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Shortly before a 2001 election victory swept him into power in Thailand, Thaksin Shinawatra, founder of a concession-based telecom empire, and his wife transferred their 35 per cent stake in Shin Corp to their closest family members, including their children and Mr Thaksin’s brother-in-law.

The move was intended to meet Thai constitutional requirements that bar cabinet members from holding more than 5 per cent in any company, and also from holding any stake in companies that benefit from government policy, to prevent conflicts of interest

But while Mr Thaksin’s sale of his shares to his relatives brought him into legal compliance with Thailand’s 1997 reformist constitution, the transaction never dispelled the public perception that the premier remained keenly interested in the family business.

News that the Shinawatra family is attempting to sell at least part of Shin Corp, its telecom-to-airlines business, potentially raising up to US$1.7bn, has raised speculation in Thailand that the transaction is intended to boost Mr Thaksin’s political popularity, which has flagged since his re-election last year.

Certainly if there is a sale, Mr Thaksin, a marketing genius, can be expected to extract maximum political mileage from the deal.

“It would be the first big gesture from him that he intends to reduce his business holdings directly, reduce charges of conflict of interest and reduce the political temperature around him,” says Thitinan Pongsudhirak, a Chulalongkorn University political scientist. “He could brandish this at his critics.”

But analysts of Mr Thaksin’s career say the decision to sell Shin Corp is the result of hard-headed business and political calculations. “It’s profit-taking time,” says Korn Chatikavanij, a Democrat member of parliament and former managing director of JPMorgan Securities (Thailand). “He has done everything he can for his business, and now it is time to get out.

“From a business perspective, the rate of growth, especially in earnings per share, isn’t going to be as spectacular as it has been over the past four or five years. From a political perspective, the operating environment can only be worse – it can’t be better.”

During Mr Thaksin’s tenure in office, Shin Corp has benefited from various favourable government decisions. These include: the reduction of the crushing licence fee burden of iTV, the group’s TV channel; Board of Investment tax breaks for Shin Satellite’s IPStar satellite project; and delays in creating a National Telecom Commission, which was supposed to create a level playing field in the skewed mobile industry.

Shin Corp has also diversified into new ventures, including aviation with Thai AirAsia, a joint venture with Malaysian budget airline AirAsia. The venture was swiftly granted a range of government breaks, including a 50 per cent discount on docking fees by the Airports Authority, and income tax breaks.

Mr Thaksin has repeatedly denied using his political power or influence to further the family business interests.

But within the wider Thai business community, many are upset about what they perceive as overt government favouritism towards companies linked to Mr Thaksin or the other members of his cabinet, which is packed with representatives of powerful business families.

One prominent Bangkok businessman says such close ties mean that Thaksin’s business empire would be vulnerable should there be dramatic political changes.

“The business community has been complaining for a long time about not getting a fair deal, and should there be a change-over, or a political accident, people will get back at him.” Selling the company now, the executive says, “provides him with liquidity in case something happens”.

Chris Baker, author of a book on Mr Thaksin’s business and political career, suggests: “His thinking may be that in case there is a disaster, they may need to have a bigger holding off-shore.”

By selling now, Mr Korn says, the Shinawatra family avoids any capital gains tax because of a regulation that could easily be changed by a future new government, potentially costing the family tens of millions in taxes should they decide to sell later. Waiting until the next election looms closer may not be wise either.

“It makes absolute sense,” says Mr Korn. “He is not going to find a better time.”

Copyright The Financial Times Limited 2019. All rights reserved.

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