Thailand's Royal Wealth
|Our Correspondent||Mar 1, 2007|
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.
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.
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.