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Ten easy steps to selling a country
11 feb 2006
At the end of 2000, just before Thaksin came to power, the market value
of Shin Corp was 46.1 billion baht. The Shinawatra-Dhamaphong families
and their sundry household staff probably owned about half – say 23
billion. This stake has just been sold for 73.3 billion. It roughly
tripled over five years, a rate of growth of 26 percent. Not bad when
the economy is growing around 5 percent. All boats rise, but some rise a
lot more than others.
Of course, you would like to do as well. Here is an easy guide.
1. Before you can sell a country, you first have to acquire one.
Business is fine, but the rate-of-return improves magnificently when
business is combined with political power. Its usually quite difficult
to buy a country on the open market, but after a devastating financial
crisis the price weakens and most competitors are taken out of the
picture. (Chang Noi offered advice on “Ten easy steps to buying a
country” on 31 July 2000.)
2. Acquire politicians. The price is surprisingly reasonable. Buying in
job-lots is more efficient (sometimes called party mergers), but the
basic principle is to acquire any that are not nailed down. Your target
should be to acquire the number needed to ensure the parliament cannot
submit you to any serious scrutiny.
3. Have a core business in which the profit level is ultimately
determined by government rules rather than market competition. A
licensed casino monopoly would be perfect, but a good second-best is a
near-monopoly business operating under a government concession with a
built-in advantage over competitors. Then all you have to do is to keep
the existing arrangements in place. Sabotage the regulatory environment.
Delay calls for market liberalisation. Even improve your own concession
terms if you’re feeling ambitious. Competitors will wear themselves out
complaining about playing fields not being level, while you maintain
your market share and profit level.
4. Diversify into areas where governmental actions can again have a
significant impact on returns. Tax holidays under investment promotion
rules or cheap finance from public-sector banks are good. Best is to buy
a business which is unprofitable because of a strict government
licensing agreement and high concession fees. Then simply tearing up the
agreement and lowering the concession fee will have a spectacular effect
on profits. It’s also a good idea to diversify into areas where you know
government policies should improve the prospects, such as air travel or
health care or personal finance. And work on that idea of a casino
monopoly in the future.
5. Stamp hard on any possible sources of scrutiny or criticism. Buy up
any TV stations on the market. Reverse any trend towards liberalisation
in electronic media under state control. Whip the press into line by
threatening their bottom lines. Get friends to buy stakes in newspapers
that still don’t understand. Close down any production companies, radio
stations, websites, or satellite TV channels that utter a squeak of
criticism. Put friends in all regulatory and oversight bodies. Harass
NGOs. Ridicule intellectuals. Intimidate everybody with a lethal
anti-drug campaign. Strew the country with defamation suits. Pour scorn
on democracy, rights, and the rule of law.
6. Be absolutely clear about what you’re doing. Say things like: “As a
prime minister, my motto is: You must be rich and don’t stop becoming
richer!”
7. Get the most respectable bank in the country to finance and otherwise
assist some of the most flagrant deals. This makes things look a little
bit better all round. Banks generally have no conscience so this is
quite easy to organise.
8. Sell while you are still in
power. This is vital. Your family companies are worth a lot more when
investors believe you have the power to improve their profits. Sell to
another country where business and politics are delicately intertwined,
and potential criticism is kept well under control. This will maximise
mutual understanding. Shortly before the sale, engineer a few changes in
laws and regulations which raise the attractiveness to the buyer. Only
you are in a position to do such things, so don’t be shy. Choose the
sale method which minimises the tax liability. In the process you might
have to break several other laws and rules such as disclosure
obligations, foreign shareholding limits, or whatever. Don’t worry about
these because the penalties are minor and anyway you are the boss of the
people who impose those penalties. Tax laws can change with the seasons.
Precedents are meaningless. Make sure all the relevant regulatory bodies
and government departments are ready to mount a smokescreen. Officials
don’t need to know any details but just keep on saying: The prime
minister can do no wrong. Don’t get sentimental about how these people
might be feeling inside. Conscience is a luxury. This is about money.
Have a team of Dobermans on the government payroll to snarl and snap at
any critics.
9. Take no notice of the international reaction. The foreign press will
start to portray your country just like a banana republic run by some
murderous kleptomaniac. Take no notice. Forget that you have constantly
accused your own critics of damaging the country’s image. Forget that
you came to power by sledging your opponents for selling the country. As
you own the country, nationalism is whatever helps you.
10. There is one regulatory body not under your control. The big one.
There’s some risk you could come back as a flea, or even get stranded in
the Lokanta depths. Try bargaining. Promise to give away all your
property several times over in your next life. This is only a bit more
outrageous than what you promise the people at election times. It might
work.
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