Thaksin's trio plays entrepreneurs tune

May 18, 2000

DR Somkid Jatusripitak and Pansak Winyarat are a strange duo. And if you add Dr Suvarn Valaisathien, you hardly get a combination for a Tchaikovskian troika.

Yet the marketing man, the newsman, and the taxman form the nucleus of an inner circle of supporters for Dr Thaksin Shinawatra, the telecom tycoon and leader of the Thai Rak Thai Party. As founding party members, Somkid, Pansak and Suvarn have been playing an influential role in shaping the economic policy of the cash-rich party, which is trying to place the entrepreneurial class at the heart of the party's platform.

This agenda, if pursued sincerely, amounts to a political redefinition, a complete antithesis to letting the elite class collapse - the class that had ruled over the Thai economy over the past three decades until 1997. It is fair to say that the pre-crisis Thai economy was virtually dominated by 40-50 Chinese-Thai families controlling banking, manufacturing, trade, commerce and services.

On the surface, it seems that the elite Chinese-Thai families were wiped out by the financial crisis over the past three years. Yet the lax legal system and the misguided government policies ignoring moral hazard have allowed the elite class to transform most of their debts into government debts, while they have managed to retain a big portion of their wealth.

The prevalence of the non-payment culture has caused government debt to skyrocket to be the equivalent of almost 40 per cent of gross domestic product. The debt was largely incurred from the necessary evil of bailing out the banking system with taxpayers' money. The public debt may peak at 60 per cent of the country's output down the road. In short, most of the financial damage from the economic crisis is turning up on the government's books!

If a sphinx were to rise from the ashes of the Thai economy, it would represent Thai entrepreneurs who had been left out in the cold during the economic bubble. This is the message that Somkid, Pansak and Suvarn are telling Thaksin so that he can put it across during the upcoming campaign. Thaksin, who is eyeing the premiership, has survived the economic crisis unscathed to emerge as the 50-billion-baht man. Is Thailand ready for a billionaire prime minister, who can literally lay his gold coins from Sanam Luang down the Rachadamnern Road to the top of the Golden Mount?

Somkid, an aide to Dr Thanong Bidaya when he was finance minister, is a marketing man by profession. He aspires to academic excellence. His thinking is greatly influenced by Prof Michael Potter's "Competitiveness of Nations". He has been focusing most of his academic endeavours on how to improve the management and competitiveness of businesses and the country.

Somkid is cool and gentle, unlike his abrasive older brother Dr Som Jatusripitak, a former president of Siam City Bank and a former commerce minister. Som, now implicated in a loan scandal, was also strong in marketing before moving on to banking. In the meantime, Somkid is also more expressive than his brother with his systematic thinking, which at times borders on the academic.

Somkit says he will be content enough if, even without receiving any political reward, he succeeds in pushing forward his grand idea behind the transformation of Thailand into an entrepreneur-driven economy. The present government, he argues, has not moved fast enough in going to the rescue of the real sector because it has been preoccupied with the shaky financial system.

But he admits that his grand plan would not deviate significantly from the structural reforms devised by Finance Minister Tarrin Nimmanahaeminda. The main difference is that the Thai Rak Thai will have a clearer platform on salvaging the real sector and reviving small and medium scale enterprises.

In short, the way ahead for Thailand is to open up a variety of niches for SMEs invigorated by the entrepreneurial spirit. Small, flexible and innovative, SMEs will become the backbone of the new Thai economy, capable of sailing through the stock market and financial turbulence in the age of globalisation.

Somkid says the Thai Rak Thai is the first party to pick up the SME slogan as a way to point the Thai economy in a fresh direction. Later on, the Chat Pattana Party also started using the SME mantra in most of its political messages. Suwat Liptapanlop, the Industry Minister and Chat Pattana secretary-general, in particular, has been scrambling hard for money to rejuvenate local SMEs, presently hard hit by the liquidity crisis. Banks have contracted their lending for 15 months in a row, dealing a blow to the Thai SMEs.

Somkid does not pretend either that Thailand is ready to take on the so-called New Economy. Eisuke Sakakibara, or Mr Yen, recently noted that Asia has been suffering from the economic crisis due to its failure to grasp the great transformation of business-industrial capitalism to cyberspace capitalism.

Taking a look at Thailand, Somkid says agriculture remains the most important sector since it employs about 60-70 per cent of the Thai population. The challenge, he adds, is how to develop the agricultural sector and link it with the modern sector and eventually with the information technology sector.

"IT is at the top of this process but it cannot be pure IT without any foundation. We cannot hope to compete against the US or other countries in IT. Our IT must promote or support businesses in agriculture and manufacturing in the real sector," Somkit says.

The Bohemian Pansak, who has a passion for political intrigue, is the most class-conscious of the three, seeing the arrival of the middle-Thailand, entrepreneurial class as the answer to the vestiges of the Old Economy. Given his background in the 1973 student-led democractic movement, he readily holds the banking and financial establishment up to ridicule.

Pansak, a member of the team of economic advisers in the Chatichai administration, is invariably known as a political mastermind and tutor. Formerly editor of the defunct Asia Times, he is one of the early writers on SMEs. As a political survivor, he speaks with passion, almost to the point of self-intoxication, about spawning Thai SMEs, linked to the global SME community.

"The government's role is to facilitate SMEs, and create a parallel financial system to support them," he says.

Suvarn is widely recognised as Thailand's foremost tax expert. He is putting forward a tax reform package for the Thai Rak Thai to adopt. He would like to see a progressive system where companies making smaller profits pay less in income taxes. At present, the corporate income tax rate stands at 30 per cent. Some companies have opted to declare losses to avoid sharing 30 per cent of their net profits with the Revenue Department.

He also would like to see the government give more privileges to those who faithfully pay their tax liabilities. "Those who pay taxes, say, of Bt500,000 a year, should be formally recognised, so that when they apply for a passport, no questions are asked. Or when they return from a foreign trip, they just go to an express lane at immigration," Suvarn says.

Suvarn also says tax collection in the oil, car and liquor industries should be improved to fill the government's coffers.

Given all the three advisers' thinking, they will face a big test in implementation if they ever get the chance to become part of a policymaking body. It remains unclear how they would cope with the banking crisis, the high corporate-debt problem and rising public debt, not to mention the other remnants of the Old Economy which are acting as a drag on the economy's recovery. Yet still, the Thai Rak Thai is dancing to its own drumbeat.

BY THANONG KHANTHONG