HONG KONG -- The Ratchaprasong Intersection in the heart of Bangkok is a symbol of anti-government unrest, where demonstrators have gathered in recent years. The Thai army's operations against them have led to massive bloodshed repeatedly since the military coup eight and a half years ago.
Near the intersection, now a symbol of the country's political unrest, stands the InterContinental Hotel, where the turmoil that continues to this day began on Jan. 23, 2006.
A press conference took place at the hotel in the late afternoon with senior executives from Shin Corp., then a major Thai holding company, and Temasek Holdings, a Singaporean state investment company, in attendance. Temasek acquired a 49.6% equity stake in Shin for 73.3 billion baht ($1.86 billion at the time).
The seller of the stake was Thaksin Shinawatra, founder of Shin, and Thai prime minister at that time. He is the brother of former Prime Minister Yingluck Shinawatra, who was deposed by a coup in May this year.
Thaksin began his career in the Royal Thai Police, and while there earned a doctorate in criminal justice in the U.S. While there, he realized the potential of the nascent computer industry, and after returning home he launched a computer leasing business. In the 1980s, he followed this by creating a number of companies, including Shin.
The Stock Exchange of Thailand (SET) currently has an aggregate market capitalization of slightly over 13 trillion baht ($414 billion), less than 10% of the comparable Japanese figure. The total market value, which stood at slightly less than 700 billion baht at the beginning of 1990, rose to 4 trillion baht in 2003 after going through a slowdown caused by the 1997 Asian financial crisis.
The rapid market expansion owed much to the rise of what was called the "Thaksin conglomerate." Shin and its core subsidiary, Advanced Info Service (AIS), the country's largest mobile phone company, constantly ranked among the top 10 companies by market capitalization. Thaksin also took public other group entities, such as satellite operator Shin Satellite and Internet service provider CS LoxInfo.
Thaksin is a typical self-made man who rose to fame and success. He moved into politics by forming the Thai Rak Thai Party based on the enormous wealth built through the businesses he created, and was elected prime minister in 2001.
Though he initially enjoyed high popularity as prime minister, he was often criticized for what was seen as an act of nepotism since he installed his close aides in key posts of the government.
Kittiratt Na-Ranong, who served as managing director of the SET, and Thirachai Phuvanatnaranubala, who worked as secretary-general of the Securities and Exchange Commission, both during Thaksin's tenure, were appointed commerce minister and finance minister, respectively, in the Yingluck government.
Entrepreneur to autocrat
Thaksin pursued a style of administration of state affairs modeled after corporate management. What he wanted was to boost Thailand's "market value." He commissioned Michael Porter of Harvard Business School, an authority on competitive strategy, to formulate an outline of a national strategy.
He was also adept at making his business appear bigger than it was, as one might expect of a successful entrepreneur. In 2004, he announced a plan to invest in Liverpool FC, the world famous England Premier League football club, sending shock waves to the European football business community. Soon afterward he withdrew the plan, but boasted that the news garnered Thailand a lot of publicity virtually for free.
As founder and owner of a business group, he brought his top-down style of leadership to governance over the country's executive branch. He demanded of bureaucrats a high level of performance. He insisted they submit reports every three months, just as corporate executives report earnings results on a quarterly basis. When government officials failed to meet his expectations, he sacked them, including even the governor of the central bank.
When asked by Japanese reporters about the difference between managing a company and managing a country, he replied, "We can dismiss workers who prove useless in business, but we cannot do it at a state."
Keyword is 'dharma'
While Thaksin was extremely businesslike, the spirit of "dharma," or the essence of Buddhist teaching, is respected more than anything else in Thailand. To put it plainly, the spirit seems to mean the pursuit of moral virtues. Thai words signifying things governing human intelligence, such as "nature," "ethics" and "constitutional law," each include "dharma" as part of them.
Purachai Piumsombun, former deputy prime minister and one-time ally of Thaksin, who enjoyed high popularity among Thais for his clean lifestyle, had the word "dharma" incorporated as part of the names of all his three children.
Thailand has only a short history as a democracy. For politicians, public support has little decisive meaning. Thai people don't particularly care if the top leader is an autocrat so long as he or she is seen as full of the spirit of dharma.
In such a political climate, in which people are still nostalgic for the "rule of man," or the rule of a virtuous man who stands above the law, Thailand's King Bhumibol Adulyadej is idealized, while Thaksin's political approach, known to be rational but high-handed, gradually developed friction among the Thai electorate.
Amid those developments, the Thaksin-led conglomerate with Shin at the top took the brunt of the backlash from the public. The key members of the group were a mobile phone carrier, a broadcasting company, a satellite operator, a discount airline and a consumer finance company.
The companies were all players in business sectors where government approvals and licenses have significant implications on their fortunes, so Thaksin often faced allegations of conflict of interest. Thais also became disgruntled with his nepotism and high-handed policy management, so protest rallies criticizing Thaksin for his lack of "ethical sense" became a frequent occurrence starting late 2005. The growing pressure against Thaksin made him feel compelled to sell a major equity stake in Shin to Temasek.
Flurry of suspicions
No doubt Thaksin sought to bolster his administration by severing its connections with businesses. In an unexpected turn of events, however, a flurry of fresh suspicions about misconduct emerged. Suspected tax evasions involving the Thaksin family, including himself, surfaced, including a case in which Thaksin allegedly dodged payment of more than 20 billion baht in income taxes through opaque business deals.
Citing the fact that the registered holders of the shares in question were his eldest son and other relatives, Thaksin repeatedly said that the handling of tax had been decided by themselves. He also noted that those family members wanted to pay taxes, but that legal rules did not allow them to do so. Such explanations further enraged the public.
After that, his downfall was quick. One month after the sell-off of the major stake in Shin was announced, he was forced to dissolve the lower house, and the April general election, which was boycotted by the opposition camp, was declared null and void by the judicial branch. Thai politics continued to drift along, leading to the military coup in September 2006.
After the ouster of Thaksin, Shin suffered. AIS was hit by a boycott by anti-Thaksin activists, which caused a steep decline in the number of subscriptions to its service. In addition, the military junta levied a massive penalty of 100 billion baht on TV broadcaster subsidiary iTV for illegally changing its TV programming plans. As Shin's stock price tumbled after the coup, Temasek's unrealized loss on its holdings of Shin shares, including those it had bought through a subsequent tender bid, approached 60 billion baht at one point.
Dharma vs 'tong'
That was eight years ago. While political tension continues, the Thai economy has grown without suffering much impact from it, and the stock market has also expanded. However, it is true that the economy has been shored up by the effects of policy measures pushed by the Thaksin administration, known as "Thaksinomics," such as consolidation of the automobile industry and export promotion.
Shin, operating under the wing of Temasek, has changed its name to InTouch Holdings. Its share price has bounced back, fetching a post-listing high last year. AIS, the flagship company of the InTouch group, has a market capitalization of more than 600 billion baht, ranking third among companies listed on the Thai stock market, standing on a par in market value with such Japanese stocks as Itochu and Toshiba. In 2008, iTV was consolidated into the state-run broadcasting operations. Shin Satellite also changed its name to Thaicom in 2008. So few vestiges of Thaksin's presence remain in the Thai business world.
In politics, however, the country has much less stable foundations than on the economic front. Even after deposing Prime Minister Yingluck, the Thai military is likely to have a hard time steering politics because the Thaksin family is still immensely popular in rural areas.
Like Purachai, Thaksin has three children, too. Their names have a common word as part of them, and the word is "tong," which means "gold" or "money," in a remarkable contrast to the word "dharma" Purachai used in the names of his children.
For the past eight years Thailand has been rattled by the political turmoil over Thaksin, which appears to have divided the people over the question of which they should pursue: growth or stability; the rule of law or the rule of man; and "dharma" or "tong."
The Ratchaprasong Intersection in Bangkok, which has been the main stage of violent clashes between political forces, is also an intersection of these conflicting principles, which Thailand faces as it grows from being a "newly industrializing economy" and to a higher stage.