Asia Sentinel

Is the Thai royal family the world’s richest royalty? Over the years, journalists and academics have attempted to put a value on the Crown Property Bureau (CPB), the business arm of Thailand’s royal family.

Usually its wealth was estimated somewhere between the $2 billion cited by Forbes magazine in 1997 and the $8 billion assigned in Michael Backman’s 1999 book Asian Eclipse: Exposing the Dark Side of Business in Asia. In August, Bloomberg calculated the CPB’s shareholdings at $5 billion, a number that Forbes also used a month later in ranking King Bhumibol Adulyadej as the world’s fifth richest monarch.

Now a new academic article in a special edition of the Journal of Contemporary Asia says those figures significantly underestimate the palace’s wealth. Porphant Ouyyanont, an economist at Sukhothai Thammathirat Open University near Bangkok, calculates the CPB’s worth in 2005 at 1.123 trillion baht, or about $33 billion at today’s exchange rates.

In Porphant’s analysis, which is easily one of the most authoritative accounts ever written about an entity that has received little attention over the years, the number jumps so much because he attempts to calculate the value of the bureau’s extensive landholdings, a process he admits has “a large margin of error.”

“The segment which is difficult to assess is the landed property,” Porphant writes. “While the total area owned by the CPB in central Bangkok is known to be 8,835 rai (552.18 hectares), there is no information available on exactly where this land is located.”

Historical evidence suggests the land is heavily concentrated in the Central Business District and other high-yielding areas of town. From this assumption, Porphant used Bangkok land prices published by private consulting firm Agency of Real Estate Affairs to roughly estimate the land prices. This process is “more likely to underestimate than overestimate” the CPB’s landholdings, he writes, while adding that the estimate “should be taken as a rough order of magnitude” rather than an exact figure.

With a worth of at least $30 billion plus, Thailand’s royal family would easily surpass the world’s other wealthy royals. According to Forbes, Brunei’s Sultan Hassanal Bolkiah is now the world’s richest royal with an estimated worth of $22 billion.

Some would argue that the money is not the royal family’s to spend, but actually belongs to the state. As Porphant notes, this was once the case, particularly after the 1932 revolution that overthrew the absolute monarchy when “the civilian government set up a commission to divide the royal properties between those belonging to the king personally, those deemed state property such as the palaces, and those used to finance the institution.”

That changed with the Crown Property Act of 1948, which gave control of the CPB back to the palace and allowed the institution to operate independently from the government. Porphant writes that the law specifies that the use of the bureau’s resources and income “depends totally on the royal inclination.” Moreover, it says the bureau’s assets cannot be seized, its income cannot be taxed and the whole operation cannot be defined clearly in terms of Thai law, he writes.

“In the course of subsequent legal processes, the Council of State [a government legal advisor] had to give rulings on the nature of the CPB on four occasions,” Porphant writes. “Not one of the rulings was unanimous, and the four rulings conflict. The Council agreed that the CPB was not a private company, government department, or state enterprise, and ultimately in 2001 ruled it was a ‘unit of the state,’ whatever that meant.”

This special status, he writes, allowed the CPB — which is invested mainly in banking, cement, petrochemicals and insurance — to emerge from the 1997 financial crisis “far stronger” than it was pre-crisis.

“Critical to the CPB’s survival and success was its deep pockets,” Porphant writes. “At the onset of the crisis it was able to borrow a sum variously reported at 6-8 billion baht, equivalent to between two and three times its former peak annual income. We do not know where or how this money was raised.”

Moreover, he writes, the nature of the CPB’s business interests allowed it to benefit from government policies after the crisis that sought to boost the property, construction and banking sectors. In particular, Porphant looks at the case of Siam Commercial Bank, in which the CPB is a major shareholder.

Like most other major commercial banks in Thailand, SCB needed to raise funds to make it through the crisis. To help the sector, the government launched a scheme in which it would provide counterpart funding against additional capital raised by the banks themselves, Porphant writes.

Some banks were wary to join this scheme, fearing that they would become vulnerable to a state takeover. But the CPB managed to strike an agreement to buy back the SCB shares from the Finance Ministry at the original selling price plus interest, which amounted to 13 billion baht.

“This purchase was achieved by transferring to the government a tract of 485 rai of CPB land in central Bangkok (Phaya Thai) on which several government institutions had been built,” Porphant writes. “This deal was unique. No other bank enjoyed similar treatment.”

In the article, Porphant largely avoids discussing the political implications of the CPB’s wealth, only to say: “The Bureau has not only given the monarchy considerable economic strength but has helped to insulate the institution from the political pressures that would be exerted on a monarchy that depended heavily on state funding.”

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