Following the sale by the Thaksin and Damapong families of their controlling stake in Shin Corp, Temasek was found to be in breach of regulations designed to limit foreign ownership of telecommunications, broadcasting and aviation businesses for reasons of national security. This is because Shin is also a major shareholder in subsidiaries including Shin Satellite Plc (ShinSat), iTV Plc and Thai AirAsia, as well as AIS, the country's largest provider of mobile-phone services.

AIS is believed to be the main target of Temasek's acquisition, because Singapore Telecommunications (SingTel), which is controlled by Temasek, has previously expressed interest in establishing a foothold in Thailand's mobile-phone market. But the Shinawatra and Damapong families insisted on selling off Shin Corp outright, so as to avoid having to pay huge taxes that the families would otherwise have been subjected to if the deal were made indirectly between AIS and Temasek.

It remains unclear how Temasek will resolve this mess. With growing political uncertainty brought on by the current anti-Thaksin campaign, the deal is now in question. After completing the public-tender process and handing out its cheques this coming Tuesday, Temasek must clarify its intentions for Shin.

As more details of the Shin deal come to light, public anger, which was directed at first at Thaksin and his family, is starting to shift towards Temasek for its complicity in Thaksin's sell-off of businesses that have national-security implications.

Temasek is the investment arm of the Singaporean government, albeit with a relatively high level of autonomy, and so the anti-Thaksin movement is asking that country to force Temasek to back off from the deal. Political activists are calling for a boycott of Singaporean goods and services if Temasek insists on proceeding with the takeover. The Singapore Embassy's response has been rather neutral, saying that since Temasek is an independent agency, the Singapore government cannot interfere in its business decisions.

Nevertheless, Temasek could never have imagined that it would face such a fierce public uproar over its takeover of Shin. After all, Norway's Telenor has already swallowed up United Communication Industry, which runs DTAC's mobile-phone network. Temasek also could never have imagined that its use of nominees to circumvent limits on foreign ownership prescribed by Thai law would be subject to this much scrutiny. The whole issue inevitably has taken on political overtones. But as Thaksin finds his popularity sinking quickly, his business dealings are increasingly subject to microscopic examination.

It will be tough for Temasek to pull itself out of this quagmire. Indeed, it plans to divest its holdings in such Shin subsidiaries as iTV, Thai AirAsia and ShinSat, because it would be difficult to control these concessions without breaching foreign-ownership limits. Temasek would prefer to retain AIS, using it to help support SingTel's mobile-phone operations on a global scale.

It is somewhat understandable that the anti-Thaksin movement would want to denounce Temasek for its Shin takeover. But anti-Temasek sentiment should not be allowed to escalate into an anti-Singapore campaign specifically or anti-foreigner feelings in general. Thailand remains an open economy that welcomes foreign investment. What we need now is a sound regulatory framework that can create a level playing field, foster fair competition and protect the consumers' interest.

After Temasek's clarification next week, we should have a clearer idea of how the situation could develop.