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Keeping politicians away from the privatisation trough

A priority for reforms is preventing political meddling in state enterprises

The protests delivered another eye-opener when Piyasvasti Amranand took to a stage to share his experience of problems at Thai state enterprises. The former CEO of national carrier Thai Airways International and ex-Energy Minister spoke of the toll political interference had taken on public enterprises. Though little in his speech was news - Piyasvasti himself fell victim to political manoeuvring when he was tossed from the helm at THAI - the ongoing political turmoil has allowed the public to revisit old wounds and re-examine the country's direction.

Thailand's state enterprises have come full circle since the day, several decades ago, when people longed for efficient providers of utilities and services. A person had to wait for years to get a telephone, pay Bt10,000 or more for a number, and search town for a post office if they wanted to send a parcel. Nowadays it's all much faster and easier thanks to ubiquitous service counters in shopping malls and local communities.

But the era of full-blown privatisation also sparked widespread suspicion among citizens. Debates still rage over the benefits and shortcomings of the public-service sell-off. Government was failing to cater to people's needs, and having the private sector chip in to boost efficiency was the solution. But then questions arose over whether privatisation benefits the major stakeholders - the state and the people.

In truth, a balancing act is needed. While business must be given incentives and has to compete head-to-head with others, the interests of consumers must remain a priority.

Piyasavasti's remarks offered a glimpse of the real problems that occur. He cited political meddling as one of the biggest obstacles to business development. "Having a police chief sitting on the board of THAI does not help either the police's or the airline's work," he lamented. Putting the wrong people in the job is bad enough, but worse still is the appointment of people from politics to the boards at state enterprises. They rarely serve the business, preferring instead to rubber stamp unnecessary procurements or give their backing for scheming business decisions. Hence, political influence makes Thailand's state enterprise less competitive. Whether such appointees really work to benefit ordinary citizens is another big question.

In one recent example, the rice-pledging debt created problems for Krung Thai Bank, as its customers feared that government would take a loan from the bank. Likewise, Airports of Thailand was yesterday forced into denying a rumour that it was about to invest in government bonds issued to clear the rice-pledging debt.

Even more importantly, the government must ensure transparency in the privatisation process.

An example is furnished by the transfer of profitable THAI routes to the airline's new Thai Smiles offshoot, which is to be listed on the stock exchange. If the privatisation of a state enterprise is conducted in such a way as to siphon off profitable business to a private unit, it is unlikely to succeed in business.

Privatisation is not an evil in itself, but Thai think-tanks have cautioned that political meddling should be kept to a minimum and that the process must be guided by public interest. The ongoing discussion about reform being carried out by both the government and anti-government protesters must include this issue, otherwise it will certainly return to haunt us again. And next time, the damage could be even more destructive to Thailand.


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