Thai opinion: Fat cats lick their lips over fresh era of privatisation

[webfact]

OVERDRIVE
Fat cats lick their lips over fresh era of privatisation
Thanong Khanthong

BANGKOK: -- Among the biggest challenges for the National Council for Peace and Order (NCPO) is to reform the state enterprises and the energy sector. In the first instance, NCPO chief General Prayuth Chan-ocha has appointed a "Super Board" of all the big names of finance and the stock market, such as Banthoon Lamsam, Dr Prasarn Trairatvorakul, Rapee Sucharitkul and Banyong Pongpanit.

The Super Board is tasked with offering the military regime guidelines on how to streamline the operations of state enterprises, improve their efficiency and eventually have them corporatised for stock-market listing. Privatisation is back in vogue.

Thailand boasts 56 state enterprises, with combined assets of Bt5 trillion. Korn Chatikavanij told me the other day that during his tenure as finance minister it was very difficult for him as an outsider to intrude on the turf of the state enterprises. Korn added that Dr Somkid Jatusripitak had told him that he also ran into difficulties in handling the state concerns, which had their own way of doing things. It seems that the state enterprises have formed, collectively, a small empire of their own. So how should the Super Board proceed on a blueprint for their overhaul?

There are now two schools of thought on how the state enterprises should be handled. One school believes they should not be in the hands of the politicians but should instead be privatised to improve their efficiency and transparency. As such, politicians would no longer have vested interests. This school of thought appears to contradict what former finance minister Korn and Dr Somkid experienced during their tenures as finance minister.

Another school of thought argues that privatising the state's assets amounts to transferring public wealth into private hands. The general public would not benefit from privatisation because they do not have money to buy the shares. State assets, after privatisation, would thus end up in the hands of well-to-do investors, politicians or foreign investors, all of whom are profit-oriented. The result would be increased income inequality.

Past experience does not bode well for further privatisation. Let's examine the cases surrounding the PTT, Thai Airways, TOT, CAT and Egat. Certain politicians, whose names I do not want to mention, colluded to create a big mess in Thailand's privatisation and non-privatisation programme. The privatisation of PTT, completed under the Thaksin Shinawatra administration, massively enriched the bank accounts of the politicians, management and bureaucrats involved. Did the public benefit from PTT's privatisation? Has PTT improved its transparency, particularly in its dubious overseas investments? Does PTT look after the interests of the Thai people or those of its shareholders?

Is Thai Airways better managed now than before it was privatised? There is no proof to suggest so. The airline faces the same old problems that it had before going public. There are even rumours of deep-seated financial problems.

The TOT (Telephone Organisation of Thailand) and the CAT (Communications Authority of Thailand) have been corporatised, ready to go public. But they have not been able to do so. Why? At the same time, private firms AIS, DTAC and TRUE have become major players in the Thai telecom market while their state-owned counterparts have been stripped of their assets or real potential and cursed by an obsession with efficiency. We all know who the big telecom tycoon is. Fortunately, the privatisation of Egat has been blocked by the courts, otherwise the telecom tycoon would have both PTT and Egat in his pocket.

It will now be interesting to see how the Super Board advises the military regime on state-enterprise privatisation. I guess the aim is to privatise the ones with potential for capital gains after stock-market listing, while the poorly managed ones will be left for the taxpayers to continue to foot the bill. Either way, the public will lose out.

Look at what Vladimir Putin, Russia's president, has accomplished with that country's natural resources. Russia would not have emerged as a superpower had it privatised its energy resources to the extent that the government lost control over state enterprises. Putin has smartly used Russia's clout in supplying one-third of Western Europe's natural gas needs as a tool to advance his foreign policy in Ukraine. Elsewhere, Latin American companies from Venezuela to Argentina have been trying to reclaim state assets from predatory foreign companies.

Thailand has abundant natural and energy resources. Yet, strangely enough, General Prayuth has surrounded himself with advisers who believe that Thailand has scant energy resources and that state enterprises are dinosaurs in a modern economy and should succumb to big money.

Source: http://www.nationmultimedia.com/opinion/Fat-cats-lick-their-lips-over-fresh-era-of-privati-30237666.html


-- The Nation 2014-07-04

[shirtless]

Privatisation usually leads to higher prices, your electricity is expensive already, Be careful once you sell an asset of the country its gone forever.In Australia this has been going on for many years when the money is spent, where do you get your revenue , Governments raise taxes and create new ones.

[chainarong]

You need to be very careful when the privatisation of government assets gets into the private arena, it not necessary means reduced charges and don't believe the B/S banded about by private power brokers in the back ground , in fact it only increases charges , private companies only answer to share holders and couldn't give a flying F!!k about the ordinary person in the street, General Prayuth , needs to study the privatisation of companies in the west , speaking from the Australian experience, it has not done the governments proud , it has placed hundred per-cent increases in costs over five years on consumers and selling the family farm, after it is gone, what assets have you left.

[Robby nz]

Same in NZ, everything sold off that was possible to sell, banks, insurance even the rail network.

In the case of rail it has turned out to be a huge mess, first thing the private 'investor' did was shut down all the unprofitable lines.

They have deteriorated so badly that there is no chance of them ever again opening, in some cases they even ripped up the rails and sold them.

This put greater pressure on the roads with higher maintenance costs.

Govt ended up having to buy back what was left after said investor had made their pile and was no longer interested for it would seem the costs of ongoing maintenance and replacement of rolling stock meant it would no longer be profitable.

Buy back price was reported to be NZ$1.

[noitom]

"All the big names." That should tell us somethng about where Thailand is headed. Round up the usual suspects. The Thai military //removed by Admin // is very serious about reform. They are making up a new review board from all the big names, the "fat cats" as the headline points out.

The Thai article puts out that Korn told the reporter that as an "outsider" with state agencies ...., therefore, are we supposed to assume that Korn is one of the "all the big names?"

Edited July 4, 2014 by webfact
a word was removed /Admin

[Roadman]

Same in NZ, everything sold off that was possible to sell, banks, insurance even the rail network.

In the case of rail it has turned out to be a huge mess, first thing the private 'investor' did was shut down all the unprofitable lines.

They have deteriorated so badly that there is no chance of them ever again opening, in some cases they even ripped up the rails and sold them.

This put greater pressure on the roads with higher maintenance costs.

Govt ended up having to buy back what was left after said investor had made their pile and was no longer interested for it would seem the costs of ongoing maintenance and replacement of rolling stock meant it would no longer be profitable.

Buy back price was reported to be NZ$1.

To be fair where the Aussies are saying in their examples that it is a bad move and your example of our Kiwi railways is not a good example either. While the railways have been run down it also needs to be pointed out that they used to cost the taxpayers exorbitant money every year to keep the "old peoples home" running. Old peoples home as I had family working there and in the business I was in even as a young man who dealt with them the inefficiencies were there to see. They were filling a social function of employing people and losing billions a year the same as many other departments that were privatised. The one I know well is the forestry example. We used to run under the forest service at a 2 billion a year lose the year before privatisation and that was back in 1987. Logs were sold at ridiculous prices to sustain inefficient local mills and it was also used as an unemployment social agency. The $2 billion 1987 lose was turned around by the Forestry Corporation even stuck with the worthless long term log supply contracts to a $0.2 billion profit in the first year. To be fair some costs the Forest Service was hit with went to the new DoC. The other obvious side to this was no New Zealand investors had the money or want to build modern mills to deal with the wall of wood that came on stream.

The issue is not whether it is wholesale clean out of assets or not but rather reviewing those assets that would be better privatised fully, or the government hold 51% ownership of, or retain in full. That is the challenge for Thailand.

[Carrerakiss]

The Singapore model for private/public enterprises isn't a bad one. Enterprises like ports, utilities etc are privately owned and quoted on the stock exchange, so run for profit in an efficient way, but the government always retains a controlling share stake or legal right to step in, so can wield the big stick if the enterprise acts against the public interest.

Trouble is, in Thailand that would allow interference from less than honest politicians, rather than a safety net to protect the public.

Have to say that in Thailand there isn't going to be a good answer for this one. Privatize and the hi so rich will clean up again, don't privatize and the enterprises will stay inefficient and be the toy thing of whatever government is in power at the time.

[jpeg]

 

Privatisation usually leads to higher prices, your electricity is expensive already, Be careful once you sell an asset of the country its gone forever.In Australia this has been going on for many years when the money is spent, where do you get your revenue , Governments raise taxes and create new ones.

 

Same thing happened under Thatcher in the UK. Everything sold off. Telecoms, electricity, transport (most notably rail) and last but by no means least, the theft that was East Anglian Water, sold off to the French with prices tripling overnight and next day disconnections/court orders. If Thailand goes down this road, the already excellerating cost of living will rise dramatically with everything in the hands of foreign carpet baggers and those amongst the already fabulously wealthy Thais. Don't do it.

Edited July 4, 2014 by jpeg

[wirat69]

Same in NZ, everything sold off that was possible to sell, banks, insurance even the rail network.

In the case of rail it has turned out to be a huge mess, first thing the private 'investor' did was shut down all the unprofitable lines.

They have deteriorated so badly that there is no chance of them ever again opening, in some cases they even ripped up the rails and sold them.

This put greater pressure on the roads with higher maintenance costs.

Govt ended up having to buy back what was left after said investor had made their pile and was no longer interested for it would seem the costs of ongoing maintenance and replacement of rolling stock meant it would no longer be profitable.

Buy back price was reported to be NZ$1.

To be fair where the Aussies are saying in their examples that it is a bad move and your example of our Kiwi railways is not a good example either. While the railways have been run down it also needs to be pointed out that they used to cost the taxpayers exorbitant money every year to keep the "old peoples home" running. Old peoples home as I had family working there and in the business I was in even as a young man who dealt with them the inefficiencies were there to see. They were filling a social function of employing people and losing billions a year the same as many other departments that were privatised. The one I know well is the forestry example. We used to run under the forest service at a 2 billion a year lose the year before privatisation and that was back in 1987. Logs were sold at ridiculous prices to sustain inefficient local mills and it was also used as an unemployment social agency. The $2 billion 1987 lose was turned around by the Forestry Corporation even stuck with the worthless long term log supply contracts to a $0.2 billion profit in the first year. To be fair some costs the Forest Service was hit with went to the new DoC. The other obvious side to this was no New Zealand investors had the money or want to build modern mills to deal with the wall of wood that came on stream.

The issue is not whether it is wholesale clean out of assets or not but rather reviewing those assets that would be better privatised fully, or the government hold 51% ownership of, or retain in full. That is the challenge for Thailand.

... and you did not start on the Post Office....

[VocalNeal]

I think the post office works well in Thailand. Everything I mail gets to its destination and everything mailed to me the same. Website is in English, delivers on Saturdays, can post a motorbike... Try looking at the Indonesian post office!

[Robert24]

I'm sure that many of the state enterprises would work much better if privatized. Look at telecom providers, they work much better privatized than in the government hands. I would also argue that prices in the telecom market are lower because of healthy competition between the private companies. Also take a look at Thai Airways. Why does the Thai government need to own an airline? Why do politicians need to be appointed at the top of these companies instead of capable business people?

Btw PTT hasn't been privatized, the government still owns a majority of the shares of the company (same as Thai Airways)

My view is that only key areas such as anything that concerns security or key infrastructure (i.e. Electricity) should stay in the government hands, everything else should be fully privatized. And the money from privatization should be used to reduce the debt of the country.

[smileydude]

Some common assumptions:

Privatisation = better governance and efficiency

State-owned = nepotism and corruption

versus

Privatisation = Bottom-end is profit and not public benefit

State-owned = Can be tailored to benefit the public via populist polices (think diesel, LPG, rice subsidies etc.)

Best option may be a hybrid where the state still has a say on what the bottom-line is, profit and/or public service while using the governance, accountability, transparency and efficiency management often seen in the private sectors.

[Eric Loh]

The Singapore model for private/public enterprises isn't a bad one. Enterprises like ports, utilities etc are privately owned and quoted on the stock exchange, so run for profit in an efficient way, but the government always retains a controlling share stake or legal right to step in, so can wield the big stick if the enterprise acts against the public interest.

Trouble is, in Thailand that would allow interference from less than honest politicians, rather than a safety net to protect the public.

Have to say that in Thailand there isn't going to be a good answer for this one. Privatize and the hi so rich will clean up again, don't privatize and the enterprises will stay inefficient and be the toy thing of whatever government is in power at the time.

Good points. The way Singapore do this is by having majority share owned by 3 wholly owned government holding companies of which Temasek is the biggest. Most Temasek capital is from the Central Providence Fund and this one way the funds are invested. To have such structure in Thailand, new laws will have to be written and if it involves funding from pension or social funds, it might curtail a review of the charter. Singapore have proved to the world that SOE can performed on par with private owned corporations. Just look at SIA and Singapore Telecom as examples.

[Jeffreyake]

"Does PTT look after the interests of the Thai people or those of its shareholders?" there is no evidence shown that it does not, but manipulation works: now reader suspects that PTT harms Thai people's interest.

like all leftists "journalism" this article is full of manipulation and distortion of facts. The truth is privately - managed companies function much more effective that state-owned, especially if laws are enforced. This is the universal rule but general public just can't tolerate the idea that somebody will get a huge reward for there management skills. The normal point of view of leftism - indoctrinated lumpen-parasites.

And about Putin: after he "nationalized" oil and gas industry (by such measures as putting private owners in jail) operation costs of these companies doubled and tripled but Russian everyman is happy. State-owned companies in Russia build oil and gas pipes 10-12 times more expensive than private-owned was going to build, but envious parasites are happy.

[belg]

privatisation, under the fake idea that things will get cheaper, is a scam

some people will get super rich from it, the one's with the inside information and the one's that can buy the new stock at a cheaper price, aka gotten almost for free

so when can I buy stock in/of the good general ?

[Jonmarleesco]

It would behove the NCPO to look closely at the result of the privatisation of certain previously state-run industries in the UK, the energy sector in particular.

Politicians and civil servants are singularly ill qualified to run industrial enterprises, but the private sector is singularly untrustworthy when it comes to choosing between profit and service. The likes of the energy and water industries, for example, should not be entrusted to the gentle loving care of private enterprise, but their management should be revitalised.

[chainarong]

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Same in NZ, everything sold off that was possible to sell, banks, insurance even the rail network.

In the case of rail it has turned out to be a huge mess, first thing the private 'investor' did was shut down all the unprofitable lines.

They have deteriorated so badly that there is no chance of them ever again opening, in some cases they even ripped up the rails and sold them.

This put greater pressure on the roads with higher maintenance costs.

Govt ended up having to buy back what was left after said investor had made their pile and was no longer interested for it would seem the costs of ongoing maintenance and replacement of rolling stock meant it would no longer be profitable.

Buy back price was reported to be NZ$1.

Can relate to that Robbie , in West OZ, just shut down a whole lot of branch lines, not much left over the years, only main lines.