Thai amnesty for errant foreign investors mooted - Straits Times

Straits Times
19 October 2006
Leslie Lopez

Abstract

Foreign investors should be free from prosecution for three years while they reveal the full extent of their ownership of Thai companies, says the nation's chief economic adviser.

Such an amnesty should also provide ample time - up to 10 years - to allow such companies to rid themselves of any illegal holdings, Dr Ammar Simawalla told The Straits Times in an interview yesterday.

Dr Ammar also said that the interim government here in Bangkok should not just focus on the controversial deal between Singapore's Temasek Holdings and Shin Corp, but should conduct a sweeping overhaul of the country's foreign ownership laws.

"Let's be frank, past governments have been in cahoots with foreign business in the use of nominees to bypass ownership laws," said Dr Ammar, whose views are taken seriously by Bangkok's ruling elite.

He said overseas investors in Thailand had side-stepped local laws limiting foreign ownership to 49 per cent for years. They have done this by parking their undeclared equity holdings with local nominees.

Dr Ammar says the practice became prevalent because "government lawyers winked at the use of nominees". It enabled foreign investors to flout the spirit of Thailand's ownership laws.

Temasek came under fire over allegations that it violated Thai laws by using local business nominees to hold stakes in Shin Corp on its behalf.

The Singapore investment agency has strenuously denied those charges, and has insisted that it complied with all the laws and regulations in Thailand.


Our Review

For those of you who have been following closely the Temasek-Shin Corp controversy in both the Thai and local dailies, you will not fail to notice the stark constrast in the style of reporting between the two in terms of emphasis and tone.

While the local media had been unusually quiet in the past one week, publishling only a reply from Temasek on 17 October 2006 in the Straits Times Forum and a report today in the Straits Times, the affair has enjoyed generous coverage in Thailand with daily updates available on The Bangkok Post and The Nation. Are Singaporeans less concerned about their national affairs than the Thais?


What the Thais report

If you have read the Thai reports, you will agree that they have used strong and harsh words on Temasek. Critical information such as the magnitude of its financial loss and damage to foreign relations are suppressed and not reported in the local media.

Just to quote a few examples:

1. Temasek Holdings of Singapore is willing to cut its losses and reduce its holding in Shin Corp. (The Nation, 18 October 2006)

2. Temasek's exposure in Shin turned into a giant mistake following the ousting of Thaksin Shinawatra as prime minister in last month's military coup. (The Nation, 18 October 2006)

3. The deal has also put Temasek's business practices in the spotlight and has brought an
awkward atmosphere to relations between Thailand and Singapore. (The Nation, 17 October 2006)

4. Democrat Party deputy secretary-general Korn Chatikavanij said Temasek's statement was ambiguous and could not be used to interpret plans for its next step. (The Nation, 17 October 2006)

5. Singapore state investment firm Temasek Holdings stands to lose more than Bt20 billion if it were to sell off its controversial majority holding in Shin Corp, financial experts believe. (The Nation, 18 October 2006).

These statements will give readers an impression that:

1. Temasek had probably made a big mistake in the purchase of Shin Corp.

2. The financial losses from the sale of its share will be tremendous.

3. Relationship between Singapore and Thailand has been strained due to the controversy enshrouding the deal.


Damage control by the local media

The local media has effectively ameliorate this negative protrayal of Temasek and soften the blow to its reputation by leveraging on two tactics: delaying of release of information and diversion of reader's attention to secondary issues.

The Thai papers have been relentless in publishing daily reports of the affair, and this serve to perpetuate and reinforce the above impression in the minds of the readers.

Human beings tend to have short memories. They do not retain much information at first contact, continuous repetition will increase their retentive capabilities and eventually left an indelible imprint on their minds.

The local media, by severely restricting news coverage on the affair, had numb Singaporeans' response to it. That is why though many Singaporeans are aware of it, few are actually interested to probe more into it.

Please read the words highlighted in red carefully in the above article, stop for a second and ask yourself what is your immediate reaction after reading it. The writer has cleverly distracted the readers from the main issues that were brought up in the Thai media to secondary issues that were never a crux of the matter.

Secondly, the interviewee was selected by the Straits Times itself and this raise doubts on the impartiality of his opinions. Interestingly, the Straits Times did not interview officials from the Commerce Ministry which is conducting the probe into the deal or members of the Thai Parliament whose words carry more weight than a mere economic advisor.

The message contained therein is:

1. Foreign investors have been in cahoots with the government for many years to circumvent the law of foreign ownership. As this is an "accepted" practice, Temasek did not break any rules and even if it did, it should not be punished too heavily. In fact, Temasek might be led unknowingly into the deal since it has tacit approval of the Thai government.

2. There are many companies who have broken this law before, Temasek is not the only culprit. Therefore, we shouldn't blow up its "mistake" as if it is an unforgiven sin. The fact that there are "many others doing it" is a convenient excuse to exonerate Temasek from any major wrong-doing.

3. It's time to stop focusing on Temasek and instead to take a look at reforming Thailand's ownership law. Readers' attention has now been diverted to an unimportant issue they are not interested in.

4. Lastly the article ends with a "strong denial" from Temasek that it has "compile with all laws and regulations". Those readers who do not read in between the lines will accept this as a fact without asking any questions.


More news to change your perception in the days to come

The verdict on Temasek is yet to be out. Investigations are still ongoing by the Thai Commerce Ministry. We can expect the local media to continue to be tight-lipped over the saga in the days to come and instead publish related articles focusing on Thailand's ownership law, corrupted commercial practices by the Thai government and even cite a few examples of flagrant violation of the laws by other "big" foreign investors.

In this way, the "filth" dug out from this will be tactfully "tai ji" to the Thai government. Singaporeans will be led to believe that the Thais are corrupted beyond redemption and Temasek continues to be a law-biding, clean and incorruptible investment agency of the government.