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Thai Generals and Corruption; A modest proposal to privatize Thailand’s state enterprises

Thai Generals and Corruption

A modest proposal to privatize Thailand’s state enterprises.

Updated June 12, 2014 10:25 p.m. ET

The Thai junta sent out its spokesman, Colonel Werachon Sukondhapatipak, on Wednesday to tell foreign journalists to stop calling last month’s “military intervention” a coup. Also, he reminded the press corps that Thailand doesn’t have political prisoners, just people who have been invited to enjoy the military’s comfortable accommodations.

When the laughter died down, Col. Werachon reiterated the Thai junta’s plans to root out corruption from all government institutions. The generals will set up an inclusive Reform Council to come up with the plan.

We don’t doubt for a moment that Gen. Prayuth Chan-ocha, who has installed himself as acting Prime Minister, has the purest of motives. But previous military governments started out with similar ambitious promises and ended up just as corrupt as the politicians they replaced.

So here is one modest proposal for a reform that would do more to reduce corruption than all of Thailand’s 13 coups combined: privatize the state enterprises that dominate large parts of the economy. The rich profits they earn fuel Thailand’s patronage politics and encourage a “winner takes all” dynamic that has polarized the nation.

On May 31, the junta called in the heads of 56 large state companies, many of them appointed by the ousted government of Yingluck Shinawatra, and “invited” them to resign. But putting these cash cows back in the hands of the aristocratic elite will not solve corruption. Only privatization will remove the temptation for rent-seeking, and it will also force the companies to become more efficient and offer consumers lower prices.

That seems like a no-brainer. But then again, some cynics doubt that the generals really want to tackle corruption. Their bete noire, then Prime Minister Thaksin Shinawatra, planned in 2006 to privatize several of these companies, starting with the Electric Generating Authority of Thailand. His plans came to nought because he was overthrown in a coup, er, military intervention.

 

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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