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Thai military moves to cement relations with big business

Serving officers are becoming directors of state enterprises and private companies

The Thailand military is known to maintain cozy ties with powerful Thai-Chinese conglomerates.   © Reuters

BANGKOK -- As he approaches the fourth anniversary of his coup on May 22, Prime Minister Prayuth Chan-ocha has been lavishing praise on Pracha Rath Rak Samakee, a social enterprise initiative created by the military in consort with wealthy businessmen, ostensibly to help the grassroots economy.

The venture is the latest manifestation of the cosy relationship between Thailand's business-minded generals and powerful Thai-Chinese conglomerates. Its name roughly translates as "people of the state love harmony."

Two dozen leading businesses have signed up, including Central Group, a major retailer. Its plans include developing tourism infrastructure, starting with the former capital of Ayuthaya, according to the King Prajadhipok's Institute, a conservative think tank.

Thai Beverage, Mitr Phol Group, a leading sugar and bio energy company, Thai Union Group, the world's largest canned tuna producer, and Bangkok Bank, the country's richest bank by assets, have also joined.

The initiative has raised few eyebrows in a country that over the decades has seen numerous coups and military governments, and open military involvement in business. Officers in and out of uniform are meanwhile finding their way on to corporate boards and being given shares in return for acting as "fixers with authority."

Prime Minister Prayuth Chan-ocha talks business at a conference in Bangkok.   © Reuters

According to Napisa Waitoolkiat, an academic specializing in military affairs at Naresuan University in northern Thailand, this symbiotic relationship has again become the "norm." Napisa co-edited the recently published Khaki Capital, a book about military business interests and sinecures. 

"After the coup of 2014, there has been a return of active duty military sitting on boards of several companies, particularly state-owned enterprises," she told the Nikkei Asian Review. Such arrangements were put in check after the 1997 financial crisis. Of 56 state-owned enterprises, 42 now have military directors by her count. So do private companies like Beer Tip Brewery, a subsidiary of Thai Beverage.

Napisa argues that the relationship between the Thai military and business has "become more overt and institutionalized" in the past four years. The military has expanded its interests in entertainment, sport, banking, and broadcasting, among other sectors. "The junta needs these big companies to pump up the economy," she said.

Pracha Rath in some ways alludes to the grassroots economic initiatives launched by former Prime Minister Thaksin Shinawatra, the regime's nemesis, whose parties have won successive general elections since 2001. It is also a reminder of the country's gaping economic and social fault lines.

According to recent surveys on wealth disparity by Oxfam and the Credit Suisse Global Wealth Report, Thailand is the third most unequal country after Russia and India. Thailand's richest 1% control 58% of the wealth, and the top 10% of property owners own 60% of the land. Thaksin was able to draw on dissatisfaction with this inequality to build political influence. 

According to Veerayooth Kanchoochat, a Thai political economist at the National Graduate Institute of Policy Studies in Tokyo, Pracha Rath reflects the "collective endeavors of Sino-Thai conglomerates to replace competitive markets with hierarchy, rather than encouraging SMEs to catch-up with them."

Veerayooth sees a clear paradox in big companies being asked to help small- and medium-sized enterprises. "Giant agricultural conglomerates nurture provincial farmers, giant hotels nurture local lodgings, and so on," he told the Nikkei Asian Review. "But doing so is likely to further empower the large corporations in the circumvention of a level playing field that will bridge the economic divide."

Prayuth recently alluded to his claimed successes with SMEs during one of his regular Friday national broadcasts, a weekly institution since the coup. The gruff former army chief, who has composed half a dozen sentimental nationalistic ballads while in office, likes to speak his mind as he might addressing a group of conscripts. He can be confrontational and volatile in his dealings with the local press elsewhere, and almost never speaks to the foreign media. 

Conglomerates have been enticed to sign up with Pracha Rath with generous tax breaks and hopes for previously elusive project approvals. According to Chaturon Chaisaeng, a veteran former elected minister, these military-business alliances influence policy and affect "who shares in the rewards of an approved project." Chaturon doubts if smaller companies that lose a government contract bid to a better connected company would dare criticize the regime.

"Under elected governments, if they were not happy, companies could openly complain," he told the Nikkei Asian Review. "Access was much broader."

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