With apologies to one of 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 to rehabilitate his image by buying 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, Thaskin in a coup last September). And both now own soccer teams (Berlusconi owns AC Milan). Shelling out £21.6 million pounds ($43 million or Rs176 crore) for Manchester City may seem an odd vehicle for a comeback, political or otherwise. Sports commentators are already 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 2 July 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.
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 whether Thailand would do battle with Singapore’s Temasek Holdings Pte to reclaim Shin Corp. and which of Thaksin’s policies would be revoked didn’t help.
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.
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 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 are watching carefully and will invest accordingly.
Finally, the generals need worry less 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 good and giving him repeated free kicks.