Economics: Junta shake-up Thai state enterprises! Improve Management or Rich Picking?

Prayuth is shaking-up state enterprises, with the stated goal of improving performance and will likely be appointing a host of new CEO and board members to the state enterprises. Of course, Thailand is infested with corruption and bad management, and the Thai military is “No Exception” to the rule.

On corruption, after the 2006 coup, the military also went in and did what Prayuth is doing today, and took control of most state enterprises. The problem is, according to Transparency International data, Thaksin’s government, is less corrupt than the 2006 junta appointed government. For example, right after coming to power after the 20006 coup, the Thai military rushed in to buy weapons, Swedish Gripen and Ukraine tanks, where both these programs, are rocked with corruption on global scale.

On mis-management, the problem is cronyism of course, but that is also mixed in with the fact, that many state enterprise, have a very difficult time filling top positions, simply because, there are few qualified candidate. In fact, because of thisd, at many state enterprise, top and senior management position, can go un-filled for months or even years.

Fact Sheet:

On Prayuth’s junta shake-up of Thai State Enterprises

1 Prayuth junta is moving to extend its control over Thailand’s 56 state enterprises, called by Wall Street Journal (source): “Formidable economic sector that has been a crucial arena for Thailand’s power struggles in recent years.”

2 Thailand’s 56 state enterprise, include Thai Airways International PCL, Krung Thai Bank PCL and oil-and-gas producer PTT PCL.

3 WSJ says Prayuth’s junta has put public pressure on the heads of these firms to resign, and many have begun to comply.  One pressure, local Thai press have reported on,  is the junta  taking aim at the boards of directors at 56 state enterprises and state-owned public organisations, ordering a review on their compensation and other and other privileges. Junta chief Prayuth Chan-ocha told the State Enterprise Policy Office to collect data and propose appropriate compensation packages.

4 That review of compensation has leaded to talk at the junta about state enterprise employees and workers bonus level as well.

5 On Monday, Voravidh Champeeratana, the chairman of, KTB stepped down. This followed the resignation at the weekend of PTT’s chairman Parnpree Bahiddha-Nukara of PTT Plc.  The heads of the Government Lottery Office and the Airports of Thailand PCL AOT also have resigned since the coup. So far, none have been replaced by the junta.

6 Local press reports more state-enterprise directors are expected to step down to create vacancies for appointees of the country’s new ruling junta, according to Prasong Poontaneat, director-general of the State Enterprise Policy Office (Sepo).

7 The state sector has been a battleground between Thailand’s two competing political factions, the Shinawatra and the Bangkok elite establishment, which culminated in the army’s takeover last month.

8 Most State Enterprise employee & workers union, have long been infiltrated by the Bangkok elite establishment, and have been active, in helping topple the Shinawatra from power, with threats of strike and employees and workers joining protest that destabilized Thailand, to the coup point.

9 Thailand’s state enterprise, says WSJ, have combined assets of $360 billion and they spend more annually on investment than the government does. Thailand’s listed public companies and their subsidiaries account for a fifth of the local stock market capitalization.

10 WSJ says analysts said it is common for administrations in Thailand, whether military or civilian, to put allies in charge either as a reward for loyalty or to control spending.

11 Thailand’s military junta says its intention is to make state enterprises more efficient. But massive corruptions have for decades engulfed state enterprise operations, under military or civilian government.

12 Thailand state enterprise have been having difficulty filling senior and top position, because of a severe lack of qualified Thais to manage these large firms, and often state enterprise goes for months without a functioning CEO.

13 WSJ says former Prime Minister Thaksin Shinawatra, a telecom tycoon, moved many of his allies into state companies following his ascent to power in a popular vote in 2001. That upended decades in which Thailand’s traditional royalist elite, which has close ties to the military, kept tight control over government and the state sector.

14 WSJ says Thaksin tried to privatize some state enterprises to boost liquidity and listings on Thailand’s stock exchange, and sold stakes to the public of some companies including PTT, Airports of Thailand PCL and telecommunications provider MCOT PCL. MCOT.But the military removed him from power in a 2006 coup, cutting short further privatization plans.

15 WSJ says a power struggle since then between supporters of Mr. Thaksin and those backing Thailand’s establishment has led to a revolving door at state enterprises. Mr. Thaksin’s sister, Yingluck Shinawatra, led her party to power in elections in 2011 and set about restoring control over the state sector, facilitating the appointment of allies to head PTT and MCOT.

16 WSJ says most board positions are selected by company committees, typically a rubber stamp for the government’s choice, former directors say. However, Army chief Gen. Prayuth Chan-ocha, who led the military’s grab for power in May and heads its new ruling council, has sat on the board of TMB Bank PCL since before the coup. Mr. Prajin, the junta’s economic czar, has been on the board of Thai Airways from before the army’s seizure of power.

17 WSJ says the Government Lottery Office, which runs the nation’s monthly state lottery, has had a number of bosses in recent years. The office made 2.7 billion baht ($83 million) net profit in 2012 on 61 billion baht in revenues, the latest available figures. Much of the profits go to fund government programs. The office also can print tickets for special lotteries to raise additional funds for specific government projects. Since the coup, the office’s former director-general, Attagrit Tharechat, who was appointed by Ms. Yingluck, has stepped down.

18 WSJ says Chaiwat Pasokpuckdee, another former director-general of the lottery under Mr. Thaksin, said the majority of board members of state-owned companies are politically-appointed and lack knowledge about operations.

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