New look at Thai royal riches
Our Correspondent | Dec 6, 2007 |
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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