SHARE SALE FURORE: Singapore warned: drop Shin takeover
Published on February 07, 2006
Critics demand island state ‘must cancel’ deal as Thai anger at Temasek is threatening to boil over. Singapore was warned yesterday to stop Temasek’s purchase of Shin Corp otherwise it would face the wrath of the people of Thailand.
Leading critics and academics slammed Singapore for making no attempt to explain its intentions for Shin Corp nor reconciling with the Thai public over their fears of seeing a company that has security implications for the country being taken over by foreigners. They urged Tema-sek to pull out of the investment.
A seminar, “The Shin Corp Deal: International Dimensions” at Chulalongkorn University, urged Temasek to explain its reasons for buying Shin Corp, which has operations that relate to national security and strategic interests.
Professor Suchit Bunbongkarn, of the Institute of Security and International Studies, urged Tema-sek and Singapore to take into account public anger fuelled by an absence of business and political ethics in the deal.
“Businessmen and those in political power should have greater social responsibility. They have to raise the moral standards in their decisions,” Suchit said.
As the force of globalisation has brought business, politics and economics closer together, each factor could affect another. “We should be able to rely on ethics and morality, not legality alone,” said Suchit, a former judge of the Constitution Court.
Prime Minister Thaksin Shinawatra is under fire for allowing Temasek to acquire a 49.6 per cent stake in Shin Corp, whose subsidiaries include Advanced Info Service (AIS), iTV and Shin Sat. The Singaporean firm bought the shares from the Shinawatra and Damapong families, who were not required to pay tax on the Bt73-billion deal.
Somkiat Tangkitvanich, research director at Thailand Development Research Institute, said his main concern was not the market being forced open, but that the deal involved broadcasting and satellite businesses that are deemed national assets. iTV and Shin Sat are national assets, which have political and security implications and should not be placed in foreign hands, he said.
The critics were also sceptical of Singapore’s intentions. Temasek said in its report to the Securities and Exchange Commission that it was interested in Shin Corp and AIS and considered the other subsidiaries such as Shin Sat, Thai AirAsia and iTV as “immaterial assets”. Thus, it would launch tender offers only for Shin Corp and AIS.
Democrat MP Korn Chatikavanij urged the company and the Singapore government to come out and make the issue clear. “So far, Singapore has kept silent.”
From the beginning, Temasek Holdings indicated it only wanted to buy AIS, a lucrative mobile business. But it had not said what it planned to do with the other subsidiaries. “They should come out and say what Singapore is going to do with Shin Satellite and iTV,” Korn said.
Thitinan Pongsudhirak, a political lecturer at Chulalongkorn University, said Singapore had unintentionally become involved in Thai domestic politics after buying a controlling stake in Shin Corp, even though profit and opportunism drove Temasek’s decision. Thitinan said Shin Corp’s business concessions were fraught with controversy and conflict-of-interest allegations right from the start.
Thitinan wondered whether Thailand could claim back frequencies on Shin Sat and iTV from Temasek. He was also worried about the potential for political violence if Thaksin did not step down soon or dissolve Parliament.
Kasit Bhiromya, a former Thai ambassador to Washington DC, urged the Singapore government to think about withdrawing the investment. He pointed out that Temasek is owned by the Singapore government so when it takes over a Thai company, it is not an ordinary corporate take-over. Moreover, some of the concessions were considered strategic industries. He said the deal might spark disagreement from the public, citing the recent US congress objection to the bid by China National Offshore Oil Corp to acquire Unocal, the US-based energy firm.
Suchit agreed with Kasit, saying Temasek and the Singapore government should pull out from the deal.
“People have not yet organised rallies against the Singapore government because they are still busy organising protests against the Thaksin government. But not for long. We may see people turn out against Singapore,” Korn warned.
Somkiat said the sale of Shin Corp had automatically liberalised the telecom sector. He said he was not concerned about market liberalisation, but it should only be done after the regulatory framework to safeguard public and consumer interests was put in place.
Korn promised the Democrats would launch a no-confidence motion against specific ministers in the Thaksin Cabinet. He said the Democrats could not find enough votes for a no-confidence motion against Thaksin, even though some factions in the ruling Thai Rak Thai Party might join the Democrat’s move to question Thaksin’s legitimacy.
Korn predicted conflict of interest would remain a problematic issue for Thaksin, although his family earlier said the sale of Shin Corp would negate this and enable Thaksin to continue his political career without criticism.