Published on January 18, 2006

SET misses out on what would have been its biggest-cap firm due to PM’s fear of alienating vocal groups like anti-drink lobby. Losing Thai Beverage Plc to the Singapore Exchange (SGX) might be considered a trivial issue when compared to other pressing emergencies facing the government.

However, it marks yet another defeat for the government as a whole and the blame for it lies solely with the government’s lack of strength and its failure to push its goals through.

Thai Beverage, an amalgamation of 46 whisky and beer interests under Charoen Siriwadhana-bhakdi, had been expected to list on the Stock Exchange of Thai-land (SET) since 2004 when the company underwent restructuring in preparation for the listing.

Given the company’s size, this goal was in line with the government’s objective of doubling the SET’s market capitalisation within five years. With paid-up capital of Bt22 billion, the company’s market capitalisation is estimated to be around Bt200 billion - surpassing even PTT Plc, which is currently the company with the largest market capitalisation, and Shin Corp Plc with a market cap of around Bt135 billion.

The more big-cap stocks present in the SET, the more attractive the exchange will be. And in the long run, with higher liquidity, the SET will become the perfect venue for Thai companies to raise funds to finance their expansion.

Prime Minister Thaksin Shinawatra, a businessman, and Finance Minister Thanong Bidaya, a former banker, realise this. The pair have stressed the importance of Thai Beverage’s listing in boosting the attractiveness of the market ever since the company filed its listing application to the Securities and Exchange Commission last year.

Unfortunately, they were just sweet-talking, without any serious intention to make the listing a reality, apparently for fear of irritating anti-drinking groups including the one led by Chamlong Srimuang, the former leader of the defunct Palang Dharma Party. Because of his clean record, Chamlong has long been helpful in raising support for Thaksin, also a former Palang Dharma member.

Thanong and Thaksin never took a definitive stand on whether Thai Beverage should be listed on the SET. Without their support, it is difficult for state organisations like the SEC and the SET to act alone in defying protesters.

Apparently, the protesters were pleased with their vague position on the matter - so much so that they weren’t overly concerned about the leaders’ failure to initiate measures to limit alcohol consumption. Since the Thai Beverage affair flared up, only one such measure has been enforced - the time restrictions on alcohol sales at retail stores. That alone could not reduce consumption, as the number of outlets where alcohol can be purchased has expanded greatly in line with the expansion of retail outlets such as 7-Eleven and Tesco Lotus. Even the “Don’t Drive Drunk” campaign could not curb alcohol consumption because of the lack of police enforcement and the widespread expansion of nightlife venues.

The government is on the right track by considering a ban on alcohol print ads and television commercials, apparently to please anti-drinking groups that are seeking measures that would limit alcohol consumption. Still, this was announced on the same day that the SEC allowed Thai Beverage to list on the SGX, months after Thai Beverage filed its listing application.

As far as the advertising ban is concerned, it could take several months to enforce it and it is not certain if this would lead to lower prices of alcohol products once companies no longer need to spend money on advertising.

It is a pity that while the government is preaching about its plans to boost the attractiveness of the SET, a Thai company will be helping to bolster the SGX, already one of the most attractive exchanges in Asia.

It is also a pity that on the day the SEC was due to make its decision, Thaksin was out on his roadshow in the Northeast. Meanwhile, Thanong, as chairman of the SEC, deliberately missed the board meeting. He claimed that his presence could wrongly influence the board’s decision. Yet, if neutrality was top on his list of concerns, he would no longer be SEC chairman, let alone hold on to the finance minister’s position.

This is yet another instance in which the government has demonstrated its inability to make decisions that are necessary to strengthen the economy, even if it means angering some supporters. The public knows that any decision contains pros and cons and it is up to the government to push forward policies that contain more pros than cons.

Achara Deboonme

The Nation

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