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When the
going gets tough, the tough get buying soccer teams.
With
apologies to one of the English language’s better-known
adages, this phrase aptly describes Thaksin Shinawatra.
Last week, the ousted Thai prime minister took time out
from his busy schedule rehabilitating his image to buy
English soccer team
Manchester
City.
Thaksin
has long been Asia’s answer to former Italian Prime
Minister Silvio Berlusconi. Both are larger-than-life,
self-made billionaires. Both are famously combative.
Both were removed from office amid a swirl of corruption
allegations (Berlusconi by election, Thaksin in a coup
in September). And both now own soccer teams (Berlusconi
owns AC Milan).
Shelling
out 21.6 million pounds ($43 million) for Manchester
City may seem an odd vehicle for a comeback, political
or otherwise. Sports commentators already are
questioning the wisdom of the purchase; in the season
that just ended, the team finished 14th of 20 teams and
last won a trophy 31 years ago.
From a
public relations standpoint, though, Thaksin’s move is a
brilliant one, especially as it came on the same day
Thai prosecutors formally charged him and his wife over
the acquisition of land from the central bank. Thaksin’s
saga says much about
Thailand
as the 10th anniversary of the Asian crisis
approaches—and not all good.
Thailand’s
move to devalue the baht on July 2, 1997, set the crisis
in motion. Its economy rebounded impressively from the
turmoil; just two years ago, it was the star pupil among
chastened Asian economies. In Manila, Jakarta, Kuala
Lumpur and elsewhere, leaders were eyeing “Thaksinomics”
as a means of spreading the benefits of economic growth.
Reversal
of fortune
These
days, Thailand is an abject lesson in what not to do.
The generals who grabbed control wanted to restore the
democracy and transparency
Thailand
lost after Thaksin rose to power in February 2001. After
all, those who arguably benefited most from Thaksin’s
policies were his family and business associates.
The
final straw came last year with the sale of Shin Corp.,
the holding company founded by Thaksin. It enraged Thais
because his family didn’t pay taxes on the proceeds. The
deal exacerbated street protests that culminated in
Thaksin’s ouster.
Yet if
you’re going to remove a democratically elected leader,
it’s best to have a plan for success—a clear way forward
to convince the populace and investors all’s well.
Sadly, that wasn’t the case.
Earlier
in the year, Thaksin, who’s been living in London,
raised eyebrows by reportedly agreeing to pay Edelman
Public Relations as much as $300,000 to counter the
negative press he was receiving. Thaksin thought better
of it and scrapped his PR associations.
Good PR
Perhaps
Thaksin realized he’d be wasting his money. All the good
PR he desires is being generated by the hapless generals
running Asia’s ninth-biggest economy. Their biggest
accomplishment seems to be making people who despised
Thaksin nostalgic for his leadership (now that’s quite a
feat!)
Controversial post-coup policies include capital
controls, tighter foreign ownership laws, changes to
visa rules, restrictions on retailer expansion and curbs
on alcohol sales, all of which opponents say discouraged
foreign investment. Waffling on plans for the economy,
on whether Thailand would do battle with Singapore’s
Temasek Holdings Pte to reclaim Shin Corp. and on which
of Thaksin’s policies would be revoked didn’t help.
Moves to
freeze Thaksin’s assets and dissolve his political party
actually made many Thais feel sorry for him. These days,
the Thai media are buzzing about another coup to replace
the generals who grabbed power. Not knowing what to
think, many investors have avoided Thailand.
Bad
democracy
As if
orchestrated to tease the generals, the Manchester City
deal reminds us the exiled Thaksin is still free, wildly
rich and moving on to other things. It also reminds us
that he continues to win the PR war versus officials in
Bangkok.
What’s
become of
Thailand
is a cautionary tale for Asia. Leaders like US President
George W. Bush see free elections as the elixir for
stable markets and prosperity. Perhaps, but only if
popularly elected leaders respect the principles of
democracy when in power. Thaksin used his office
undemocratically and Thailand’s 65 million people will
long pay the price.
It’s
something Asia’s other leaders should take to heart 10
years after the Asian crisis. As important as it is to
reform banking systems, reduce foreign-currency debt and
amass currency reserves, it’s also vital to create a
stable and predictable political environment. Politics
is the kind of wildcard that can scare investors away,
indefinitely.
Investors beware
There’s
also a lesson here for investors: Asian economies that
one day drip with potential can literally unravel the
next. For all
Asia’s heavy lifting since 1997, political surprises are still a
major risk that investors need to navigate.
Thailand
is Exhibit A. Thailand’s junta leader Sondhi
Boonyarataklin and other officials in Bangkok need to
leave the central bank alone to do its job. They need to
be more transparent in their decisions. They must
remember that investors controlling the capital Thailand
needs to grow faster are watching carefully and will
invest accordingly.
Finally,
the generals need to do a little less worrying about
Thaksin and think more about not shooting the economy in
the foot. They should start by not making new Manchester
City boss Thaksin look so good and giving him repeated
free kicks.
William Pesek is a Bloomberg News columnist. The
opinions expressed are his own. |
