Thailand’s Military Junta Moving To Extend Control Over Nation’s Powerful State-Owned Enterprises
By Jake Maxwell Watts and Nopparat Chaichalearmmongkol
BANGKOK—Thailand’s military junta is moving to extend its control over the nation’s powerful state-owned enterprises, a formidable economic sector that has been a crucial arena for Thailand’s power struggles in recent years.
The nation’s generals, who took power in a coup last month, have stopped short of an outright seizure of the nation’s 56 state-owned companies, which include Thai Airways International THAI.TH +0.64% PCL and oil-and-gas producer PTT PTT.TH -1.34% PCL. But they have put public pressure on the heads of these firms to resign, and many have begun to comply.
Voravidh Champeeratana, the chairman of Krung Thai Bank PCL, KTB.TH -3.33% stepped down on Monday, following the resignation over the weekend of PTT’s chairman. The heads of the Government Lottery Office and the Airports of Thailand AOT.TH -2.76% PCL also have resigned since the coup. So far, none have been replaced.
The state sector has long been a battleground in the clash between Thailand’s two competing political factions, which culminated in the army’s takeover last month.
There is a lot at stake: These firms have combined assets of $360 billion and they spend more annually on investment than the government does. Thailand’s listed public companies and their subsidiaries account for a fifth of the local stock-market capitalization.
Politicians have fought to control these companies, whose revenues are a source of financing for government projects. Analysts said it is common for administrations in Thailand, whether military or civilian, to put allies in charge either as a reward for loyalty or as a way to exert control over spending.
“If we’re talking about investment projects to boost the economy, state enterprises are more important than the government,” said Niphon Poapongsakorn, an economist at the Thailand Development Research Institute, a think tank.
Thailand’s military junta says its intention is to make state enterprises more efficient.
“If we have to make any change, we will find good people who can contribute to the country and put them to work,” Air Chief Marshal Prajin Juntong, the junta’s economic policy czar, said after the coup.
Former Prime Minister Thaksin Shinawatra, a telecom tycoon, moved many of his allies into state companies following his ascent to power in a popular vote in 2001. That upended decades in which Thailand’s traditional royalist elite, which has close ties to the military, kept tight control over government and the state sector.
Mr. Thaksin tried to privatize some state enterprises to boost liquidity and listings on Thailand’s stock exchange, and sold stakes to the public of some companies including PTT, Airports of Thailand PCL and telecommunications provider MCOT PCL. But the military deposed him in a 2006 coup, cutting short his privatization plans.
The struggle since then between Mr. Thaksin’s backers and Thailand’s establishment has created a revolving-door dynamic at state enterprises. Mr. Thaksin’s sister, Yingluck Shinawatra, led her party to power in elections in 2011 and set about restoring control over the state sector, facilitating the appointment of allies to head PTT and MCOT.
In other sectors, the establishment was able to keep some influence in an uneasy balance with Ms. Yingluck’s allies. Most board positions are selected by company committees, typically a rubber stamp for the government’s choice, former directors say.
Army chief Gen. Prayuth Chan-ocha, who led the military’s grab for power in May and heads its new ruling council, has sat on the board of TMB Bank PCL since before the coup. Mr. Prajin, the junta’s economic czar, has been on the board of Thai Airways from before the army’s seizure of power.
The Government Lottery Office, which runs the nation’s monthly state lottery, has had a number of bosses in recent years. The office made 2.7 billion baht ($83 million) net profit in 2012 on 61 billion baht in revenue, the latest available figures.
Much of the profits go to fund government programs. The office also can print tickets for special lotteries to raise additional funds for specific government projects.
Since the coup, the office’s former director-general, Attagrit Tharechat, who was appointed by Ms. Yingluck, has stepped down. Mr. Attagrit denied the junta had pressured him to resign.
“In order for the organization to move forward, I should open the door for the new administration,” he said.
Chaiwat Pasokpuckdee, another former director-general of the lottery under Mr. Thaksin, said most board members of state-owned companies are politically appointed and lack knowledge about operations.
Wanchai Surakul, director-general of the office under the establishment government of former Democrat Party prime minister, Abhisit Vejjajiva, said it was normal for heads of state firms to resign when governments change to “make room for new people.”
Write to Nopparat Chaichalearmmongkol at email@example.com