Many of you who follow this blog will have also followed the upheaval in Thai politics that started with the military coup in 19th September 2006. One side of the political equation has been referred to as including a segment of Thai businessmen (mostly Thai-Chinese ), joining the traditional old elites and a smattering of new “liberal” democrats. These groups are united in their nearly universal aversion to the former prime minister (and the individuals who succeeded him in rapid succession).
What has received less attention is the underlying dynamic of origin and nature of the economic and political interest and how they’ve remained fairly consistent in Thailand for many decades despite the fact that governments and constitutions have regularly changed. This partnership of convenience has an enduring quality.
The perception that Thaksin policies threatened to upset this partnership with its existing players, caused a sense of panic, followed by determination to do what was necessary to eliminate the threat.
To understand the working relationship between the business community (overwhelmingly ethnic Chinese) and the other big political players such as the bureaucrats, the “old-money” class and men in uniforms, you would do well to read Joe Studwell’s Asian Godfathers.
Studwell does an excellent job of revealing how the Godfathers succeeded in Southeast Asia, including the Thai godfathers contingent. In any Southeast Asia patronage system where concessions, licenses, cartels and other monopoly practices have had a long history, the Chinese were skillful in cultivating the right political connections and exploited them to create a herd of rich cash cows. Whether it was ports, banks, telecommunications, mining, rubber, or timber, having an exclusive right to a monopoly coupled with the guarantee to exclude competition was a surefire way to rake in a large amount of money. The other factor that Studwell identifies as significant to the rise of billionaire Asian Godfathers was access to easy and cheap credit. This allowed them to expand their business interests.
As the global financial recession continues accelerate, it will likely eliminate the easy and cheap credit that Asian godfathers have grown accustomed to tapping. How many of the Asian Godfathers have been over-leveraged? As this is a secretive group, probably no one really knows the answer to this question. The same is true of another question—whether the cash flow from the Asian godfathers’ traditional concessions and licenses will see them through this financial crisis.
Local economies in Southeast Asia are contracting as well. Less of everything is selling. Having a monopoly over resources or services will be a cushion but will it prevent injury when the fall this time is from such a great height? No one, again, can predict how much of a haircut the Asian Godfathers will be in for this time. The likelihood is, once the dust settles, and the accounts are reconciled, we will discover some heads that have been shaved clean.