baht…”. Let’s get some perspective on this. The Mall Group is not publicly listed and so reported profits are more or less secret. However, Supaluck Umpujh and her family are said to be worth $1.6 billion. In this context, 20 million baht is loose change. The 50 million from the TBA is similarly a drop from their huge bucket. The TBA represents a bunch of Sino-Thai banking families and their money-making machines. Just one, the Bangkok Bank made a net profit of over $1 billion in 2019. Add in the other banks and the contribution is trifling. But it gets publicity, gratitude and is menat to make them look somehow generous. They aren’t.

It is reported that the “donated funds are to be distributed to King Chulalongkorn Memorial Hospital, Ramathibodi Hospital, Rajavithi Hospital, Bamrasnaradura Infectious Diseases Institute, Siriraj Hospital, and the Thai Red Cross Society.” That’s less than 12 million for each hospital and institute.

Still, the groveling general “thanked the private sector for its contribution and the help given to hospitals and medical staff, enabling the government to work more effectively in the present health crisis.” Pennies from heaven perhaps?

Did someone mention the king? Despite his almost continual absence from the country, Thailand’s Kibosh “makes” what are called “donations.” All media tell us that the king and his major wife “have graciously distributed relief supplies to members of the public who are affected by the coronavirus disease 2019 (COVID-19) situation, in Bangkok.” The poor people receiving these small gifts are expected to be grateful and to show their gratitude and loyalty for ever and ever. This is part of the palace’s propaganda to make Thais subservient to the monarchy. They have been doing it for decades.

Update: Gen Prayuth has sent letters to the rich list. He says he wants them to propose “projects” to assist Thais in need. He reckons these richest should also be bright. If the proposal by Forbes lister Prasert Prasattong-Osoth is anything to go by, Prayuth’s got it wrong. Prasert proposes a project that’s been going on since he was a kid. Then there’s the CP mask factory, built in just five weeks and already operating, donating masks. Great you would think, only to learn that it is fully automated and operated by just three persons. No work created there. And, as we have heard on the grapevine, it is likely to get BOI support and not pay tax for several years. Maybe instead of “projects,” Prayuth could consider ways of getting the filthy rich to pay tax and to stop hiding wealth offshore.

Thailand’s billionaires in 2019

Forbes has released its 2019 billionaires list. It includes 31 Thai individuals and families.

To make matters a little easier, we have constructed a table where all persons with the same family name have been combined and we have listed just the top 10.

That aggregating mainly impacts the Chearavanont family who have several scions listed this year. Putting all of those individuals together reveals how vast the clan’s wealth is, expanding at a rate that means it rivals the king for economic power.

But, as usual, the king is missing from the list. This year that does seem rather odd as laws have been changed to make King Vajiralongkorn the personal owner of all crown property. Essentially, that is as it has been for a long time, but the current king just got rid of the quasi-legal mechanism to allow the government and the Crown Property Bureau to protest that the king’s property was not really his.

That charade is now gone, so Forbes should list him at number 1. A rough estimate of the king’s wealth would be at least $60 billion (using data from 2005, and estimating changes in stock and land values since then).

The table reveals how the top 3, including the king and his crown property, have moved well ahead of the rest in terms of measurable wealth. We do acknowledge that the fabulously wealthy are adept at hiding their personal wealth, so all those listed are probably a lot wealthier than these figures allow.

Corrected: The tycoons and the junta

This is a corrected post. We became aware that the search function we used at Forbes to list Thailand’s tycoons returned something other than a full list. We have now located a more reliable list at Forbes and have rewritten the post based on the correct data. Thanks to a reader for questioning us about the data, causing us to go back to the source.

At the same time, we remain cautious about the data given that the totals in the global list do not exactly match those in the Thailand list.

There’s been a lot of talk about the military dictatorship having done little for the economy. One group is benefiting. That’s the junta and its allies in state enterprises, those on the take, those raking in commissions and the various puppet appointments. But their takings, while huge by the standards of the average Thai, are not the measure of how the tycoons are doing.

That group are the richest Thais, mostly the Sino-Thai tycoons and a couple of foreigners who have made their fortune in Thailand.When we had the wrong data, we indicated that the wealth of the top 10 had decreased. This is corrected in the table below, showing a very large increase in wealth.

We know this from the listing in Forbes of the world’s US dollar billionaires and, now, from the list of Thailand’s billionaires. Over the years, we have listed the top 10, so we are sticking with that so that a comparison can be made.

The table compares 2014 wealth (Forbes 2015) and the year of the coup and the 2016 figures (Forbes 2017).

The totals for the top 10 show that their combined wealth has increased by almost $16 billion. The top two families have increased by more than $9billion.

When we had the data wrong we asked: How long will these economic whales put up with a military dictatorship that delivers economic decline? Now that the data has reversed the position, we can only imagine that the tycoons are loving the junta.

Avoiding tax

We are late with this post, but want to draw attention to yet more tax avoidance by Thailand’s tycoons. Of course, the rich in Thailand don’t pay much tax (nor, it seems, do they anywhere else – e.g. Britain, Australia, US, Malaysia).

As reported at the Bangkok Post, the Ministry of Finance has inheritance and gift taxes in place from 1 February. A tax on those making gifts while still alive, this move has been anticipated for some time, with the tax ranging between 5 and 10% on transfers exceeding either 20 million or 100 million baht, depending on the relationships between the parties involved. The report states that spouses remain exempt.

According to the Post, this anticipation has caused a wave of transfers meant to beat the 1 February deadline. It states that:

… [s]hares worth nearly 80 billion baht have been transferred by affluent Thais to their heirs before the introduction of inheritance and gift taxes…. Executives and major shareholders of more than 160 listed companies transferred their shares to children, spouses, parents, siblings, cousins and holding companies from July 2014 to last Friday, according to a Securities and Exchange Commission (SEC) reports on changes of executives’ securities holdings.

A Bangkok Post graphic

The Post has a useful graphic that we have clipped and added to the right.

The assets subject to the tax “include property, securities such as treasury bills, bonds, shares and debentures as well as investment units, deposits, registered vehicles and financial assets to be described in royal decrees.”

The list of those transferring stock in order to avoid the tax includes Prasert Prasarttong-Osoth, “the founder of Bangkok Dusit Medical Services Plc (BDMS) and Bangkok Airways Plc, transferred his stakes in both listed companies with a combined worth of over 10 billion baht to his wife and children…”. The report adds that he is “the richest businessman on the Thai stock market last year, transferred 9.96 billion baht worth of BDMS shares to his wife and children and another 868 million baht worth of Bangkok Airways shares to a daughter.” Last year Forbes listed him as 8th wealthiest in Thailand with assets worth $2.8 billion.

Another almost 8 billion baht worth of BDMS shares were transferred to family members by other major shareholders.

Thailand’s tax regime has long been regressive, and as elsewhere, the rich have many ways to avoid contributing to the common good.

Rich still doing very well

Forbes has published its latest Thailand Rich List. There are no real surprises for the mega-rich in Thailand continue to do well through political instability and military coup. The ranking of Thailand’s 50 richest is available from Forbes.

CP’s agribusiness tycoon, the aging Dhanin Chearavanont, is the country’s richest man with a net worth of US$14.4 billion. Next is beverages and land tycoon, Charoen Sirivadhanabhakdi,with a net worth of $13 billion.

The list does not include the monarchy, which is covered in another Forbes listing. The monarchy’s combined wealth, which is mostly managed by the Crown Property Bureau, is variously estimated at $40-50 billion. This is equivalent to the total combined wealth of the top 3-4 tycoons in this Forbes list.

Most of those on the list have close connections to the palace, although they are big enough to split their bets when there is political agitation. As we noted last year, since 2011, the assets of the mega-rich have increased very substantially, and this has continued in this listing.

Thaksin Shinawatra and his family ranked 10th, as they were in the last listing, with the same combined assets:

Dhanin Chearavanont; US$14.4 billion
Charoen Sirivadhanabhakdi; $13 billion
Chirathivat family; $12.3 billion
Chalerm Yoovidhya; $9.6 billion
Krit Ratanarak; $4.7 billion
Vanich Chaiyawan; $3.95 billion
Santi Bhirombhakdi; $2.9 billion
Prasert Prasarttong-Osoth; $2.8 billion
Vichai Srivaddhanaprabha; $2.5 billion
Thaksin Shinawatra; $1.7 billion

Forbes states: “This list was compiled using shareholding and financial information obtained from the families and individuals, stock exchanges and analysts, the Stock Exchange of Thailand and regulatory agencies.” It is not clear whether it includes land holdings.