By: Our Correspondent

A man, let’s call him Somchai, lives in a prime location in
central Bangkok.
Now in his sixties, Somchai designed and built his house himself nearly 30
years ago. He doesn’t own the land, but he only pays about 400 baht ($11) in
rent to his landlord.

So why does he now wish he lived somewhere else?

“If I could do it all over, I wouldn’t build on this land,”
he told Asia Sentinel. “There is no security. I can get kicked off at any
time.”

But he won’t go voluntarily. Somchai’s land, you see, is
owned by the King.

In fact, most of Bangkok’s
best real estate is owned by Thailand’s
royal family through the Crown Property Bureau (CBP), which manages the
monarchy’s land holdings. Somchai was able to build the house by bribing bureau
officials a few decades ago. Now if he sells it, 75 percent of the money will
go to the CPB, giving Somchai—who is retired with little savings—no incentive
to leave.

 “The people around
here all worry that they might be forced out, but we are too scared to talk
about it,” he said.

That fear of upsetting the monarchy goes a long way to
explain why so little has been written about the Crown Property Bureau. King
Bhumibol Adulyadej’s golden robe shields the bureau from public criticism,
allowing it to oversee a modern form of feudalism with little scrutiny.

More than any institution over the past hundred years, the
CPB has shaped Bangkok
and in recent years it has only picked up speed. Since recovering from huge
debts incurred during the 1997 financial crisis, the CPB has aggressively
sought to boost profits from its prime Bangkok
land plots, often pushing out poorer shop owners and tenants that have lived on
the land for generations.

The ceaseless development of huge malls, hotels and office
buildings is rarely debated as the bureau avoids public criticism. When its
officials do speak, they simply tout the king’s theory of a sufficiency
economy, which preaches moderation, reasonableness and immunity. As the bureau
has found, however, the best immunity from an economic downturn is to make sure
its birthright properties are yielding large amounts of cash.

 

Claiming the land

 

Talk of that sufficiency economy has been replaced with a
13-billion-baht grand vision to turn famed Rajadamnoen Avenue in Bangkok’s historical district into a shopping
street known as the “Champ Elysees of Asia” – that brand name ought to bring a
smile to former Prime Minister Thaksin Shinawatra, who royalist coup leaders have
blasted for failing to adhere to “sufficiency economy”. The bureau owns much of
the area, and said it would not renew 137 contracts after they expired in 2004.

A new part of the CPB’s strategy was to turn much of its
prime land into shopping centers and luxury housing. The CPB also signed a
30-year lease with Central Pattana to transform the World Trade Centre near the
Chidlom Bangkok Transit System station into Central
World Tower,
an enormous hotel, office and shopping plaza in the heart of Bangkok. It also joined hands with
Singaporean property firm CapitaLand to form a local subsidiary.

In addition to Central World, the CPB owns the land on which
a host of the city’s largest malls are located, including MBK Shopping Center, Siam
Center, and Siam Paragon. Coincidentally, Kempinski Hotels and Resorts, a
Europe-based company majority-owned by the bureau, will manage the new luxury
hotel being built next to the Paragon.

In recent years the bureau has also shocked longtime
residents of various traditional marketplace districts by giving them eviction
notices. Previously they had always felt safe living on “the king’s land.” In Chinatown, Thai-Chinese families that lived on CPB land
on Soi Luenrit for three generations were kicked out so a property developer
could put up a jarring shopping mall that is out of character with the historic
neighborhood.

In Charoen Phon, residents were told to leave their
shophouses to make way for a Tesco Lotus superstore. In Klong Thom, another Chinatown market, the bureau sent marching orders so a
developer could build a new market that yielded higher rents. At the old fish
market on Charoen Krung on the Chao
Phraya River,
traders fear that thousands of unskilled laborers will soon be out of work. The
CPB wants to turn the traditional market into a 7-billion-baht high-rise hotel,
condominium and commercial complex. The Silom Club, an 89-year-old sports club
that some regard as a historical monument, will also be turned into a
high-rise.

The results of the new strategy have paid off grandly. In
2003, the CPB recorded revenue of four billion baht. About 1.7 billion baht of
that came from increased rents, shattering the 1 billion baht target Bureau director-general Chirayu
Isarangkun na Ayutthaya

had set four years earlier. In 2004, the bureau’s earnings reached five billion
baht. Chirayu announced that the CPB was now healthier than before the 1997 crisis.

 

Bangkok’s tallest skyscraper

 

But as the bureau’s ambitions grow, the more it is entering
the public spotlight. While eviction is never easy, two high-profile spots are
getting more press. At Bo Bae market, City Hall asked vendors to move off the
street, where they had been blocking traffic, and into another building.
Although the CPB is not evicting anyone, it owns the land and offered a
concession to a developer to build a new market that was supposed to house the
evicted Bo Bae vendors. Police were called in at one point when vendors refused
to budge, and some have gone elsewhere. The developer, meanwhile, is upset that
many in the market have not moved into the new building. The fight looks set to
go on, as some vendors are standing firm and have vowed to go to jail if
necessary.

A larger fight could potentially take place at the Suan Lum
Night Bazaar, where reluctant vendors have been given until April to vacate
what has quickly become one of the city’s surprising tourist attractions. Some
see the battle over the largest plot of land in Bangkok’s central business district as a
prime example of how the CPB is patient in getting what it wants.

In the 1950s, the Navy controlled this valuable plot of land
next to Lumphini Park, but the military-run government of
Sarit Thanarat transferred it to the Army after he suspected Naval officers of
using the site to plot a coup against him. It then became home to the Armed
Forces' Preparatory School, which opened in 1958.

In 1993, the CPB told the Supreme Command to move the school
when its lease expired in 1999 in order to ease traffic congestion. Since then,
plans for the 20.6-hectare site have been mired in controversy. Initially it was
to become a 350-meter tall telecommunications tower 49 percent-owned by the
bureau. Then it was set to become the headquarters for Siam Commercial Bank, in
which the CPB has a controlling stake.

But all along, the military pushed for the land to become a
public park in a city starved for green space. So when it emerged in 2000 that
the bureau would turn the land into the Suan Lum Night Bazaar, a kitschy night
market for tourists, many criticized the move. “The shopping mall is an eyesore
and a disgrace,” said leaflets distributed at the site by military school
alumni. “This is against a social contract made with pre-cadet students.”

The CPB responded in 2002 by saying the move was intended
only to recoup some cash spent relocating the military school. In a statement
reported at the time, the bureau said that long-term the land would be used for
“educational, cultural and recreational purposes.”

Many suspected, however, that the bureau only wanted to
lease the area to the night market in order to change the zoning from educational
use to commercial and residential. That happened in 2002, when Thaksin’s
government passed a law changing the status of the land plot. Indeed, by 2004
it was clear that the site was actually the pillar of the CPB's expansion
plans.

Director-general Chirayu
said the sprawling market would be turned into a 100-billion-baht
commercial complex filled with offices, retail outlets, condominiums,
entertainment venues and a hotel.

Last June, the bureau announced that it had short-listed
Central Pattana Plc, Sansiri Plc and TCC
Land as developers for
the site. The company that operates Suan Lum also submitted a proposal to
expand the site while retaining the popular Night Bazaar and its many vendors;
that was rejected.

Central Pattana, which runs Central
World Tower,
has said it wants to redefine the city’s skyline by erecting Bangkok's tallest skyscraper on the site. The
bureau is expected to announce the winner next April.

 

Royal cloak

 

Despite any setbacks, what keeps the bureau strong over the
long haul is the lack of critical public input or media coverage. Sure, some
attacks do appear on certain web boards, but business editors in Bangkok know better than to
write anything about the CPB for fear of upsetting the monarchy, and the bureau
is happy to keep it that way.

This immunity was most apparent after Singapore-government
run Temasek Holdings bought Shin Corp from Thaksin’s family in January 2006.
The sale was the tipping point for Thaksin, who responded to mass protests by
calling early elections. Months of deadlock ensued before the military, with
the backing of the palace, pushed the twice-elected premier from office. Most
criticism of the deal centered on the complicated shareholding structure
Temasek used to purchase Shin in such a way that it could bypass foreign
ownership restrictions.

Although this seems devious, the practice had been standard
operating procedure in Thailand
for decades before Thaksin’s political opponents seized on the issue.

It turns out that Kularb Kaew, one of the companies in the
Temasek-led consortium, was acting as a nominee for Temasek. Shareholders of
Kularb Kaew included Pong Sarasin, the brother of Arsa Sarasin, King Bhumibol’s
principle private secretary. Kularb Kaew owns part of Cedar Holdings. The other
owners of Cedar are Temasek and Siam Commercial Bank, in which the Crown
Property Bureau has a controlling stake. SCB also played a crucial role
advising and providing financial support for the deal.

Despite these interlocking interests, public anger was
directed solely at Thaksin for “selling off” a valuable Thai national asset to
foreigners. SCB and CPB were barely mentioned in the local press, even though
they actively helped Temasek allegedly violate the law.

The issue gets even more bizarre. The currently military-appointed
government recently proposed changes to the law to stop the longstanding
practice of foreigners using nominees to buy Thai companies. The new Commerce
Minister Krirkkrai Jirapaet had said the
changes were necessary because the Shin purchase through nominees “led directly
to the fall of a government”— the implication being that Thaksin himself was
responsible for the army driving tanks into Bangkok and tearing up the Constitution.

The Crown Property Bureau also has longstanding ties to Singapore.
Temasek owned a stake in SCB long before the Shin deal transpired, and Chirayu
has said the state-owned investment vehicle has been a “good partner for
years.”

Chumpol NaLamlieng, who served as president of Siam Cement
for 12 years, is now chairman of SingTel, which is owned by Temasek and holds a
21 percent stake in Advanced Info Service, the market-leading
telecommunications company founded by Thaksin and Shin Corp.

Since everyone knows everybody in this elite circle of
friends, it came as a shock to many that Tongnoi Tongyai, the private secretary
to Crown Prince Maha Vajiralongkorn, seemed set to join the Shin board and then
was quickly disowned by the palace. The episode was certainly awkward. While
the sequence of events remains opaque, some claim the prince gave the go-ahead
for Tongnoi to join the board, which led to a public announcement, but King
Bhumibol nixed the deal. Vajiralongkorn then issued a bizarre and shocking
public statement lashing out against Tongnoi.

“HRH the Crown Prince's Personal Office considers MR Tongnoi
Tongyai a perverse abuser of power for his own benefit,” the statement said.
“His acts have misled the public and harmed HRH the Crown Prince's Personal
Affairs Office, which thus finds itself obliged to publicize the facts of the
matter.”

Of course, since he had offended the throne, Tongnoi was not
able to defend himself.

The incident didn’t go away easily, however. Post Today, the
Thai-language sister paper of the Bangkok Post, had to pull thousands of copies
off the printer one recent night because a story quoting a leftist academic
said the press should investigate why Tongnoi was dismissed in such a strange
manner. Vajiralongkorn eventually called a group of reporters to the palace,
where he reportedly asked them: “Do you have a problem with me?” Nobody spoke
up.

 

Moral money-making

 

The Crown Property Bureau’s operations are important to
scrutinize in light of the September 19 coup. It was argued that the coup was
justified because Thaksin abused his powerful position to boost the financial
gains of his many companies, intimidated the media into favorable reporting,
and flaunted foreign ownership laws and tax loopholes in his family’s sale of
Shin Corp.

These arguments certainly have merits, but they are dubious
justifications for the palace-supported coup. The CPB is also guilty of what
Thaksin is accused of. The bureau has used its powerful position for decades to
acquire its massive landholdings, winning favorable business deals and paying
no taxes. It intimidates the media by linking itself to the god-like Bhumibol,
leaving newspapers afraid to touch it for fear of violating lese-majeste laws.

Some may argue that this doesn’t matter, as the Crown
Property Bureau’s assets are technically national property. Yet if that’s the
case, then it should shed its opaque “semi-private, semi-public” legal status
and open its books for all to see where the money is going. As of now, all
anyone has to go on is the words of executives and the general belief that they
must be morally outstanding because of their closeness to the royal family.

This moral image is crucial to the success of the monarchy
and its financial arm. Thaksin was certainly well loved in many parts of Thailand, but was reviled in Bangkok by royalist elites who eventually saw
him as a rival to the all-powerful Bhumibol. This opened the door for attacks
that questioned Thaksin’s moral ability to lead after his family sold Shin to
Temasek.

Thaksin didn’t help his cause when he openly boasted that
his critics were “jealous” of him. Enraged opponents called him greedy and said
he didn’t have the kingly attributes to run the country.

Bhumibol, on the other hand, has adeptly crafted an image of
a loving father who always has the country’s best interests at heart. He
preaches sufficiency economy in an effort to distance the palace from the
consumerism that it helps create through opening lavish malls on some of Bangkok’s best
properties. You don’t see CPB using much of that land for green space to
contemplate the serenity of nature.

If this image was not so carefully cultivated—if Bhumibol
were a mere man with rather than a Buddhist dhamma king—then ordinary Thais
might ask how it came to be that one family managed to grab so much land. They
might even start to demand that they receive “fair value” and an opportunity to
have a slice of the pie.

As long as the elderly Bhumibol is around, this is unlikely
to happen. But the monarchy must ensure a smooth succession, otherwise the
public may demand that some light finally shine on the bureau’s murky finances.

 

Part
Two: The Crown Property Bureau and How it Got That Way

 



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