Will Charoen take a leaf from Thaksin?

10 January 2006

I may list my Chang beer in Singapore, but I and my family would never ever spend New Year's holiday for four days in Singapore.

Liquor tycoon Charoen Sirivadhanabhakdi is a merchant in the strictest sense. He would like to list his liquor, beer and beverage business on the Thai stock market. If listed, the market capitalisation of Thai Beverage Plc would amount to Bt200-Bt300 billion.

But dark politics are opposed to Charoen and his popular Chang Beer.

Chamlong Srimuang, the former leader of the Palang Dharma Party, has succeeded in scaring off the exchange authorities with tens of thousands of protestors in the street every time the exchange board takes up the listing application of Chang beer. He and others of the anti-Chang coalition said that if Charoen’s business were to be listed, it would send a wrong signal to the Thai public, amounting to promotion of alcoholic consumption in this Buddhist society.

Never mind that Thailand is already liberalising the alcoholic beverage market by reducing tariff barriers and promoting further investment. Never mind that on every corner of every street, you can easily buy a bottle of beer or whisky.

So Charoen has threatened to take Chang beer all the way to the Singapore stock market. His straightforward thinking is: If you don’t want me here, I’ll go somewhere else.

Now Kittiratt Na Ranong, the president of the Stock Exchange of Thailand, is turning panicky. The other day, he came out to appeal to Thai Beverage to reconsider listing on the Thai stock market instead. He felt disappointed that beverage behemoth’s listing in Singapore would deprive the Thai market of a big blue-chip company just as the exchange is looking forward to building up its size to further attract investors. Besides, brokerage fees generated from stock transactions of Beer Chang would be worth Bt500 million a year.
But what has the Thai exchange been doing over the past two years?

Thai Beverage has been restructuring its business in preparation for the listing for all this time, but its application has been delayed time after time by the SET. Nobody dares to make a decision for fear of political pressure.

Finance Minister Thanong Bidaya has given a strong signal that he would like Thai Beverage to list on the Thai exchange. But if the company decides to go to Singapore, he won’t be able to do anything about it. Thanong, too, is helpless in this situation.

Dr Somkid Jatusripitak, Thanong’s predecessor, would like to promote the listing, but he is out of the picture now as he is commerce minister.

Thirachai Bhuvanat-naranubala, secretary-general of the Securities and Exchange Commission, has played along with a game of no hurry, waiting for the final decision on regulations covering the listing of such sin businesses as liquor.

So what is the position of Prime Minister Thaksin Shinawatra on this delicate issue?

Thaksin has never made his position clear. Chamlong’s protest against Chang Beer amounts to an attempt to send a signal to the prime minister that he still has some political clout. His Dharmmkaya Sect provides the shock troops for Chamlong to take to the streets.

In Thailand, there are now three powerful business groups: Shin Corp of the Shinawatra family, Thai Beverage of Charoen and the Charoen Pokphand Group of Dhanin Chearavanont.

Dhanin knows how to get along with Thaksin to further advance the business interests of his CP empire. But Charoen does not seem able to cut a deal with Thaksin yet. In fact, Thaksin should be afraid of Charoen, whose net worth amounts to several billion US dollars.

If Charoen were to give out Bt5 billion, he could easily set up a new political party or support any existing political party. This is a scenario that Thaksin does not want to see.

But didn’t Thaksin get into politics in order to protect his telecom business in the first place?

And why wouldn’t Charoen do likewise if his business gets the squeeze from politics?

We have to keep on watching further developments of Charoen’s strategy as he is ready now to pass on his business to his children.