Tuesday, January 09, 2007

More Bangkok bad news: Shin Corp an unmitigated disaster for Singapore!

Thailand imposes limits on foreign investment

Posted: 09 January 2007 1534 hrs
(Channelnewsasia)

BANGKOK : Thailand's military-appointed government Tuesday approved new limits on foreign investment, despite concerns about the potentially disastrous economic fallout.

The cabinet approved changes to the Foreign Business Act after a nearly five-hour meeting, agreeing to limit foreign investors to holding no more than 50 percent of the shares or the voting rights in companies.

The cap will only apply to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture, Finance Minister Pridiyathorn Devakula said.

Foreign investors in violation of the new limits will have a year to reduce their stakes, and two years to reduce their voting rights, he said.

Prime Minister Surayud Chulanont said the changes would not take effect for "some time", as a panel of legal experts reviews the changes and the government tries to reassure nervous investors.

"We think that it needs to be worked out in detail for the law to be more transparent, and to make investors more confident," Surayud said.

"If we explain clearly and allow investors to participate, they will agree that the law is open and transparent at a certain level."

But that failed to console the stock market, which tumbled 2.69 percent on the news, with the Stock Exchange of Thailand (SET) composite index losing 17.07 points to close at 616.75.

Companies have traditionally set up their operations in Thailand so that the local subsidiaries are nominally owned by Thais, but controlled by foreigners.

The practice became controversial last year after investors led by Temasek Holdings bought 96 percent of telecom giant Shin Corp for 3.8 billion dollars, giving it key stakes in Thailand's biggest mobile operator, a satellite company, a television station and an airline.

The investment firm bought half of those shares from the family of former prime minister Thaksin Shinawatra, sparking public outrage that eventually led to the military coup that ousted the billionaire premier in September.

After the coup, the commerce ministry ruled that the takeover violated foreign ownership requirements, casting doubt on the legality of the operations of thousands of local subsidiaries of foreign companies.

Pimonwan Mahujchariyavong, head of macro-economic research at Kasikorn Research Centre, said the legal review period would do little to reassure investors who felt the law was approved without consultation.
(read the rest...)

My comments:

Hi friends,

The Thai government has today driven yet another nail into the coffin that is Shin Corp(se)!

The cabinet’s approval of changes to the Foreign Business Act forces Temasek to reduce its stakes in Shin Corp to no more than 50 percent within one year!

Lelong! Lelong! ( Singlish for Fire Sale!)

This means a fire sale! This will be a buyer’s market and the potential buyers (assuming there are some Thais who might not mind being seen to be our bed-fellows!) will be driving a very hard bargain.

Admit it, these same buyers have got us by our b*lls and they know it.

Yet to this day, our authorities continue to put on a brave front and defend this purchase as one based purely on a commercial decision.

If it were a purely commercial decision, did someone in Temasek actually do some due diligence?

What did the Due Diligence Committee think ? ( if there was such a committee and if such a committee could indeed think)

Let's suppose this "Due Diligence Committee" having been satisfied with the Shin Corp's financial ratios, SWOT (strength-weakness-opportunity-threats) analysis or P.E.S.T analysis etc and what-not,did anyone there then consider that the friendly ever-smiling Thais may not take too kindly to us taking their jewel in the crown?

Did we ever expect that they may not be as benevolent as we when we allowed foreigners to come into our city-centre and whisk away our grand Dame, the Raffles Hotel?

Could it be possible that the Thais had much more national pride and resolve than we thought possible?

Some window dressing needed at home

Now Temasek’s accountants will just have to find a nice and tidy way to write off this investment from their books and then their frontman ( or woman) can boast that (yadda yadda yadda) not withstanding this or that event, they still managed a Return On Investments of XX% ( whatever the figure is)!

I am encouraging my kids to do accountancy. Their work is.. how shall I say, eh like MAGIC!

From:

Dr.Huang Shoou Chyuan
( who refuses to be cheery after Singapore’s loss of billions in this escapade of folly)

Other links: BBC:Thai revises business rules
CNN: No plans to lift Thai controls
FT:Getting Singapore to drastically reduce Shin appears to
be Thailand’s main purpose (10 Jan 07)

16 comments:

Anonymous said...

Our neighbors are fast learning from the Pay and Pay party .Change the rules to your own advantage through creative legislation. Our beloveds are having a taste of their own medicine. Ha!Ha!Ha!

Anonymous said...

We thought we have seen the worst but the worst has yet to come.

Let's move on...

Anonymous said...

All your worries are unfounded. The Fire Sale Lost (if there are any!!) will be passed to Poor Singaporeans in the form of direct or/and indirect fees increase across the board.

Anonymous said...

Then let's celebrate. You know any increase in fees, be it GST, COE, ERP, ABC and XYZ is to help fellow Singaporeans.

Anonymous said...

"We hang the petty thieves and appoint the great ones to office"

CSJ was hung for taxi-claims..hahahahahahahah

nofearSingapore said...

Hi,
It's interesting to see in the immediate aftermath, how the spin machine is starting to turn. By next week the MSM would be saying that this latest Thai measure is a godsend and how we had anticipated all this etc etc

Dr.Huang

Anonymous said...

The two faced Govt is getting smacked by the Thais while they return home to Singapore with tails between their legs and take it out on their own submissive people. Sounds like the abusive father and spouse who after being castigated at work turns on his family to boost up his bruised ego. What bullies and cowards.

Poor suffering Singaporeans. What is more to come?
Salt on top of injury.

Anonymous said...

Nothing like a little TT Durai scandal to divert everyone's attention.

TT Durai = Millions
Shincorpse = Billions

Yet look at the amount of attention the MSM is paying to the Durai scandal with nary a mention of Shincorpse fiasco.

Anonymous said...

Singapore Govt should sue the Thai Govt in the Singapore courts and bankrupt the Thai PM for daring to even slight the good name of Temasek which is run by such an impeccable and honest member of the Singapore Royalty. Any aspersions of impropriety by the Singapore Govt must be aggressively corrected, otherwise if allowed to fester will be assumed as the truth and this cannot be tolerated,as the slightest blemish will tarnish its sparkling clean image.
The Thai Govt must show cause why it should remain in power, or otherwise face the wrath of the mighty heavy hand of the Singapore Govt.
We will ensure that the Thai Govt will have to publish in the media corrected comments, that are acceptable to the Singapore Govt.

Now why is the Singapore Govt not doing just what they have proven so good and successful in???

Are they just winnows and bullies that cannot deal with real and formidable oppositions??

Anonymous said...

Elite:

If you ask me, I am worried. Worried that fellow Singaporeans are so gullible and so easily cowed by this government. Worried also that there is no transparency. How much reserve do we really have and how much have we lost?

shimure said...

It is common knowledge that singaporean scholars, in the tower of ivory, do not understand the nature of the business world.

Being safe and sound in a place where controls are in your hands, you do not have risks.

In another's country that is different business all together.

There can be political coup, changes in policies and wars. These can affect one's investments.

Moreover, there can be plots and plans. Why would someone give you a good pie with no strings attached?

Someone said that there is no free lunch in the world. Yet again and again singapore businessmen and policy makers fall into these traps.

Look at the Suzhuo project and you will see history repeating itself.

Tharksin with his billions could very well live high and dry and be free of worry of ever facing up to this.

"In a well, you may be a big fish.
In the ocean you are only a minnow."

nofearSingapore said...

Hi,
Shimure:Of course it goes without saying that our scholar-mandarins very likely do not the skills to survive in the real world. How can they, when they have been protected ( some from the time they entered the Gifted Program in school). They learn from experience that taking risks do not pay, hence take safe subjects, go to the usual 2 JC's and go through the mill and the trodden road that their predecessors have paved for them. Followed by fast-track careers where they are almost untouchable ( unless they REALLY screw-up).

To be honest, the scholars are just trained to be administrators and be a cog in the whole machinery.

But for ShinCorp, I am sure merchant bankers/risk analysts/top notch finance people were consulted.

But if the numero uno in our organisations have made up their minds, you think these experts' ( expensive they may be) opinion would change their minds ( esply if the advice was against investing )?

I do not know the inner workings of Temasek nor about this Shin Corp deal, but it goes against good business practices to have people running companies that are difficult to bring to task or made accountable when lemons turn up when we were expecting apples!

Dr.Huang

shimure said...

In business, a businessman accounts for his own failures.

In War, A general answers for his own failures.

Yet contrary to most.......

In singapore, none would answer for failure, yet thousands will vie for glory....

Well, I guess it is the singaporean taxpayers which will be eating lemons instead of apples.

Anonymous said...

Hi all

Exercise your rights and concerns through your votes. Demonstrate a will for righteousness and justice. Mass boycott of institutional impositions and services that are unfair .Freedom has a price and it must be paid in blood.
Accountability carries a heavy responsibility.
And the blind is leading the blind unless you will break away from the common yoke.
Otherwise, we are just musing in wanton idleness.

Cheers

Anonymous said...

Temasek thought that it was so clever to buy over Shin Corp. It is yet another greedy kiasu move like many Singaporeans to grab without carefully thinking of the repercussion. And then for our Minister to meet up with the former Thai minister is yet another display of stupidity to the highest order. Even the mighty Japan avoids meeting the former Thai PM when he visited Japan recently.

Of course our government which as we know is not capable of wrong doing or error in judgement will always insist that it is above board and did nothing legally wrong.

This is my asessement of our bunch:
EQ : Zero
IQ : Doubtful, Questionable
AQ : 10 upon 10 (A stands for arrogance).

Anonymous said...

Quite obviously Temasek has failed to do diligence on the Shin Corp deal. What makes it worse is whether old Lee actually had a role in "encouraging" Temasek in the buy over. After all Lee is known to have a personal liking for Thaksin and if Lee says yes who would dare to question? We have definitely not seen the worst of the Shin Corp fallout. Shin Corp and Temasek is now like a sitting duck in the water waiting to be bled and milked dry by the Thais. It will be a slow and long process. Which partly explains the LHL's desperation in raising the GST at one go.