The Nation
Thu, October 12, 2006 : Last updated 20:46 pm (Thai local time)
DAMAGE CONTROL
S'pore urges talks to save Shin buyout
Worried Temasek ready to pay fine and reduce holding in telecom firm to 49% A top-level official in Singapore has approached Prime Minister Surayud Chulanont to discuss the controversial Shin Corp deal in the hope of resolving ownership issues in an amicable manner, a government source said yesterday.
Surayud is likely to assign his deputy MR Pridiyathorn Devakula, who is also the finance minister, to look into the matter, the source said.
"One likely recommendation from the Thai government is that Temasek Holdings of Singapore should comply with the Thai foreign ownership law by quickly reducing its stake in Shin Corp, which is estimated at 96 per cent, to below 49 per cent," he said.
Temasek got itself into hot water with its Bt140-billion takeover of Shin Corp, which was owned by the Shinawatra and Damapong families.
The Commerce Ministry's Business Registration Department has found that Temasek relied on nominees to skirt a legal ban on foreign companies owning more than 50 per cent of a telecom business.
A Singapore investment banker said he had overheard that Madame Ho Ching, the CEO of Temasek, had been following political developments in Thailand very closely and had expressed her willingness to seek a compromise."Temasek, from what I have heard, is willing to pay a fine or make other concessions in order to end the controversy rather than allow the issue to drag on," he said.If Temasek reduced its holding in Shin Corp from 96 per cent to 49 per cent by selling some 1.5 billion shares, it would suffer a huge loss. It paid Bt49.25 a share, for a total of Bt140 billion-Bt150 billion, but now Shin Corp is trading on the stock market at Bt28.25 a share. The Thaksin Shinawatra government and Temasek had been sitting on the nominee investigation, hoping the issue would go away after Thaksin staged a comeback with an election victory. But the September 19 military coup has sent Thaksin into exile in London.
With a fresh government installed, the probe into the Shin-Temasek scandal has taken on a new life.
Besides, Singapore faces public outrage here over its perceived attempt to dominate Thailand's businesses involving national security.
"The Thai government is expected to tell the Singapore government and Temasek that current anti-Singapore sentiment needs to be dealt with quickly," the source said.
"There is a lot at stake for Singapore and Thailand relations, depending on a compromise on the Shin deal."
Of particular concern are Shin Satellite and iTV, both listed subsidiaries of Shin Corp. They are considered politically sensitive state concessions while the cellular service business of Advanced Info Service, Shin Corp's flagship unit, is in a more liberalised industry.
It is widely believed that under close scrutiny many foreign-invested Thai companies would fall afoul of the foreign ownership law, which has been criticised as vague and subject to abuse.
Noted economist Ammar Siamwalla said the Thai government must enforce the rule of law in all the nominee cases by doing away with all the violations.
The government could offer clemency to all foreign companies, giving them three years to cure the ownership or nominee structure to comply with the regulations, he said.
Within 10 years, Thailand should be in a position to enforce the law strictly regarding foreign ownership.
"But we need to state clearly which businesses we would like to protect for national security reasons and which businesses we would like to free up. I don't care if they want to liberalise all businesses. But we have to spell it out and stick to the enforcement," Ammar said.
"The government must uphold the spirit of the law, instead of interpreting it in the srithanonchai [tricky] way," he added.
http://www.nationmultimedia.com/2006/10/12/headlines/headlines_30015988.php
