Year-end Special: Top 10 Business News Stories

[Jai Dee]

YEAR-END SPECIAL: TOP 10 NEWS

2006 - the year of the rising baht

Central bank took on the speculators, record Shin Corp deal and retailers fought to stop the multinationals Capital control measures

In a bid to stem baht speculation, the Bank of Thailand (BOT) demanded foreign investors bringing money into Thailand deposit 30 per cent of that in non-interest-bearing accounts.

If those investors decide to take that money out of Thailand within one year, the BOT will return a third only of the 30 per cent on deposit.

The day after the announcement, the SET main index plunged almost 15 per cent, slashing market capitalisation by Bt820 billion. The impact was so huge the central bank reversed part of its policy and exempted foreign capital inflows for share and futures investing.

In spite of the BOT moves, the baht has not weakened as expected and the control measures are having an effect on other sectors. There is a widespread feeling the BOT move was too strong.

The bank's credibility remains in question.

The Shin Corp-Temasek deal

Mergers and acquisitions in Thailand saw a new record on January 23 when the Singapore-government investment arm Temasek Holdings purchased for Bt73.3-billion the shares of Shin Corp held by the Shinawatra and Damapong families.

A tender offer for additional shares in Shin Corp and its subsidiary Advanced Info Service saw Temasek spend a total of more than Bt140 billion for 93 per cent of Shin Corp.

Thailand is unlikely to see a future deal of similar proportions.

However, the sale was not plain sailing and its tax implications and the alleged use of nominee companies to subvert foreign-ownership laws continue to have ramifications.

Retail rows

Small provincial retailers have united to fight the aggressive expansion of multinational retailers, particularly Tesco Lotus which, through its Tesco Lotus Express outlets, is in direct competition with privately owned businesses.

The outcry prompted the Commerce Ministry to start drafting legislation to regulate the retail sector and introduce zoning measures to temper rapid and widespread expansion by multinationals.

The law is expected to become effective next year. However, multinationals have accused the government of discrimination.

Egat/PTT privatisation

In April, the Supreme Administrative Court handed down a historic judgement abolishing two laws supporting the privatisation of the Electricity Generating Authority of Thailand on the grounds of conflicts of interest.

The listing of the state electricity producer had been stalled since November the previous year. It is now off altogether.

The court ruling sets a precedent on how conflicts of interest are defined. It stated committee members and government advisers Olarn Chaipravat and Parinya Nutalai were not neutral.

The decision marked a rare victory for consumer groups. These are now expecting a similar win in a case against PTT. Its 2001 privatisation involved alleged conflicts of interest, they say.

They claim some members of the privatisation committee were PTT officials who were allocated shares.

Market observers fear if PTT privatisation were revoked, the Finance Ministry will have to spend billions to buy back shares. The company has the largest market capitalisation on the SET. They worry the SET will be diminished in the eyes of investors, too.

Alcohol-ad ban

The Food and Drug Administration decided to ban all alcohol advertising all the time - television, radio, outdoor and indoor and movable ads like T-shirts illustrating alcoholic beverages.

The tough regulation is the first of its kind anywhere and has been criticised by the brewing and distilling industries, importers, distributors and pubs and restaurants and broadcasters and the advertising world.

These interest groups claim the ban will not reduce alcohol consumption. They cite the 70-per-cent market share held by white spirits that are not advertised at all.

If the rules are enforced, an annual Bt2.6 billion in advertising spending will disappear. Many worry sports and other events will have to be cancelled for lack of sponsors. Already distiller Johnnie Walker is threatening to pull its Classic golf tournament from Thailand next year. The Bt30 million Thai Beverage gives to the national football team is in doubt.

GE says 'okay' to Bay

August 28 saw General Electric's financial arm snap up 25.4 per cent of Bank of Ayudhya following approval from the Finance Ministry and the BOT.

The bank had scheduled a shareholder meeting for September 20 to approve the deal. The coup threw the situation into doubt but GE Capital International Holdings confirms it will stick with the deal. The first purchase of 1.39 million shares will be made by January 10. The shares are priced at Bt16 each, putting the purchase price at Bt22.24 billion.

Thai Beverage stock listing

The country's biggest brewer Thai Beverage aborted its bid to list on the SET in the face of vigorous protests from temperance and religious activists.

The maker of the best-selling Chang Beer was forced to list on the Singapore exchange, where it became that country's biggest initial public offering for a decade.

The May 30 listing raised Bt200 billion.

The Sirivadhanabhakdi family realised Bt20 billion from the sale of its shares.

The failure to list Thai Beverage in this country led to the resignation of stock-exchange president Kittiratt na Ranong.

Call jam

Fierce competition between cellular-telephone operators this year prompted call jams on all networks and millions of frustrated users.

The cell companies admitted the congestion was a result of promotions offered to lure new customers sparked by the entry of Norway's Telenor into the local market through its purchase of United Communication Industry in November 2005.

Some packages charge subscribers only for the first few minutes of each call, encouraging them to talk from dusk until dawn.

Industry watchdog National Telecommunications Commission stepped in and forced operators to expand networks to ease call traffic.

Operators agree promotions will end once all telecom companies enter the commission's interconnection-charge regime. This means they have to share call revenue if more than one network is involved.

Major operators Advanced Info Service, Total Access Communication, and True Move have signed the agreement and more are expected to follow next year.

TPI saga

Thai Petrochemical Industry ended its thorny debt restructuring on April 26, nine years after collapsing.

The company has been renamed Integrated Refinery Petrochemical Corp.

It had been in financial crisis since the 1997 Asian economic meltdown and entered rehabilitation in 1998 with debts of Bt139 billion.

The saga ended when PTT, the Government Pension Fund, Government Savings Bank and the Vayupak Fund bought in.

The new shareholders successfully entered into an agreement with creditors, which led to Bankruptcy Court approval for a rehabilitation plan.

Founder Prachai Leophairatana continues to fight for control of the company - this country's biggest-ever bad debtor.

Telecom concessions

Information and Communications Technology Minister Sitthichai Pookaiyaudom has asked the Council of State to examine all private telecom concessions.

He wants to ensure fair competition. Many wonder if the exercise will be complete by the end of this government's one-year term.

Source: The Nation - 30 December 2006