OVERDRIVE: From grass-roots politics to Thailand Grand Sale Published on December 16, 2005

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Is Prime Minister Thaksin Shinawatra putting Thailand up for sale? It really looks like it. On Wednesday, more than 100 ambassadors, diplomats and international-agency heads went shopping at Government House. Thaksin looked very comfortable in his role of salesman. He appealed to his foreign guests to take a look at all the key sectors of Thailand, from mass transit systems, water resources and education to defence, which he announced were to be opened up to foreign investors.

It was his biggest showcase ever for the Bt1.7 trillion in planned mega-projects, which have become the hallmark of his new policy to prop up the Thai economy and which have completely replaced his grass-roots populist policies.

Several of the diplomats who attended the prime minister's road show raised their eyebrows over Thaksin's sales pitch. Never before had a leader of a country pledged to open up all the key sectors of country in this fashion to foreigners without having to consult his domestic constituents. It seems that Thaksin feels his bilateral free-trade agreements (FTAs) are not moving fast enough to open up Thailand.

After he made his presentation on the Thailand Grand Sale, he did not take any questions from the floor. The ambassadors, diplomats and other guests were led to another room within Government House to see what deals were available in the sectors they were interested in. All the Cabinet ministers were there, as well as other top Thai policymakers. Officials from key ministries manned booths detailing what was up for grabs. A handful of senior military officers welcomed foreign guests at the Defence Ministry's booth with information packages. Chaturon Chaisang, the education minister, guarded his ministry's booth. Pongsak Ruktapongpisal, the transport minister, and Khunying Sudarat Keyuraphan, the agriculture minister, were also on hand at their booths to welcome the foreign guests with brochures.

The scene looked like one of the Tourism Authority of Thailand's travel marts, in which the tourism agency brings together hotel tour operators to meet with foreign buyers. But the Thailand Grand Sale was a step above that, done at a national level, involving all the key ministries and agencies of Thailand.

The ambassadors, diplomats and international-agency heads that picked up the information packages are now expected to put data related to the Thailand Grand Sale on their websites so that private-sector companies in their home countries can do their homework and prepare to take a piece of the action.

Does Thaksin know what he is doing? As you might recall, when Thaksin first came to office in 2001, he campaigned on a platform centred on nationalism. At that time, the country was still suffering a hangover from the 1997 economic crisis. He denounced the Democrat government for selling Thai assets to foreigners at cheap prices. He vowed that he would never sell off Thailand. He pledged to revive the Thai economy by making easy credit available to people at the grass-roots level. Then he embarked on a dual-track policy, hoping to balance domestic demand and exports. In the process, he lifted the economy out of the doldrums by spending money like crazy on populist programmes and forcing state-owned banks to finance all his pet projects.

Thaksinomics is running out of steam. All the domestic-led policies have failed to become the backbone of an economic recovery. The grass-roots populist policies have not worked and have saddled rural folks with debt. The structural reform necessary to lay the foundation for future growth never got off the ground. Instead, the Thaksin government has become addicted to big spending. This has led to corruption scandals like there is no tomorrow.

So what is his real motivation for the Thailand Grand Sale? First, it could be a ploy to delay the construction of the Bt550-billion-worth of mass transit system projects slated for Bangkok. The government is quickly running out of cash. The Bank of Thailand has warned that the hasty implementation of the mega-projects might further accentuate the country's deficits. Knowing that it would never be able to invest in the mass transit system next year, the government has delayed its bidding until the middle of next year. Who knows what's happening to the money that's supposed to be spent on mass transit projects?

Second, by asking the foreign investors to submit their investment proposals, the Thaksin government hopes it might get all the information it needs about the mega-projects. Then it can squeeze out the best deal with the bidder it has in mind. Past practices of this government show that it likes to deal with only one big bidder for a lump sum, instead of spreading deals among several bidders. For instance, the Laem Chabang Deep-Sea Port deal was awarded to Hutchison Whampoa; the duty-free shops deal was awarded to King Power.

Third, the Thaksin government still wants to protect the telecom industry, particularly the 3G business. We didn't see the Thaksin government opening up the telecom sector at the Thailand Grand Sale. You already know why that was the case. Finally, in opening up Thailand, the Thaksin government realises that it can no longer depend on domestic demand or the populist policies to drive economic growth. It really needs foreign money to prop up the Thai economy again.

From grass-roots policies to the Thailand Grand Sale, you have to admire our leader for making the best out of situations he gets himself into, without thinking of Thailand's future.

Thanong Khanthong

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