A week ago now I said something here about Thaksin Shinawatra, the prime minister of Thailand ousted in a coup in 2006 who has recently returned to face corruption charges.
Today I'll just briefly record the new developments there. Thaksin has pleaded "not guilty." Also, his request for a month-long trip to the UK has been granted.
Instead of covering the same ground I did last week about Thaksin's career, let's try to put it into a bit of context. In my day job at HedgeWorld we ran a story recently of a survey, released in November, by the consulting firm Oliver Wyman.
Wyman's study said that among hedge funds in Asia's debt markets, China and India are the two most popular destinations for their cash, despite the infamous illiquidity they can encounter in either place.
It found that Thailand was waaay down the list of desirable locales for such investors.
In fact, the list is this (name of country followed by the percentage of surveyed funds putting their money there).
China: 78
India: 76
Japan: 71
Taiwan: 59
South Korea: 45
Philippines: 44
Australia: 39
Thailand: 33
Indonesia: 30
Hong Kong: 29.
The significance of the list is perhaps not immediately apparent.
My take on it is this: such hedge funds make a profit only on inefficiencies. If a debt market is too well developed already, they'll turn away. Because in such a case, the assets are already priced at their value, and there won't be arbitrage plays.
On the other hand, the kind of inefficiency that makes a country attractive is of a specific sort. Hedge funds that are playing the credit markets aren't making their money off political chaos or inadequate infrastructure. They want stability, functioning courts, passable roads and reliable bridges etc. China and India possess both of these requirements. They've got the infrastructure that allows for the normal conduct of business, and they've got markets still inefficient enough for wily speculators to find profit opportunities.
A low place on that list, then, can be either good news for a country or bad. It's good news for Australia and Hong Kong, which both had efficient enough markets to scare off such funds. But its bad news for Thailand and Indonesia, where the basics aren't yet considered trustworthy.
The 2006 coup itself was presumably a large part of the reason for that in Thailand's case. I of course wish the people of the country well and hope that the routine resolution of the charges against Thaksin will prove something of a showcase for the routine functioning of a well-honed legal system.
Showing posts with label Thaksin Shinawatra. Show all posts
Showing posts with label Thaksin Shinawatra. Show all posts
13 March 2008
06 March 2008
Thinking about Thaksin
Thaksin Shinawatra returned to his homeland, Thailand, on February 28.
He has been in exile for a year and a half, when Thaksin -- the prime minister then -- was deposed by a military coup.
The junta stepped aside peacefully last year, arranging for elections, and a new incarnation of Thaksin's political party won those elections, as the leader of a six-party coalitions.
Six-party coalitions can be fragile things, so although the new prime minister (Samak Sundaravej) is an associate of Thaksin's, it's a bit much to speak of Thaksin, as some have, as the "kingmaker" in this situation.
Indeed, Thaksin is under something of a cloud himself. He has returned not in triumph but to face criminal charges arising out of his time in office.
One charge involves a 2003 land deal. While Thaksin was PM, his wife bought a plot in Bangkok from the central bank's distressed-asset fund. The accusation is that this was something more than just a sharp bit of dealing by a woman who just happened to be married to the prime minister, but that it was an inside fix.
The other charge relates to the events that set off the military coup. In 2006, the Shinawatras sold their interest in a computer company, Shin Corp. (they owned 49.5% of its equity) to Temasek Holdings, the sovereign wealth fund of the government of Singapore, for about US$1.9 billion. They paid no capital gains tax on this sale. It appears that under Thai law they were exempt from the tax, although the legality of it may only make it more scandalous than otherwise.
Also, Thailand's SEC found that the couple's son, Panthongtae Shinawatra, violated some of its disclosure rules in connection with the Shin Corp. transaction.
Such points are mere technicalities, though, compared to the issue of who bought the company the family was selling. One of their political opponents said that Thaksin was worse than Saddam Hussein for not protecting the Thai economy from foreigners: "Dictator Saddam, though a brutal tyrant, still fought the superpower for the Iraqi motherland," whereas Thaksin was selling out his motherland to Singapore.
Although there were lots of other reasons various factions were unhappy with Thaksin, as there always are, it was the Shin sale that sent people into the streets. Mass anti-Thaksin demonstrations, answered by mass pro-Thaksin demonstrations, created the climate of disorder that, in turn, created at least a plausible pretext for the coup that autumn.
Now he's home, and this Wednesday, March 12, 2008, Thaksin will appear in court to answer charges related to the 2003 land deal.
Conclusions? I have none to offer, except that all states are failed states. Pragmatism should dictate that we find ways to order our affairs without reliance upon hierarchy, sovereignty, and superstition. Anarcho-capitalism. Catch the fever.
He has been in exile for a year and a half, when Thaksin -- the prime minister then -- was deposed by a military coup.
The junta stepped aside peacefully last year, arranging for elections, and a new incarnation of Thaksin's political party won those elections, as the leader of a six-party coalitions.
Six-party coalitions can be fragile things, so although the new prime minister (Samak Sundaravej) is an associate of Thaksin's, it's a bit much to speak of Thaksin, as some have, as the "kingmaker" in this situation.
Indeed, Thaksin is under something of a cloud himself. He has returned not in triumph but to face criminal charges arising out of his time in office.
One charge involves a 2003 land deal. While Thaksin was PM, his wife bought a plot in Bangkok from the central bank's distressed-asset fund. The accusation is that this was something more than just a sharp bit of dealing by a woman who just happened to be married to the prime minister, but that it was an inside fix.
The other charge relates to the events that set off the military coup. In 2006, the Shinawatras sold their interest in a computer company, Shin Corp. (they owned 49.5% of its equity) to Temasek Holdings, the sovereign wealth fund of the government of Singapore, for about US$1.9 billion. They paid no capital gains tax on this sale. It appears that under Thai law they were exempt from the tax, although the legality of it may only make it more scandalous than otherwise.
Also, Thailand's SEC found that the couple's son, Panthongtae Shinawatra, violated some of its disclosure rules in connection with the Shin Corp. transaction.
Such points are mere technicalities, though, compared to the issue of who bought the company the family was selling. One of their political opponents said that Thaksin was worse than Saddam Hussein for not protecting the Thai economy from foreigners: "Dictator Saddam, though a brutal tyrant, still fought the superpower for the Iraqi motherland," whereas Thaksin was selling out his motherland to Singapore.
Although there were lots of other reasons various factions were unhappy with Thaksin, as there always are, it was the Shin sale that sent people into the streets. Mass anti-Thaksin demonstrations, answered by mass pro-Thaksin demonstrations, created the climate of disorder that, in turn, created at least a plausible pretext for the coup that autumn.
Now he's home, and this Wednesday, March 12, 2008, Thaksin will appear in court to answer charges related to the 2003 land deal.
Conclusions? I have none to offer, except that all states are failed states. Pragmatism should dictate that we find ways to order our affairs without reliance upon hierarchy, sovereignty, and superstition. Anarcho-capitalism. Catch the fever.
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