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.”