Thai Constitutional Court Plays Whack-A-Mole On Popular Party

August 20, 2024 Edward Dever

This previous post posed the question - can Thailand move forward following the electoral victory of the Move Forward Party?

It seems not.

The recent Constitutional Court decision to dissolve the MFP over its election platform advocating reform of the lese-majeste provision under Thailand’s Criminal Code sends a clear message.

Reforming this provision to prevent its misuse as a political tool was only part of MFP’s bold plan to shake up the institutions of power in Thailand. Their plans received broad electoral support, including winning all except one seat in Bangkok in the May 2023 election.

The Constitutional Court has now ruled that the reforms pose a threat to both the monarchy and the democratic form of government with the monarch as head of state.

The Court also imposed a 10 year ban on 11 members of the Party’s executive team. Each remaining MFP MP must join another political party within 60 days or lose their status. (MFP was outmaneuvered following the 2023 election by Thaksin’s Pheu Thai Party and military aligned and other minor parties who formed the requisite majority. Around this time, Thaksin returned to Thailand, ending 15 years in exile.)

A new successor party has quickly been established, the People's Party, which plans a similar reform platform ahead of the 2027 election.

The lese-majeste provision has been interpreted very broadly by Thai courts. There have been examples where even a like on Facebook or a simple comment - ‘yeah’ (in Thai) in response to a social media post have fallen foul of the provision. Lengthy jail terms have ensued. Often, prosecutions have also involved a provision under the Computer Crime Act - entering false data in a computer system - effectively doubling the jail term.

Fourteen million Thais voted for MFP in the 2023 election, with broad support in Bangkok. Voter reaction to the Constitutional Court’s decision remains unclear. However, any stumbles or overreaching by the Government may bring protesters back to the streets. The Constitutional Court engaging in a game of whack-a-mole for every MFP successor party may have a similar effect.

Disbanded Thai Opposition Party Rebrands as ‘People’s Party’

August 2024

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

Virtual Silence on Regional Air Pollution at 2024 ASEAN-Australia Special Summit

March 8, 2024 Edward Dever

The ASEAN-Australia Special Summit was held in Melbourne on 4-6 March 2024.

If attendees had cast an eye over NASA's regional map before the various events, they would have seen a region consumed by agricultural burning-off and forest fires. It might have provoked the odd question of leaders attending the Summit.

Fires across South East Asia are an annual event which choke the region and affect the health of tens of millions of people. During this time, the level of fine inhalable particles is many times higher than the WHO recommended level, resulting in increased respiratory-related illnesses.

While Thailand has a new draft Clean Air Act approved by Cabinet, each year politicians make broad statements about tackling air pollution and invoke feel good but otherwise useless temporary measures such as spraying water mist into the air.

Much of the air pollution is linked to agricultural burn-off, particularly in the sugar cane sector. Burning off is a cheap solution where farmers don't have the financial resources for more environmentally friendly farming practices. Some change is occurring. Another significant air pollution source is deliberately lit forest fires.

A key issue is enforcement of existing laws. Closer regional co-operation is also needed.

There is a brief mention of regional air pollution or 'transboundary haze pollution' in Item 42 of the Melbourne Declaration.

In a somewhat woolly statement, the ASEAN leaders look forward to exploring cooperation in addressing transboundary haze pollution, including the establishment and operationalisation of the ASEAN Coordinating Centre for Transboundary Haze Pollution Control (ACCTHPC).

While ASEAN leaders kick the issue down the road and hold hands in Melbourne, people in South East Asia choke through another smog-filled day.

ASEAN Melbourne Statement

NASA Fire Information for Resource Management System

March 2024

Historical Flaws in Malaysia's Torrens System?

October 24, 2023 Edward Dever

There are plenty of issues in Australia with poorly completed strata residential apartments. Owners are left saddled with huge defect repair bills after the developer has been liquidated or otherwise managed to avoid liability.

But imagine losing access to your apartment because the developer retained ownership of the common property and subsequently sold it to a third party.

That is the case in Malaysia with the saga of Sea Park Apartments where, due to the laws at the time, the developer was able to separately strata title six blocks of apartments while retaining ownership of the common area land, including the car parks and essential services such as sewerage and fire hydrants.

Crucial building plans which may have assisted apartment owners in their court battle mysteriously disappeared from the local Council and the Land Office.

The Sea Park Apartments saga has gone on for almost 20 years. In hindsight, the strata owners probably should have closed the transaction at the time the developer offered to sell the common areas to them in order to make the best of a bad situation. However, as the strata owners always thought they collectively owned the common areas (and only received their freehold titles a few years prior to the offer), one could understand any reluctance. Apparently, the main issue was the vehicle to be used for common property ownership.

For residents who live there, some for over 40 years, there seems no end in sight for this dispute.

The Apartments With No Entrance

October 2023

Shadowy Chinese Firms That Own Chunks Of Cambodia

October 1, 2023 Edward Dever

Interesting BBC piece on exploitation of Cambodia's resources. The only thing that seems to have changed over the past 30 years is the nationality of those doing the exploiting.

In the mid to late 1990s, French and Malaysian investors attempted, often successfully, to take advantage of Cambodian government officials.

Almost 30 years later, it is Chinese investors although they now deal with a far more sophisticated government apparatus as indicated by the increasing wealth disparity between Cambodian government and business figures and the rest of the population.

Looking back at the land speculation deals dressed up as rice farming projects and the favourable airport concession arrangements, one ultimately unsuccessful deal stands out.

In late 1996 and early 1997, there was a grand plan to erect a sound and light show at Angkor Wat. This proposal would have seen management of the temple complex outsourced to a Malaysian conglomerate which would have had full authority over the area. Cambodians were to be excluded from their own temple other than on particular religious holidays. The Malaysian group was to have total control over the content of the sound and light show and would be entitled to make modifications to the temple complex as they erected their equipment and built fencing.

Equally concerning was the plan to build hotels right up to the front of Angkor Wat, a detrimental step that was unlikely to have ever been reversed.

The contract was a particularly one-sided affair with the Cambodians effectively ceding sovereignty over Angkor to a foreign corporation.

The deal reached an impasse and, in the second half of 1997, an economic tsunami hit Asia. A number of Asian economies fell like dominoes commencing with Thailand. Malaysia enacted currency and capital controls, effectively walling itself off from the rest of Asia.

The economic crisis severely impacted the Malaysian conglomerate and it went home to try to revive its finances. Its grand plans for Angkor Wat came to nothing. The economic crisis had saved what would arguably have been Angkor Wat's destruction.

Today, as tourists return post-Covid to gaze at the wonder of Angkor Wat, they should say a quick thank you to one of the silver linings of the Asian Economic Crisis.

The shadowy Chinese firms that own chunks of Cambodia

October 2023

Can Thailand Move Forward?

May 18, 2023 Edward Dever

The aptly named Move Forward Party has claimed victory in the recent Thai national elections.

But the biggest question is whether MFP and their coalition partners will be allowed to govern for a full term or will Thailand be subject to yet another military coup?

MFP's platform includes revision of the Lese Majeste laws often used as a political weapon to stifle dissent. It is not clear how quickly they will move on this reform and how it will be viewed in the corridors of power. The appointed members of the Senate under the most recent military-backed Constitution further complicate matters, including the appointment of MFP's nominee as Prime Minister.

Thailand has been the subject of many coups over the years. There's a running joke that, at some point, the Thai Navy should be allowed to mount a coup as the army takes the lead each time.

The most recent coups have been preceded by mass protests by rival groups wearing colours signifying support for their side of politics.

In 2006, yellow shirts protested the Thaksin Shinawatra government. The protests appeared to have run out of steam before Thaksin sold his stake in AIS mobile business to Singapore's Temasek Holdings after enacting a new law which increased the sector's foreign ownership limit from 25% to 49%. He also insisted no capital gains tax was payable on the approx. USD 1.88b sale proceeds. He was ousted in a coup in September 2006 and lives in exile in Dubai, periodically promising to return.

The shadow of Thaksin Shinawatra hung over the 2023 election with his daughter nominated as a Prime Ministerial candidate under the Pheu Thai banner.

In 2008, the yellow shirts blockaded Suvarnabhumi Airport, stranding many travellers. It was surreal travelling the empty highways at night to U-Tapao Airport near Pattaya which became the de facto international airport for rescue flights.

In 2010, the red shirts blockaded parts of central Bangkok. The military crackdown on 19 May saw the military use live fire to quell the protests. The dead included a Japanese journalist. Numerous buildings were set alight that day, including Central World shopping complex near the centre of the protests.

19 May was probably the only time a colleague will ring me early in the morning to let me know that she wanted to go to work that day but there was a tank outside her home.

2013 saw the yellow shirts back on the streets protesting the government led by Thaksin's sister, Yingluck. Once again, parts of central Bangkok were blocked. Protests continued in various forms until 22 May 2014 when another coup was launched. Yingluck also now lives in exile in Dubai.

The 2023 election result showed voters rejecting parties affiliated with the military, including those headed by the current PM and Deputy PM. The country wants to move forward but it is not clear whether the institutions of power will permit it.

MFP attention turns to Senate

May 2023

Thailand - The Glacial Pace of Government Approvals

October 18, 2022 Edward Dever

In 2005-2006, I was part of a small team who completed the sale of a Canadian listed company with concession rights to potash deposits in Udon Province in Thailand. The purchaser was Italian-Thai Development PCL

The takeover was completed during a period of significant political upheaval in Thailand, with daily rallies in the streets, either protesting the Thaksin Shinawatra-led Government or rallying in support of the Government. People in Bangkok at that time will recall Sondhi Limthongkul's Friday afternoon rallies in Lumpini Park. Sometimes, the only way to determine who was demonstrating was to look out the office window and check the colour of their shirts - red was pro-Thaksin, yellow was anti-Thaksin.

The political upheaval culminated in a military-led coup on 19 September 2006.

Fast forward 16 years and, on 7 October 2022, ITD was granted a Potash Mining Licence from the Udon Thani Provincial Industrial Office. This allows ITD to proceed with the underground mining project to extract potash for both domestic and international markets. The Udon South Potash Project's mine construction period will be approximately three years with potash ore production of around 21 years from this deposit.

When ITD completed the takeover of Asia Pacific Resources Ltd in 2006, we knew they faced an uphill political battle to obtain a mining licence. (Ask Kingsgate Consolidated Ltd how easy it has been to deal with the Thai Government during the past decade.) However, I suspect none of us thought it would take 16 years post-sale to progress the project to the point where a mining licence would be issued. Clearly, ITD's persistence has paid off.

ITD SET Release - 7 October 2022

October 2022

Thailand - The Wheels of Justice Turn Slowly

September 27, 2022 Edward Dever

Rakesh Saxena, 70, was recently sentenced to 335 years in jail (yes, 335 years) over three lawsuits stemming from the Bangkok Bank of Commerce embezzlement scandal in the 1990s. He will serve only 20 years behind bars, the maximum term under the Thai Penal Code.

Bangkok Bank of Commerce was one of the first banks to fall ahead of the Asian Economic Crisis. Between 1993 and 1994, BBC spent over Baht 36 billion on business takeovers and leveraged buyouts. BBC also granted loans with insufficient or overpriced collateral to companies controlled by Saxena, BBC executives and associates, including politicians.

When the music stopped, it was clear that BBC was hopelessly insolvent and the Bank of Thailand took control. It was then liquidated in 1998.

Krirkkiat Jalichandra, the disgraced BBC president, was sentenced to 20 years in jail and fined Baht 3.1 billion. He died in October 2012 while serving his prison sentence.

Saxena fought extradition from Canada between 1997 and 2009. He then fought a legal battle in Thailand that ended this month with a final Supreme Court ruling.

The shenanigans at BBC mostly predated my time in Thailand. However, in my early days, I did come across it on the periphery of several transactions. One treated BBC with caution as rumours circulated that all was not well within the bank.

Rakesh Saxena and the Thai banking scandal that triggered Asia’s financial crisis

September 2022

Cambodia - Crypto and new-age 'pig butchering'

July 18, 2022 Edward Dever

‘A fool and his money are lucky enough to get together in the first place.’
Gordon Gekko, Wall Street

In something reminiscent of a Hollywood movie, Cambodia appears to be fast becoming the new centre for online scams.

It does not seem that long ago when the main scam in Cambodia seemed to be trademark infringement. The fake ‘Sheraton Hotel’ in Phnom Penh (subsequently changed to ‘Sharaton’). Or the ‘McSam Burger Restaurant’, complete with its own Golden Arches. Or the ability of certain businessmen to magically remove trademark applications from the Ministry of Commerce’s Trademark Register and substitute their own applications.

Fast forward to 2022 and the latest game seems to be online scams. Once centered in Nigeria, this new style ‘419’ scam involves large scale operations in Sihanoukville and other centres using the full gambit of online communication channels to scam people, including WhatsApp, Facebook and Instagram.

Sihanoukville, transformed from a sleepy town into a Macau-style gambling haven, before a Cambodian-government crackdown outlawed online gambling and decimated the related property sector, has apparently become a centre for these scams utilising former casinos as bases for their operations.

In the past, boiler room operations were sometimes staffed by backpackers. At one point in Bangkok, they were operating out of the prestigious PwC building on South Sathorn Road. The workers were easy to spot among the suited-up accountants and lawyers that inhabited the surrounding buildings. Their uniform of cheap Khao San Road purchased shirts, pants and ties stood out among the tailored suits wandering the foyers at lunchtime.

Based on the Vice article, it seems the current crop of operations are staffed by a mix of people who are either conned into the work or voluntarily offering their skills. The impact of Covid-19 on employment in South East Asia has resulted in the unemployed across the region being lured by promises of well-paid employment in Cambodia. The operations no doubt operate under an umbrella of local officials and law enforcement protection.

One scammer’s playbook apparently includes the quote - ‘There is no un-scammable person. Only scripts that don’t fit.’

That may well be the case. I remember working with a senior foreign lawyer who had flown into Bangkok for several days. The lawyer was out of my sight for only a few hours at the end of days of meetings and was scammed by the well-known ‘Grand Palace is closed today jewellry scam’ in Bangkok.

As highlighted in the Vice article, awareness is perhaps the best form of defense against the scammers. Shutting down operations in Cambodia and neighboring countries is likely to merely force them elsewhere.

From Industrial-Scale Scam Centers, Trafficking Victims Are Being Forced to Steal Billions

July 2022

Thailand - 25 Years After The 1997 Financial Crisis

July 1, 2022 Edward Dever

Saturday July 2, 2022 marks the 25th anniversary of the float of Thailand’s currency, the baht. This event is widely regarded as triggering the Asian Economic Crisis of 1997 throughout South East Asia engulfing the economies of Thailand, South Korea, Indonesia and the Philippines.

Known as the Tom Yum Gung Crisis in Thailand, floating the currency was one of the final acts of a government which had exhausted the country’s foreign currency reserves in an ill-fated attempt to shore up the baht against waves of selling and protect a finance sector riddled with substandard loans.

At its low point in January 1998, the baht slumped to around 56 baht to the US dollar. The banking sector and most major corporations with significant foreign currency borrowings were insolvent. The International Monetary Fund coordinated a bail out which was later criticised for the austerity measures it imposed on the Thai government.

In Bangkok, one of the Mercedes-Benz dealers initiated what became known as the “Market for the Formerly Rich”. Buyers sifted through an array of luxury cars, jewellery and other boom time badges of opulence, heavily discounted to raise cash for those who had lost jobs or money on stock market investments.

A number of banks and over fifty finance companies were closed or merged with other institutions. Sales of loan portfolios and other bank assets were organised. Lehman Brothers, which itself collapsed in 2008, was heavily involved in this asset sell off.

Twenty-five years on, it may come as a surprise to learn that a number of the main banks and major conglomerates are still controlled by the same pre-1997 family groups. The ability to retain control in the face of extreme financial adversity was due to two main factors: the debtor-friendly legal system in Thailand and the tenacity and negotiation skills of these families, their executives and advisers.

In 1997, there was no formal rehabilitation procedure for companies. A rehabilitation amendment was added to the Bankruptcy Act in 1998. At the time, bankruptcy was considered an option in only a few rare cases. Insolvency was determined by a company’s historical balance sheet rather than the more realistic liquidity test. Restructurings were often completed outside the court process although, for a time, the Bank of Thailand assisted in coordinating meetings of companies and their creditors.

Companies often took an extremely hostile approach to restructuring with a number of debt standstill arrangements taking over a year to negotiate. Thai executives believed lengthy delays would allow negotiations to be finalised in a more favourable exchange rate climate. In many cases, they were correct.

In the years following the crisis, many Thai companies have taken a more conservative approach to debt, particularly unhedged foreign currency debt. They have also expanded beyond Thailand's borders with investments in neighbouring countries and further afield in places such as Australia and Europe. Part of the rationale for this diversification would be the lacklustre Thai economy, particularly in the past ten years or so as Thailand has struggled under political uncertainty and military rule.

Should the events of 1997 be revisited (and Covid-19 has certainly caused problems in certain sectors), it is doubtful that creditors would fare much better. While the rehabilitation law remains in place, debtors would once again have the upper hand in any negotiations. Directors of companies in Thailand are generally not personally liable if a company trades while insolvent. So there is little incentive for companies to use the rehabilitation procedure unless to cram down creditors. Tossing a set of the factory keys across the desk to your creditors, particularly foreign creditors, and asking them to take over the business would remain a highly effective means of retaining control and negotiating a favourable outcome.

In these circumstances, the restructuring era adage that, in practice, equity in Thailand ranks somewhere above unsecured debt and, often, above secured debt is likely to hold true once again.

July 2022

Signs Of A Tourism Recovery in Asia

February 4, 2022 Edward Dever

A sure sign that Thai authorities believe that Covid-19 has turned a corner and tourism recovery may be on the way is the reappearance of the Thetsakij on Bangkok's streets.

Absent for almost two years, these Bangkok Metropolitan Authority (BMA) inspectors fine people (mainly unwitting tourists) for littering. As a general rule, you don't need to litter to be accosted by these inspectors who will claim you dropped a cigarette butt and should pay a THB 2,000 fine. It is just another scam mainly targeting tourists, just dressed in official BMA uniforms.

While the Thetsakij's reappearance on Bangkok's streets may indicate some tourism optimism (and some tourists have returned), the reality is a little different.

In December 2021, Thailand suspended its Test & Go quarantine measures following the emergence of the Omicron variant. The suspension was lifted on 1 February, however, there is no guarantee that further suspensions will not occur.

The suspension highlighted the risk for travellers trying to navigate the rules for international travel. The risk of getting stranded in another country is high, particularly if you test positive for Covid-19 and are unable to travel until obtaining a negative test or a certificate of recovery (apparently not accepted by all airlines).

Test positive on arrival into Thailand or be a close contact of a case and you face quarantine in a hospital or hotel (hospitel). While Covid-19 insurance is mandatory for foreigners as part of the Thailand Pass entry requirement, this insurance may not cover all quarantine circumstances. It pays to read the fine print.

Restarting the travel sector is not as simple as flicking a switch. The sector in Thailand and across South East Asia remains in tatters. Many companies will not be revived, lacking the funding to rebuild their businesses, rent office premises and rehire employees, let alone deal with the debts remaining from pre-Covid times.

For those able to survive, there is an opportunity to build back a leaner, more efficient operation and adopt better and more flexible work practices. The survivors may also benefit from a lack of competition in certain areas as their former competitors are liquidated.

It is pleasing to see that Pandaw Cruises will likely survive. Having announced their permanent closure in November 2021, they have now secured funding to see them through to September 2022, when they anticipate restarting operations.

Pandaw Cruises - December 2021 Update

Back on Bangkok's Streets - The 'cigarette police' who target foreign litter bugs (2013)

Warning against traveling to Thailand

February 2022