19 jan 2004

The market vendor looked at Chang Noi with a face full of resignation. "Let's face it, every government is on the take. They are all the same. Some in a big way, some only a little. This one is no different. But it leaves enough left over so some trickles down to us. That is a bit different. So I like this government."

It has been a remarkable past year. Chang Noi has been travelling upcountry a lot in the past month. Even small towns have got the buzz back again. Buildings are being completed. Markets are busy. Goods are moving. Traffic is getting awful again. Maybe it will turn out to be a bubble, but in the short term, it feels good.

It has been a remarkable past year for the Shinawatra family business too. AIS has held onto a 60 percent share of the galloping mobile phone market. AIS shares have gone up even faster than the skyward-bound stockmarket index. Investors seemed to like the Shinawatra connection, and perhaps the conversion of the concessin obligations into an excise tax too.

But while this core Shinawatra business has been doing very nicely, it has been the new ventures that really caught the eye. SC Asset launched several major property developments. OK Capital has been launched into the expanding credit business. Asia Air Lines promises to be the lead player in the new economy segment of regional air travel. The iPStar satellite has sorted out its problems with China over positioning, and has found a marketing strategy. ITV's deal with Traiphop promises to turn the company from minor to major player in the expanding entertainment industry. And so on. Shin is going conglomerate.

At several points, these businesss seem to have benefited from government decisions. The Cabinet decided to change the mobile phone concession obligations into an excise tax. The Board of Investment gave iPStar an 8-year tax holiday without any obvious reason why the project qualified. The government opened up the possibility of an economy airline segment; the Airports Authority reduced the landing fees; and the transport ministry removed the floor on ticketing prices. And so on.

Of course the Shinawatra family businesses are technically separate from the prime minister. An innocent view would be that these little bits of government assistance have nothing to do with the fact that the companies benefitting happen to belong to the prime minister's family. On the one hand, there is a government committed to making the economy grow. On the other, there is one of the largest and most dynamic companies in the country. Inevitably, these two institutions come into contact without any need to suppose any personal influence.

But not everybody sees it so innocently. Thaksin himself, for instance. At a recent gathering of the telecom industry he boasted that he had "rescued" the sector (though from what, is not clear; perhaps regulation). And retail investors in the stock market call the shares of companies associated with the Shinawatra family "hun thaksin", or Thaksin shares, suggesting they believe the connection is real – and special, and valuable.

But even if government is helping the expanding Shinawatra business empire, does it matter a bit in the world of Thai politics? In what Nidhi Eoseewong called the "cultural constitution" – meaning the rules of the political game as they work in practice rather than on paper – is this not what politicians are expected to do? And what prime ministers are expected to do big time. Banharn flooded Suphanburi with funds from the national budget. Chavalit did much the same for Nakhon Phanom. And many just could not understand why Chuan did absolutely nothing to favour his home town of Trang.

Unlike these politicians of the past generation, Thaksin does not have a home town which has to be nurtured as an electoral base. Instead he has a family business which has to be nurtured as a source of political funding on a national scale. In the cultural constitution, perhaps there is no problem that the Shinawatra empire might be receiving some pretty obvious and pretty useful assistance. It may indeed be another proof that Thaksin is clever and hence the right man to lead Thailand at a difficult time. Does it matter if all that separates big business and the state is the width of the dining table?

But the situation is new. Never before have business and government been so close. New clauses are having to be appended to the cultural constitution to govern this new situation. We can perhaps begin to discern some of these, but others are yet to emerge. The spice is: do these as yet unknown clauses impose any conditions on this new closeness of state and business?

At base, urban Thailand is a society of migrants who left home (in Swatow or Surin) and took huge risks to escape poverty and make a fortune. For many, that experience is now two, three or more generations ago. But it is undoubtedly there deep in the cultural memory. And the shock of the 1997 crisis dragged it back into the mental foreground. A leader who can restore growth, put the buzz back into the economy, and push that cultural memory back into the background, wins a great measure of support.

But does this mean the fate of Thaksin and the TRT government and the Shinawatra business empire is bound to the GDP growth rate by hoops of steel? What happens when growth becomes so "normal" again that it seems automatic, and not dependent on the will and energy of clever leadership? And what happens, God forbid, were the growth to dip or the bubble burst?

In the version of the cultural constitution outlined by the market vendor above, big people can benefit in a big way as long as small people can benefit in a small way too. But if the small benefits disappear, or just become too everyday to be motivational, are the big benefits then resented? Or is the cultural constitution more generous, more forgiving?