The Bangkok airport fiasco

30 January 2007

Let's call it what it is - a total fiasco. Papering over the cracks was not the solution.

Bangkok's new airport was meant to be the new hub of South East Asia - a matter of great national pride. Instead an overly hasty opening, years of corruption, poor design and poor construction, mean that the new airport is now beset with serious problems that could potentially have significant safety issues.

The new airport is built on swamp land; subsidence was always going to be a concern. The new airport was already operating at capacity on its opening day. There are only 51 "gates" of which apparently only 40 are operational due to taxiway and hard stand repair work.

The government is reporting that the new airport already has about 100 cracks in 25 of its taxiways and one of its two runways.

Passengerss and airline officials have voiced their disappointment at the poor state of the airport - and some commercial airline pilots stated publicly its problems made them fear for the safety of their aircraft and the people they carry on board.

Thailand's Civil Aviation Department last week refused to extend an "interim" aerodrome certificate, a document initiated by the UN International Civil Aviation Organisation to prove airports meet international safety standards, that was granted the Suvarnabhumi Airport upon its opening last September.

Although airports can operate without the certificate, international airlines have reportedly warned the Thai government Suvarnabhumi has now entered a safety certificate "no man's land".

The Civil Aviation Department refused to renew the interim safety certificate it granted the airport four months ago because of numerous problems, and the military government says it is still investigating serious allegations of corruption including the awarding of contracts for its construction and operation.

In the meantime the government has apparently ordered the re-opening of the old Don Muang airport for domestic flights only. This will, as previously reported be an issue for Thai Air Asia in particular who use their fleet on a heavy schedule of domestic and international flights with fast turnaround times.

Re-opening Don Muang will take up to two months. This really is a decision that should have been taken some time ago. It is the right decision although the AoT and the government should do well to listen to the airlines views on what flights and services should return to Don Muang.

This should be immediately announced as a permanent move and not a temporary measure. Many of the world's great cities operate efficiently with wto or even more airports. There is no reason, bar a little bruised ego, why Bangkok cannot do the same.

The Bangkok Post writes today under the title;

The Legacy and Liability of Greed

With Suvarnabhumi quickly proving itself a shining monument to greed, the prospect of reopening Don Muang is one of the most promising developments in post-coup Thailand

By PHILIP J CUNNINGHAM

The news that Don Muang Airport will be back in use soon is a very promising development for the country, for it not only alleviates a transportation bottleneck created by the inadequacies of the new airport, but also stands as a symbolic rejection of the megaproject crony-capitalism that characterised the Thaksin era.

The appointment of fabled Thaksin critic Chirmsak Pinthong to the board of directors of the Airports of Thailand Plc (AoT) is also an encouraging sign that the controversial Suvarnabhumi Airport, which bears the heavy imprint of the deposed premier, will find its level _ not as a money-making scheme or an overblown gateway to Thailand, but as a useful regional airport.

Initially eyed for domestic flights only, the revival of Don Muang will make domestic air travel convenient again and probably less costly. If nothing else, it gives the air traveller the option to fly from a well-established transportation hub rather than forcing everyone to traipse out to remote airport built on an ancient swamp.

Perhaps international flights could be resumed at Don Muang as well; many cities with populations considerably smaller than Bangkok boast two or three airports. While multiple airports can lead to some confusion for first-time travellers to London, Paris or New York, the system works well overall and is a boon to the discriminating traveller.

Visitors to New York, for example, can opt to arrive at La Guardia, which is convenient to Manhattan and Queens, or the JFK, which is convenient to Brooklyn, Queens and Long Island. And then there's the nearby Newark airport servicing both Manhattan and New Jersey. JFK is primarily international and La Guardia is primarily domestic, but absolute segregation of domestic and international flights is hardly necessary.

For example, Suvarnabhumi could bear the brunt of tourist arrivals, with connecting flights to Phuket and tourist-oriented destinations, while Don Muang could function more as a businessman's airport, with its convenient access to downtown, the train and domestic flights.The details can be debated, but the point is that Thailand is not well-served by granting a monopoly to Suvarnabhumi Airport, a project that came to fruition under capitalism with Thaksinomic characteristics. Suvarnabhumi, as currently configured, offers up the deposed premier's vision of what an airport should be; first of all there was lots of money to be made in the making of it, secondly there are monopolistic shops and limo services to rake in more money and then there are the frilly VIP services geared to the well-heeled traveller.

In short, it is an infrastructure built and maintained by the rich, prejudiced in favour of rich travellers. It is a socially-engineered contained environment, a money trap, cluttered duty-free shops and all, a bottleneck through which all Bangkok air travellers must pass.

Although Suvarnabhumi Airport is plagued by cracked runways and shows signs of uneven settling, it is here to stay in the short and mid-term and must be utilised, if only as an overflow airport for the expanding tourist tide that was putting strain on the funky but functional Don Muang Airport.

The new airport cannot be abandoned but it need not be the country's showcase either, it's best seen as just another airport, a not entirely unattractive one that may prove especially popular for visitors whose main aim is to hit the beaches without going through Bangkok.

Downgrading Suvarnabhumi to just another airport makes sense logistically, it also has symbolic value. To force every air traveller to pass through a bottleneck that became in essence a get-rich-quick scheme for the discredited Thaksin government and its big business cronies, is unfair.

The new airport, as it was diced up and distributed among Thaksin crony-investors, is a shining monument to greed. Known for its crooked deals and cracked runways, overpriced luggage scanners and overpriced food, drink and duty-free, the new airport is but one of many megaprojects of the sort where the smart money was made well in advance of completion by politically-connected middlemen and brokers.

Fees pocketed for the privilege of "taking meetings" and public funds wasted on overpriced purchases will probably never be recovered, but wrongdoing should be thoroughly investigated.

Dispensing political favours and rampant commercial greed, while ugly, is not entirely beyond understanding. What is unforgivable _ if evidence of the sort suggested by the problem of runway cracks should prove to be firmly documentable _ is the implicit risk to safety that results from such corruption.

The sight of jet-lagged travelers laden with luggage limping down the cavernous yet oddly cramped corridors of the new airport, winding past dripping ceilings, stained floors, poorly ventilated restrooms and broken lights, suggests that the unhealthy vapours of the plot once formerly known as Cobra Swamp have not entirely dissipated. Short-cuts in construction quality are evident, though there are no short-cuts from landing gate to the distant taxi stand, and there are no mass transit alternatives to the car-clogged roads into town.

Inadequate toilet facilities make for lousy first impressions and dubious parting memories from a nation's gateway airport, but cracks on the runways bespeak actual physical peril. The news about jets forced to circle over Suvarnabhumi repeatedly, and even in some cases to make unscheduled landings at U-tapao airstrip in Sattahip while emergency repairs are conducted on cracked runways, illustrates how carelessness in the contracting and construction stage of a megaproject can precipitate inconvenience and worse, further down the road.

A well-to-do European traveller remarked that the new airport's VIP services, which include being greeted at the gate, getting whisked through customs and having one's luggage be taken out to a waiting limo, makes for a smooth first impression, but how many regular travellers can afford such a luxury? Only a small percentage of travellers could take advantage of such perks without the sytsem breaking down. Staying at the Oriental Hotel also makes for a nice impression, but you pay for it dearly and it cannot in any case accommodate large numbers of people.

In the meantime, the average traveller, who pays just as much of the inflated airport tax as the thick-walleted crowd, will find no convenient public transportation upon exiting baggage claim but instead a host of lesser alternatives which range from paying 50 extra baht for the privilege of waiting for an ordinary taxi while huddled on a crowded curb in a poorly-ventilated, sunless car park, or lugging personal effects up and down escalators and elevators to try and find a free-ranging taxi at the open-air departure level, or making cumbersome connections to a bus that leads to another bus.

Taking care of the airport and other unwieldly white elephants left over by the previous administration poses a challenge to the current prime minister, who is faced with the task of mopping up the mess left by Thaksin Shinawatra even while the exiled prime minister and his supporters beat the drums for a comeback. Mr Thaksin, a wily politician, continues to make his presence felt in manifold ways. He has hired pricey Washington DC public relations flacks to enhance his aggressive media strategy outside of Thailand. Inside the country he retains, through links of money and loyalty, supporters in high places in business and the bureaucracy, and now, with the airport, a physical infrastructure that bears his vision.

Architects understand the dynamic that even as we shape our buildings, our buildings also shape us. Mr Thaksin's tentacles of power will continue to haunt the new government if it lets the Thaksin legacy, be it the new airport or mega-malls or the bureaucracy, shape the new Thailand, instead of redefining that legacy.

EK to Brazil from October

24 January 2007

Exciting times for Emirates as it announced yesterday that it would become the first Gulf airline to break into the Latin American market in October with direct flights to Sao Paulo, Brazil.

Air Arabia announces IPO

24 January 2007

Air Arabia is to become the first airline in the Gulf region to go public.

The Middle East's first low-cost carrier, based in Sharjah, has applied to the UAE Economy Ministry and relevant regulatory authorities for approval to launch an Initial Public Offering (IPO) in the first quarter of this year, probably late March.

An application has been submitted to convert the carrier into a public shareholding company ahead of a planned IPO, said Air Arabia chairman Shaikh Abdullah bin Mohammad Al Thani.

"In just over three years since launch, Air Arabia has established itself as one of the region's great success stories," he said in Sharjah.

"Born in Sharjah and serving a region that stretches across the Middle East, North Africa, Indian subcontinent and Central Asia, Air Arabia has set its sights on reaching even greater heights."

SHUAA Capital has been appointed the financial adviser, lead manager and bookrunner for the IPO.

Having served more than 3.4 million customers since it began operations in October 2003 and currently serving 32 destinations, the company has been profitable since its second year of operations, said Shaikh Abdullah.

Chief executive officer Adel Ali said the decision to go public was prompted by the airline's desire to increase its equity capital to support its ambitious plans for growth.

"We are keen for our customers, staff and stakeholders to share in the success of Air Arabia through this IPO," he added.

"Based on both the individual success of Air Arabia and the growing demand for commercial and leisure travel in the region, we are planning to expand the company's current operating fleet over the next five years from nine Airbus A320s to 34 aircraft."

The offering is likely to be for 55% of the company's stock; the remainder being retained by the government.

Ten Ways for budget airlines to make more money

23 January 2007

I was inspired today when a Dubai hotel insisted that they had to charge me Dhms28 for a Dhms25 top up card for my prepaid mobile phone account. This is simply extortion. It is hotel policy I was told. Although I was actually buying the card in the gift shop.

Making money for adding absolutely no value whatsoever is almost criminal; but supply and demand works so I still bought the card.

Which then leads me to thinking how other industries can grow their revenues......

So here are some thoughts for the budget airline industry on how to make more money from their budget minded passengers.

1. On boarding the crew will confiscate any food you bring on board and then sell your food back to you.

2. Fee for use of the toilet: $1.00. 1 pack of tissue: $1.00. Staying longer than five minutes; additional $1.00

3. Seats only recline after inserting a $1.00 coin, every 30 mins. 

4. Sell prime seats for a premium. Some airlines do this already.

5. Fee for use of crew call button; varies depending on request.

6. Baggage space, hat racks above the seats can only be opened by using a credit card. There is a per hour storage fee and a fee every time the door is opened to remove something.

7. Conducted tours of the cockpit at $50 each.

8. Have your picture taken with a crew member - from $50 for the captain to $10 for the male flight attendant who never leaves the galley.

9. Sell immigration forms that are actually given out for free. Charge $10 for a form-filling service.

10. Last ten passengers to board the plane are fined $10 each. That should encourage early boarding.

Thaksin makes his case in Japan

23 January 2007

Another day; another Thaksin interview. He is still making the news. Will the Thai military junta now break off diplomatic relations with Japan? Certainly not; Japanese FDI and tourist traffic into Bangkok is way too significant for Thailand to be complaining about yet another media interview.

Yet here is Thaksin, openly lobbying his cause and conveniently rewriting history. Thailand hardly had a proper democracy when he was PM. He bought the election victories; tried to restrict media activities; encouraged extra judicial killings in his war on drugs; introduced legislation that openly favoured businesses controlled by his family and tolerated depressing levels of corruption. Reading the following he sounds like Mother Teresa.

The Asahi Shimbun article stated that:

"Thaksin Shinawatra, ousted as Thailand's prime minister in a military coup last September, said Monday it is essential for Thailand to regain international trust by showing it is a proper democracy.

"The respect of the rule of law and the justice system (by international society)" is at stake, he said. "What international society worries about is that if the government under a coup d'etat abolishes the Constitution, the rule of law will not be observed."

Thaksin told The Asahi Shimbun in an interview in Tokyo that he hoped he will not have to live in exile much longer. He said he could play a "useful" role in restoring unity and international trust in Thailand.

Thaksin, who has been living in Beijing and London since September, said the bloodless coup had damaged his country's standing with the international community and that Thais, along with foreign investors, would not tolerate a military regime over the long term.

"I am waiting for the situation to go back to normal, because I want to urge the military government to restore unity to the Thai people," he said.

"I think I can be useful for the country. I can tell my supporters, 'OK, it's time that we should unite.'

"Thailand is still a good place to work and make money. This is what I would tell the investors, foreign governments and the private sector," he said.

The coup occurred while Thaksin was visiting New York. He has not been allowed to return.

Since he arrived in Japan last Friday, Thaksin has been looking up acquaintances in Japanese political and business circles.

While he has refrained from making political statements, Thaksin said he felt compelled to make it clear that he was in no way involved in a terrorist bombing in Bangkok on New Year's Eve.

Thaksin said the September coup was notable in that it resulted in a populist leader being toppled from power.

This, he said, highly damaged the country's credibility in the international community.

"Thais have enjoyed democracy and never want to be under a dictatorship or a non-democratic government," he said. "But they can be patient and tolerate such things to some extent, but not for too long."

If the military junta postpones holding general elections, public and foreign investors will likely shy away from Thailand, he warned.

Thaksin likened the military leaders to bureaucrats, saying they do not have the mind-set to catch up with intensifying global competition.

Thaksin said he would seek assurances that he will be safe if he is allowed to return. He insisted that he has no intention of going back into domestic politics.

He added that he is willing to let younger members of his Thai Rak Thai Party lead the country.

Air Asia's plea for common sense

22 January 2007

Tony Fernandes, the head of AirAsia, Southeast Asia's largest budget airline group, has called on Thailand to either reopen the old Don Muang airport for both domestic and international flights or build a terminal dedicated to low-cost carriers (LCCs) at Suvarnabhumi airport.

Fernandes was commenting on a recent decision by Airports of Thailand Plc (AoT) to move only non-connecting domestic flights back to the old airport to relieve the congestion at Bangkok's new airport that opened on Sept 28 last year. This of course makes no sense to an airline like Air Asia which uses the same plane to fly a domestic flight followed 20 minutes later by an international flight.

The decision means that the airline's Thai subsidiary, Thai AirAsia, would need to split its operations between the two airports if it decided to shift domestic services to the 92-year-old site to take advantage of ample facilities and lower operating costs.

Fernandes says AoT's decision made no economic sense for AirAsia due to the prohibitive costs in operating at two bases. It's also confusing for passengers. Either have a low-cost carrier terminal at Suvarnabhumi or reopen Don Muang for all commercial flights was his simple message.

Thai AirAsia was among the Bangkok-based budget carriers that advocated staying at the old airport ahead of Suvarnabhumi's premature opening to avoid higher operating costs and passenger inconvenience at the new facility.

But AoT's decision to allow only non-connecting domestic flights to go back to Don Muang was beyond the expectation of some low-cost carriers, especially Thai AirAsia, which was encouraged by AoT management's initial plan to build an LCC terminal at Suvarnabhumi.

The budget terminal now appears to be on the back burner due to budget worries. The proposed LCC terminal, covering 40,000 sq m and capable of handling 17 million passengers a year, would cost about 1.4 billion baht and take two years to build.

To avoid capital costs involved in building the new LCC terminal, Mr Fernandes suggested Thailand would be better off using Don Muang for all flights. Indeed why build a new LCC terminal when Don Muang is available already?

There is certainly plenty of international precedent. British Airways operates at London Heathrow and Gatwick while budget carrier Ryanair operates from Stansted.

Fernandes warned that Thailand could lose out to countries in the region that are reopening old airports or building no-frills terminals to attract budget carriers and their customers.

Meanwhile the AoT (determined to milk the cash cow for all it's worth) still plans to raise the landing/parking fee by 15% in April, and the international passenger service charges to 700 baht (from 500 baht) next month. 

Emirates plans expansion to the Americas

22 January 2007

The fun begins as Clinton enters the White House Race

21 January 2007

Hillary Rodham-Clinton yesterday entered the race for the Democratic nomination for the 2008 White House where she is seeking to become the first woman commander in chief.

The Democrats have a crowded field with her strongest competitor being Illinois Senator Barack Obama who is in the early stages of what promises to be the most credible White House campaign ever by a black politician.

It is still one year before the first caucus and primary votes are cast. It is a fair bet that the Democrat nominee will be from these two front runners.

Other Democrat candidates include New Mexico Governor Bill Richardson, embarking on a bid to become the first Hispanic to preside from the Oval Office, as well as the party's 2004 vice presidential candidate, John Edwards, Senators Joseph Biden of Delaware and Chris Dodd of Connecticut, Representative Dennis Kucinich of Ohio, former Iowa Governor Tom Vilsack and possibly others to follow. The last few are going to lose out; they are male and white.

Mrs Clinton has to deal with a legacy that can play to her advantage or disadantage. Her husband, former President Bill Clinton still enjoys rock star status. Among Democrats the Clinton years are remembered as some of the best times, not just for the party but for the country

Mrs Clinton is widely respected among Democratic voters of all stripes for being very smart and someone with important leadership qualities. She won a second Senate term last fall after raising more than $40 million, much of it from donors who presumably understood her ambition did not end with re-election to Congress. Her most recent filings indicate a campaign treasury in excess of $13 million.

Many of the senior strategists who worked on her husband's two winning campaigns are now on her payroll, and Clinton loyalists around the country await a summons to duty.

Clinton joins the race after six years in the Senate from New York in which she has worked to establish a political identity independent of her husband's. She took a seat on the Senate Armed Services Committee and fought for anti-terrorism money for New York City. She tended so well to the concerns of upstate constituents that she carried more than three dozen counties in 2006 that had supported President Bush two years earlier.

But the Clinton years are remembered, even by Democrats, for more than good times. We can expect endless Republican smear campaigns remembering the Monica Lewinsky affair and impeachment proceedings.

The question for Mrs Clinton is how best to bring him into the campaign for her candidacy. He is a great asset; but she must be seen to be running her own campaign.

Clinton also joins the race at a time when the war in Iraq dominates, an issue that may cause her some difficulty with the anti-war activists who will help pick the Democratic nominee. Like many Democrats, she voted to authorize the war in Iraq when the issue came before Congress in 2002. Like others, she grew increasingly critical of the Bush administration as the months passed and the casualties mounted. But, unlike Edwards (the turncoat) she has not apologised for her vote.

For political observors we will have an intriguing campaign which may unify or split the Democrats. Whoever wins the Democratic nomination is likely to be the next POTUS who will be a first; a first Black or a first Female President. And about time to.

Censorship puts Thailand in the dark ages

19 January 2007

Thailand's main cable provider said Friday it would block an upcoming interview with deposed premier Thaksin Shinawatra, hours after media rights groups criticised the junta for censorship.

Thaksin broke his media silence and spoke about his ouster on CNN Monday night, but most Thais were unable to watch excerpts of the interview as local cable provider UBC switched to images of celebrities.

CNN will broadcast the full interview on Saturday, but UBC spokeswoman Kantima Kunjara told AFP that they will not air it because of a request by the Council for National Security, as the junta calls itself.

"Since the CNS has asked for cooperation from broadcasting media not to broadcast statements from former prime minister Thaksin, UBC will cooperate and will not broadcast his interview," Kantima said.

Her comments came after media watchdogs expressed concern that coverage of Thaksin was blocked on Monday night.

"In our view this measure is regrettable and contrary to your country's interests," said media watchdog Reporters Without Borders.

"Censoring or blocking news or information carried by any media does not prevent the information's existence, and those who want to have access to it usually succeed," it said in a letter to the country's military rulers.

Thaksin was ousted in September while he was out of the country. A variety of censorship orders were later issued, including a threat earlier this month to shut down broadcasters who carried statements by Thaksin.

"Last Monday we received good cooperation from the media," a junta spokesman said.

 But the Foreign Correspondents Club of Thailand (FCCT) said it would write to new Prime Minister Surayud Chulanont to express its "deep disappointment" that the interview was not broadcast.

The letter to Surayud on behalf of the FCCT's professional membership said the attempt at censorship "casts the Thai authorities in a poor light" and was "pointless" as the interview was reported in print media and on the Internet.

Time magazine on "The land of fading smiles"

19 January 2006

"Thailand prides itself on its way with Westerners. After all, the kingdom survived the Age of Empire as the only country in Southeast Asia to avoid colonization. Success in deterring the foreign barbarians came from deftly playing the Western powers off against one another, and throwing open doors to European traders. Siam, at it was known then, didn't so much repel the Western invaders as charm them into submission with armfuls of exotic bounty and respites from their malarial colonial outposts.

The military junta that rules Thailand these days might do well to remember the ways of the nation's diplomatically skilled forebears. Just as before, Thailand's economy is dependent on negotiating global forces—the country is the world's No. 1 exporter of rice and relies on tourism and foreign direct investment to power its growth. Yet in recent weeks, the Cabinet appointed by the ruling generals, who in September overthrew the democratically elected Prime Minister Thaksin Shinawatra, has unveiled economic measures that have left foreign investors distinctly uncharmed. In December, to combat an appreciating currency that was irking Thai exporters by making their goods pricier overseas, the central bank briefly instituted harsh capital controls, precipitating the worst one-day drop in the 31-year history of the Bangkok stock exchange. Then, last week, Thailand's Cabinet began tightening foreign-ownership laws, closing loopholes that had made the country one of the region's most welcoming destinations for overseas investment. At the same time, the government is clamping down on the thousands of foreigners who work in Thailand without proper permits. "Given the strong regional competition for foreign investment, Thailand should be sending a message that we welcome foreigners," says Sompop Manarungsan, an economist at Chulalongkorn University in Bangkok. "Instead, we're doing the opposite."

That globalist warning bell may ring true in Davos, but in Thailand, ground zero of the 1997 Asian financial crisis, economic protectionism is on the rise. "There are several members of the coup Cabinet who believe Thailand is too dependent on foreign investment," says Supavud Saicheua, head of research at Phatra Securities in Bangkok. "They believe it's their duty to fix things before global economic trends negatively affect Thailand." In a country where the King is widely revered, the junta's Cabinet has shrewdly tied its closing-door strategy to an existing royal mandate. After the regional financial meltdown a decade ago, Thailand's King Bhumibol Adulyadej urged his subjects to forgo the turbo-charged drive of capitalism for a Buddhist-inspired "sufficiency economy" that embraced moderation. Sounds harmless enough. But free traders complain that the military junta is now using the fuzzy precepts of a sufficiency economy to undermine the legacy of former Prime Minister Thaksin, a billionaire who avidly pursued free-market policies, signing international trade deals and encouraging farmers to take out small-business loans. "Whether you like it or not, we have to live under a capitalist system," Thaksin told the Wall Street Journal on Jan. 15. "If you make a 180-degree about-turn in one day, confidence is destroyed."

So far, the Thai public doesn't appear too rattled. Although a local poll showed the junta Cabinet's popularity plunging from 90% to 48% since October, that's largely blamed on a mysterious New Year's Eve bombing campaign that killed three people in Bangkok—not on economic nationalism. "I think there is a growing group in Thailand that believes business here should belong to Thais, not foreigners," says Sukhbir Khanijoh, senior analyst at Kasikorn Securities in Bangkok. That sentiment was stoked by Thaksin's controversial $1.9 billion sale last year of his family stake in telecom firm Shin Corp. to Singapore's Temasek Holdings—a deal perceived domestically as delivering a key national industry into foreign hands. The tax-free sale came courtesy of the loopholes in the country's Foreign Business Act that the junta government is now eliminating. The changes aim to stop foreign investors using local nominees to put their firms in a Thai name without giving them commensurate decision-making power. "It's clear these moves are going to discourage new investors," says Peter van Haren, head of the Joint Foreign Chambers of Commerce in Bangkok. "Our members have come to me and said this is essentially a forced divestiture."

Thailand's economy is still more open than many of its neighbors'. But in hot investment destinations like Vietnam and China, the trend is toward fewer restrictions, not more. Nor have recent trade figures justified the pleas for protection by Thai exporters, which led to the controversial capital controls. Despite the baht's 15% rise in 2006, Thailand's exports actually climbed 17% last year, to $130 billion. So who loses out? In the short term, mainly foreigners. But given Thailand's dependence on overseas investment, such protectionism may backfire. "The repercussions of these policies will eventually affect Thais too," says van Haren. "There's no way to escape global economics.""

Opening night of Dubai's horse racing season

18 January 2007

Tonight was the opening night of Dubai's horse racing season which will run to March 31. Opening night was at the Nab-al-Sheba track. Admission to the public areas is free. There is no betting; although a little flutter between friends makes the evening more interesting!

Catering in the public areas is basic but the stands are modern. The crowds were not big so it is easy to walk around the paddock and to stand by the rail for the races. The private boxes and hospitality areas are expensive; Dirhams 75 to enter with food and drinks all extra.

Someone could not pick a winner all night.....

It's a different night out; not something to do every week but fun for a change of scenery. It is still cool at night.

Building Dubai's Image

Gulf News - 15 January 2007

Thaksin interview creates ASEAN fall out

15 January 2006

Ex Prime Minsister Thaksin's visit to Singapore, private meetings and a half hour interview with CNN have caused a massive diplomatic rift between Thailand and Singapore, two of the more influential members of the ASEAN group of nations. On Tuesday Thailand decided to suspend indefinitely all high level meetings including the planned summit later this year and a ministerial dialogue next month with Singapore as a result of the island's insensitivity to Thailand's political development.

Krit Garnjanagoonchorn, Permanent Secretary for Foreign Affairs, summoned Singapore ambassador Peter Chan to lodge Thailand's protest of Singapore's action and Thaksin's interview on the island, which he used to attack the current government. "We want to show our dissatisfaction," said the ministry spokesman, Kitti Wasinond at the press conference.

Last week, Chan had informed the Thai government that Thaksin would be visiting Singapore for four days on a private visit. Deputy Prime Minister S Jayakumar would also host him a private lunch. Then on Monday, Thaksin granted an interview to the foreign media, namely CNN, which Thailand viewed as unfriendly act.

Of course this is a little bizarre. The Singapore government cannot tell CNN who they can and cannot interview; and Thaksin's overthrow is still an important international news story.

Since the coup, the military and the temporary government it installed have blamed Thaksin and his supporters for trying to cause unrest to destabilize the country. Thaksin has denied the allegations, for which no evidence has been produced.

The Thai government's overeaction may well be seen internationally as another example of the lack of political savvy and direction of Thailand's military junta.

Thaksin did after all give interviews to the international press when in HK, but Thailand was not going to criticise the Chinese regime.

Singapore meanwhile said it regretted that the Thai government has decided to suspend the Singapore-Thailand Civil Service Exchange Programme (CSEP). The Singapore government said that the Thai government did not notify Singapore that Dr Thaksin has been charged with any offence. Further there is also no restriction on which countries he can travel to.

The ministry says Dr Thaksin had chosen to make a visit to Singapore on his own. He had asked to meet Deputy Prime Minister Professor S Jayakumar, who is an old friend. The Singapore statement said that it was a social and private meeting. No official calls or meetings were arranged.

Thai nationals do not require visas to visit Singapore and there is no reason for Singapore to turn Dr Thaksin away.

Prior to Singapore, Dr Thaksin had also visited several other countries without any protest by the Thai government.

The Singapore Ministry of Foreign Affairs said it is therefore saddened that the Thai government has chosen to take this course of action.

The Thai military has a paranoia about Thaksin coming back; but they cannot block and censor an international news organisation and are source and will cause themselves difficulties by picking a fight with a local neighbours.

For many Thais at the time of the coup they thought it would make things better but the junta has appears to have little control and little awareness of the impact of their actions. To date everything that they have done is driven by the Thaksin factor; yet they have been unable to charge him with anything and he remains a Thai citizen able to travel freely.
 

TRANSCRIPT OF INTERVIEW AVAILABLE
CNN's full interview with ousted Thaksin to air this weekend

CNN's full interview with deposed prime minister Thaksin Shinawatra in which he vowed to retire from politics will go on air this weekend, the television network said.

CNN had broadcast five-minute excerpt of the interview with Thaksin from Singapore on Monday night.

The full half-and-hour interview with CNN's Bangkok Dan Rivers will be aired on its special edition "Talk Asia" at 7.30am and 11pm Saturday and at 8.30am and 9pm Sunday Bangkok time.

Thaksin told Rivers in the interview aired on Monday that he decided to stay out of the political arena and lived like a normal citizen. "Enough is enough," he said. He also denied that he was behind the New Year's Eve bombing that killed three people and injured 40 others.

The following is the CNN's transcript of the interview aired on Monday. (DR - Dan Rivers/TS - Thaksin)

TS - It's baseless allegations. No one believes so. Because everyone knows who is, who am I. I come from election, I come from the people. I owe gratitude to our people. I do everything for the good of the country and the people. I don't do something that's stupid.

DR - So you had no involvement..

TS  - Not involvement at all. Uh, and but I would like to express my deep sympathy, deepest sympathy for those who lose, lost their loved ones and also all those who are injured. And the individuals who are involved must be brought to justice.

DR - This is the first time you've spoken since the coup of September the 19th, first of all, you were in the United States, in New York at the UN, when this happened, how  did you find out that this was going on?

TS - Well I find out just uh, about uh, 4, 5 hours uh, before, before it happened, but I trying to get into the television station but uh, its very difficult at that time I cannot get into it until I can get into channel 9 briefly, but uh, you know, which I, it's a rumors at that time but I don't believe that this can happen again in the 21st century.

DR - So it was surprise when it happened?

TS - It's very surprise because you know, but anyway 70 years in Thailand, 17 coups happened is very unfortunate but it's, uh, it's an event that happened here in Thailand.

DR - Will you go back to, go back into politics?

TS - No. No. (DR: Go back as a private…) Enough is enough. Six years you serve the countries. You been working hard. You sacrifice your time, even your life. And uh, even your family life. So it's, it's time for me to go back as a private citizen and contribute to the Thai society outside political arena.

Dubai: Sky's no limit
Middle Eastern financial center aims to be a force in international travel with a huge new airport, rapidly growing airline and a layover playland at the world's crossroads

By Julie Johnsson
Chicago Tribune staff reporter
Published January 14, 2007
 

DUBAI, United Arab Emirates -- Tiny Dubai has big plans. Armed with riches seemingly as endless as its ambition, Dubai aims to exploit its Persian Gulf perch to become an aviation superpower.

Leaders of this booming Middle Eastern financial center have budgeted $82 billion to construct the world's largest airport on barren desert 30 miles from its downtown and make its home-town carrier, Emirates Airline, one of the biggest on the planet.

Dubai wants to make the most of its setting, a crossroads between Europe, Asia, and Africa and a natural link between new economic powers like China and India. Blessed with year-round sunshine, stunning beaches and azure gulf waters, Dubai also is pumping billions of dollars into turning itself into a layover playland.

Its plans threaten to redirect travelers from Europe's largest cities and upend American airline dominance of intercontinental travel.

"We want to be one of the biggest," said Sheikh Ahmed bin Saeed Al-Maktoum, who oversees Dubai's airport and is chairman, chief executive and co-founder of Emirates Airline. "Not only in size, but in being effective around the world."

But not if its next-door rival has anything to say about it.

The oil-rich capital of the United Arab Emirates, Abu Dhabi, is building a new airline, as well as an airport due to open in 2010, only a 90-mile drive from downtown Dubai.

Etihad Airways, the carrier that Abu Dhabi started a little more than two years ago, already flies to 35 cities, including New York, and has a fleet of more than 20 wide-body aircraft--with new planes arriving at the rate of about one per month.

Was Abu Dhabi driven to keep pace as Emirates started taking off as a global carrier?

"Of course, it played a role," said Geert Boven, vice president of commercial with Etihad.

But Abu Dhabi, too, believes that sufficient traffic will flow through the region to support another supercarrier. "That was one of the ideas of the government: We are an important financial center in the world, so let's connect the world to Abu Dhabi," said Boven.

Qatar, another tiny Persian Gulf state, harbors similar ambitions. In fact, the handful of carriers in that region account for nearly one-quarter of all the long-range airplanes on order at Boeing Co. and Airbus SAS. Some question whether the market will soon be glutted with aircraft and new airports.

"People are saying that this market is reaching its limits," said Habib Fekih, Airbus president for the Middle East. "I'm saying, check later and watch out."

Dubai is taking on plenty of risk in its bet. While Abu Dhabi has a financial cushion in that it sits atop one of the world's largest oil reserves, Dubai's oil is running out. Moreover, the airline industry is notoriously cyclical.

Oil shocks, terror attacks and war could all dampen demand for air travel in the gulf region, and especially hurt the economy of Dubai, the second-largest of the seven city-states that make up the U.A.E.

What's more, Dubai's aviation growth is timed, and designed to feed visitors into the mind-boggling welter of developments rising from the emirate's desert sands. Any turbulence at Emirates Airline sends ripples through Dubai's economy.

That's one reason why government officials were so angry at the well-publicized production snafus at Airbus. The delayed delivery of the A380 jumbo jets, which won't arrive until 2008, already have cut in half Emirates' planned growth for this year.

"You can imagine why the government is miffed," said Tim Clark, president of Emirates Airline.

Building broad-based economy

But Dubai continues its frenetic building, seemingly undaunted. In just 30 years, Dubai has morphed from sleepy port into a thriving business hub, with a diversified economy that other Arab cities covet.

It's hard to ignore the ready capital flowing into this emirate, known for its tolerance of Western culture and open markets.

More than 200 skyscrapers are rising around one project alone: a massive, man-made marina whose skyline mirrors, and dwarfs, downtown Vancouver. Rows of Jetson's-like skyscrapers already line Sheikh Zayed Road, Dubai's main drag.

Authorities in Dubai, which is home to a famous sail-shaped hotel, last week announced plans to build a 35-floor building shaped like a man wearing traditional gulf Arab garb. It would be the largest man-shaped structure in the world, another record the city, which is obsessed with its stature, hopes to set.

Dubai is also home to the three largest man-made islands in the world, visible from outer space. Dubailand, the world's largest theme park, will house 45 megaprojects such as the Snowdome, an indoor ski resort boasting a five-star hotel shaped like an icicle.

Dubai doesn't boast the world's tallest building, yet. But two towers under construction--their planned heights are closely held secrets--are dueling for that title.

Dubai is hinging its future economy on real estate, aerospace, technology and tourism. Because its oil reserves are small and rapidly dwindling, Dubai was forced to build a broad-based economy. Now other cities across the Middle East are following its model.

The strategy is the brainchild of Sheikh Mohammed bin Rashid Al Maktoum, Dubai's ruler.

The Maktoums provided $10 million to get Emirates Airline off the ground in 1985. While the airline quickly established itself as a leading regional carrier, it didn't start charting a global strategy until about seven years ago, said Sheikh Ahmed, the airline's American-educated chairman and chief executive.

"One day [Sheikh Mohammed] called me up and said, `You know, Ahmed, I want to see 15 million hotel guests in Dubai by 2010,'" said Sheikh Ahmed, interviewed in an office overlooking the giant customs hall at Dubai International Airport. In his reception area, the U.A.E.'s transportation minister and other dignitaries waited for an audience with the laconic executive, who is a member of the royal family.

Sheikh Mohammed's directive was startling, Sheikh Ahmed said, because Dubai drew only 3 million tourists per year then. "I said, `Your highness, how can we come up with 15 million?' ... I said, `Maybe, 6 [million]?' He said, `No. I want you to go try to work it out with your people at the airline.'"

After crunching numbers, Emirates' team concluded: "It's not completely impossible," Sheikh Ahmed recalled.

Now it's happening.

The emirate drew about 30 million air travelers in 2006, up from 13.5 million five years ago. And it's building facilities capable of handling more than 200 million passengers by 2015--nearly three times the capacity of Chicago's O'Hare International Airport.

"They're going for it, no question," said Paul O'Connor, executive director of World Business Chicago, a non-profit focused on economic development. "That's the thing that's not well appreciated, especially by the government of the U.S."

What's more, Emirates is spending $30 billion on planes capable of flying halfway around the world. With such aircraft, Dubai is no more than 15 hours from key cities globally.

Emirates is growing as it connects cities never previously linked and by poaching travelers who formerly were forced to take circuitous routes through Europe to reach destinations in Asia or Africa.

Within weeks of launching service in October between Dubai and Beijing, for example, Emirates' flights were sold out. The passengers, researchers quickly discovered, were traveling from Africa.

"If they can get from Dar es Salaam [Tanzania] to Beijing with two hours on the ground in Dubai? Hell, they're going to do it," said Clark, the Emirates Airline president.

As Dubai's importance grows, it threatens to cannibalize traffic that traditionally has flown into Europe's largest cities such as London, Amsterdam, Paris and Frankfurt, Germany.

Emirates Airline is among a handful of carriers catering to the speeding forces of globalization. It, along with Singapore Airlines, Germany's Lufthansa AG, Hong Kong's Cathay Pacific Airways and Australia's Qantas Airways Ltd., is scrambling to serve the huge new middle class emerging in Asia, Africa and Eastern Europe.

"We are a threat to the European airlines and far eastern airlines, as well," said Etihad's Boven.

"We're setting up a new transportation system in the Middle East that has never been there before."

American carriers, which have dominated intercontinental travel since the days of Lindbergh, also are at risk of being eclipsed.

"The American carriers are still the world's biggest. But that's going to change," predicted airline analyst Vaughn Cordle.

America's airlines, finally emerging from the global market downturn that followed the Sept. 11 terrorist attacks, have been slow to order the next generation of jets that would make them competitive globally.

"In terms of service quality and profitability," Cordle said, American carriers have already fallen behind carriers like Emirates and Singapore Airlines.

U.S. aviation hubs, like Chicago, could also be left behind.

"A lot of these traffic flows don't touch the United States and we're not going to get those," said economist Daniel Kasper, managing director with LECG LLC, an economic and financial consulting firm based in Massachusetts.

Banking on long-range flights

Long-haul planes are integral to the future of both Dubai and its Emirates Airline. Emirates already is the largest customer of Airbus' A380, accounting for nearly one-third of total orders.

Dubai is counting on the supersize aircraft, capable of seating up to 644 passengers, to feed tourists to the multitude of new attractions opening in Dubai in the next two years and to fill the 100,000 hotel beds that will be added by 2010.

Officials even timed the opening of a new wing at Dubai International Airport for 2007, when the double-decker planes were due to arrive in force.

But now Emirates won't see its first A380 until August 2008 because of production snags.

As a result, the airline's capacity will grow by 15 percent in 2007, less than half the 35 percent officials had planned, said Emirates' Clark. "We've taken a big hit," he said.

The carrier has ordered 45 Airbus A380s, as well as 46 of the new, long-range Boeing 777s capable of flying the 7,247 miles from Dubai to Chicago without refueling.

It has already added 23 new 777s to its fleet in 2006. When the new planes arrive, they will triple Emirates' capacity and make it the largest long-haul network carrier in the world by 2012, according to a recent Boston Consulting Group report.

Other cities around the Middle East are moving to emulate Emirates and Dubai's strategy, mindful of the dollars, euros, rubles and rupees aviation is pumping into Dubai's economy.

Orders for aircraft around the region took off in 2003 and 2004, as oil prices rose, said Lee Monson, Boeing's vice president of sales for the Middle East and Africa.

"The petro-dollar has clearly been a huge impact on their ability to purchase airplanes," Monson said. "The region is working to get out of the model of being strictly an oil producer. They want opportunities for tourist travel, enhancement of a more broad-based business sector."
 

Thaksin banned from Thailand for one year (at least !)

13 January 2006

Prime Minister Surayud Chulanont said Sunday that he would not allowed his predecessor Thaksin Shinawatra to return to Thailand for at least a year.

He said Thaksin should wait until a new government is elected in a year before returning to Thailand.

"The best way is that Thaksin should wait until the problems have been solved during the year ahead. When there is an election and a new government, it will be a proper time [for Thaksin to return to Thailand], Surayud said.

Surayud said it was inappropriate to allow Thaksin to return and put him under a house arrest as suggested by former prime minister Chavalit Yongchaiyud as doing so would be similar to an action of the Burmese military government.

Yet they still have not been able to charge him with anything. This is all rather bizarre and is little more than political expediency.

 

Emirates goes to Tyneside

12 January 2007

Newcastle is to become the newest addition to the Emirates route network. The airline has announced that it will start daily non-stop services from the north-east airport to its hub in Dubai from September 1. The service will be Newcastle’s first ever scheduled long-haul service.

Vic Sheppard, Emirates' vice-president UK & Ireland, says: “We firmly believe there is a significant potential market for Emirates in the North-East – one that currently remains largely untapped – and believe this new route will prove hugely successful for both Emirates and the North-East. With the involvement of the local community, it has the potential to boost inbound trade and tourism, whilst also helping to foster strong trade and tourism links between the North-East, Dubai and other destinations we serve.”

Flight EK036 will depart Newcastle International Airport each day at 1340, arriving into Dubai International Airport at 0005 the following day. The return flight, EK035, is scheduled to depart Dubai at 0720 every day, arriving in Newcastle at 1210. The service will be operated by an Airbus A330-200 aircraft.

Foreign Investors react to Thai FBA changes

12 January 2007 (Mainly from the Bangkok Post)

Foreigners yesterday expressed serious concerns at moves by the Thai government to regulate foreign businesses by dismantling the widely used practice of using local nominee shareholders.

''If this government's aim is to scare away foreign investors, then I think they are doing a very good job here; they have the perfect strategy in place to do this,'' said Lance Depew, the portfolio manager of Quest Capital, a $250-million fund management company. Quest has until this time been very positive about Thailand even at the peak of the economic crisis in 1997.

''They are wreaking havoc on foreign investors, and investors are going to vote with their money on where they want to invest,'' he said.

The military-backed government's attempt to place restrictions on foreign ownership by clarifying the poorly understood 1999 Foreign Business Act has been bitterly opposed by most foreign investors. They claim restrictions would only exclude Thailand from the booming foreign direct investment flowing into the region.

''In the face of competition from so many other countries, this is nothing but negative for Thailand, and we may have to do more research on what the impact of these measures would be before deciding on the sovereign ratings,'' said Kim Eng Tan, an associate director for sovereign and international public finance ratings at Standard & Poor's.

''I have a feeling that things are not going to be very rosy from here on,'' he said, noting that S&P was studying the country's rating and there was a ''strong chance'' that the outlook could be lowered.

Under the changes that have made markets jittery, foreign investors will be given one year to sell down their holdings and up to two years to reduce voting rights to less than 50%.

The laws redefined alien business classifications, and gave a 90-day deadline for firms that use Thai nominees to disclose their holdings. A one-year deadline was set for them to comply with revised limits.

This move comes as the country's investment climate is already suffering from political instability, foreign ownership probes and recent capital controls.

Mr Tan said many previous investments in Thailand would have to be restructured. Some investors will leave altogether, even if the majority stick around.

Peter Van Haren, the chairman of the Joint Foreign Chambers of Commerce thought that there is still have a ray of hope that things will be amended when it goes through the various processes before it becomes a law.'

The cabinet will refer the changes to the Council of State, the government's legal advisory body, and it could be months before the law is formally enacted.

But the moves are seen as a step backward at a time when competition is intense for foreign direct investment. Thailand, which is already facing a protracted political crisis, saw investment applications in the first nine months of 2006 halved to $5.4 billion from the same period in 2005.

''What is Thailand doing? Countries like Vietnam are looking to relax foreign limits, and we are looking to tighten them?'' Mr Depew asked.

Other analysts were more vocal, saying that the interim government's poor understanding of business could have long-term implications.

''The main problem with this army-sponsored government represented largely by retired army generals is lack of experience in politics. ... Ministers are using a 'learn on the job' method. The result is simple _ confusing policies exposing their inexperience and hurting foreign investment, investor confidence, domestic consumption and the country's image [further],'' Vikas Kawatra, head of institutional sales at Kim Eng Securities, said in a note to clients.

''Imposing restrictions on FDI is simply wrong _ even though the intention behind the move is to punish the deposed PM Thaksin Shinawatra. I think these two steps aren't the last silly moves expected from this government.''

Citicorp Securities said hopes of a possible compromise were shattered, and called the moves the ''worst-case scenario''. It recommended its clients remain underweight in the Thai equity market.

Mr Tan of S&P agreed. ''Even in the best-case scenario I would say it is negative news for Thailand.

''In the short term people are going to pull out of Thailand and you will see less interest from foreign investors into Thailand,'' he said, adding that most foreign investors were looking for majority stakes to increase the efficiency of the companies in which they invest.

Beginning to feel sorry for Thaksin

12 January 2007

Thers is a mild danger that I will start to feel sorry for deposed (elected !!) Prime Minister Thaksin Shinawatra, who is apparently in Hong Kong.

The military rulers of Thiland have revoked his (and his wife's) diplomatic passport and banned television and radio coverage of him.

The government argued that ex-PM Thaksin was undertaking political activities and that such actions were supported by his use of the diplomatic passport. Remember that no charges have yet been brought against Thaksin who was twice elected Prime Minister with the over-whelming support of the country.

The foreign ministry said Thaksin's passport had been revoked "because of the changing security situation".

Army-installed Prime Minister Surayud Chulanont has accused factions linked to Thaksin of staging the Bangkok bombings, but Thaksin has denied any involvement and to be honest the government has produced no evidence to support its allegations.

The military also threatened to shut down Thai television and radio stations that cover briefings by Thaksin, his lawyer or supporters.

Thaksin was in New York when the military toppled his government, and he has remained in exile since then, hopping the globe with stays in London, Beijing, Hong Kong and Bali.

Media professionals and free speech advocates have criticised the Council for National Security (CNS) for ordering the broadcast media to cease airing views defending former prime minister Thaksin Shinawatra and the Thai Rak Thai Party. They argue that such constraints showed a disregard for free speech little different from the regime it replaced.

50 editors and media executives were summoned on Wednesday to the Army's headquarters yesterday and were told that the CNS' tolerance of letting the media exercise its own judgment had reached a limit. If the media continued to ignore the CNS request to present only "constructive" news, the CNS would have to resort to stricter measures to make them conform.

Frankly it is hard to tell the difference between the CNS and the Thaksin regime. They both tried to muzzle the media such that only favourable news would be reported. Both governments have tried to stifle any opposition.

Changes to the FBA have a long way to go

10 January 2007

The Thai government will limit foreign investors to holding no more than 50 per cent of the shares or the voting rights in companies here under legal changes approved Tuesday, Finance Minister Pridiyathorn Devakula said. he said that foreign investors who altogether hold more than a 50 per cent stake in a company must lower their stake within a year and that foreign investors who hold more than 50 per cent of voting rights must also reduce their voting rights within two years.

The 50-per cent cap will only apply to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture, he said. This is presumably open to very liberal interpretation.

The cabinet approved the changes to the Foreign Business Act "in principle" on Tuesday.

But the Prime Minister said that the government's top panel of legal advisers would continue to work on the details of the law to ensure precision and transparency, adding that "it will take some time for the law to take effect."

The foreign business community in Thailand has urged the government to postpone the changes for at least six months.

"Why should we withdraw it? They have not yet seen the details. If they had seen the details, I am sure that they would be happy," said Finance Minister Pridiyathorn said. He rather bizarrely then added that  "why should we postpone it when we have worked on it for three months. This is Thailand."

Pridiyathorn said he had consulted some foreign investors about the changes to the Foreign Business Act and more than half of them had found the new rules acceptable. Clearly he had not spoken to the Joint Foreign Chambers of Commerce.

The revised law is expected to redefine shareholder rights and ownership structures for local subsidiaries of international firms.

Companies have traditionally set up their operations in Thailand so that the local subsidiaries are nominally owned by Thais but controlled by foreigners.

Singapore state-owned investment company Temasek Holdings Pte will be among those affected by the changes after its poorly managed investment in Shin Corporation.

The law redefines "alien" to mean "foreigners and their Thai nominees," who must reduce combined ownership to less than 50 per cent.

The benchmark SET Index slumped another 2.4 per cent. Yields on 10-year notes fell to the lowest in three weeks after the Cabinet approved these revisions.

The new rules are widely seen as another blow to investor confidence in Thailand, already dented by a September coup and last month's decision to impose capital controls.

The best summary - dont panic yet. The Cabinet may have approved the legislation. The amended law will, from now, go to the Council of State which will "fine-tune" it before it is submitted to the National Legislative Assembly for debate. This is far from being enacted legislation. But it doesn't send a good message.
 

Plans to change Thai Foreign Business Act could have serious impact

9 January 2007

 Thailand has many laws the prohibit or restrict the rights of foreigners to operate certain business activities in Thailand. The principle legislation in the Foreign Business Act (1999).

The sale in January 2006 of a controlling interest in Shin Corporation Plc to Singapore's Temasek Holdings has focused attention on Thai's foreign business rules and in particular on the use of nominee shareholding structures. The practice of foreign companies using Thai nominees has been in existence for many years. This allows foreigners to have beneficial ownership of companies through using different classes of shares carrying different voting rights.

The authorities, fully aware of these structures, have always recognised the benefits of foreign investment through job and income creation, technology transfer, skills transfer and learning, property investment. Therefore they have always looked only at the immediate level of ownership and to disregard ownership held through voting rights.

Thailand's foreign business community warned Monday that the military government's planned changes to investment rules could dramatically damage the nation's already faltering economy.

The cabinet will consider today a revision to the Foreign Business Act, which is expected to redefine requirements for voting rights and shareholding structures of foreign companies that operate here.

It is expected that the law will limit foreign ownership in Thai companies to the existing 49%, while redefining voting rights for local subsidiaries, to eliminate the existing nominee structures by assessing the ultimate owner through voting control.

Thailand would give existing foreign controlled companies a period of one to two years to adjust themselves to comply with the new law.

But the Joint Foreign Chamber of Commerce in Thailand, after meeting with representatives of more than 18 nations that do business here, warned the changes could prove disastrous and urged the government to postpone plans to change the law.

"Such a radical change of this law, of the Foreign Business Act, will lead to a further erosion of business confidence," the chamber's president, Peter van Haren said.

In effect the changes simply mean that a foreign company could only beneficially own 49% of its Thailand subsidiary and that the remaining 51% would have to be held by Thai shareholders; which effectively leaves the controlling ownership in Thai hands. For companies that have used the nominee structure such that they held a 90% plus voting control this represents a massive loss of control of their Thai business and of the profits and assets that may be reported on consolidation.

What is clear is that there has been little or no consultation with the foreign business community and if there has been consultation it has been largely ignored.  The JFCCT certainly sounds aggrieved that its representations have been ignored.

The proposed changes come with Thailand's stock market still in a slump after the deadly New Year's Eve bombings in Bangkok and new foreign currency requirements that sparked a crash last month. All in all this is a very uncertain time for foreign companies to be looking at a significant Thai investment and it should be making a number of well known international companies very nervous about their Thai subsidiaries.

The problem for Thailand is that there is competition for foreign investment. And the money will flow to those nations that offer the greatest incentives, the greater transparency and have the most open of investment and ownership rules. It is in the nature of a military government to be nationalistic. But this could hurt Thailand in the long term.

The Joint Foreign Chambers of Commerce issued a press release yesterday which is printed below:

Seeing will be believing

8 January 2006

The latest aviation news from the Thai Department of Civil Aviation is that eight new airlines are being set up, most operating from Bangkok's already over-crowded new airport. Most of the following are unlikely to ever take to the sky - following in the footsteps of other doomed projects such as Thai Pacific Airways.

But there are still people out there who believe their is money to be made in Thailand's aviation industry.....

Phuket Air, which scrapped an earlier application for landing slots, has reapplied under its new company name of Suvarnabhumi Airline. It plans services from Bangkok to Ranong, Buri Ram, Chiang Mai and Phuket. Based on its previous record this could be an airline to avoid. And on domestic routes it will be taking on Thai, Thai Air Asia, Nok Air and Bangkok Airways; all well established.

Its main shareholders are also setting up Holiday Airline to operate routes to Beijing, Seoul and Tokyo. Again, believe it when you see it. PB Air tried to fly to Beijing and Shanghai and failed quickly.

Prathip Boonprasom, the major shareholder of the defunct Air Andaman, which ceased trading two years ago, is planning a comeback with a German national, Hubert Joseph Trunser and Bernan Luthee from Switzerland in a joint venture to be called Asian Aerospace Service.

Sky Star Airway, the fourth applicant to fly routes from Suvarnabhumi, is a joint Thai (51 per cent) and South Korean (49 per cent) venture. It plans flights from Bangkok to Shanghai three times a week, five flights to Beijing, and five to Taipei. See above.

Siam Express Airway plans to fly to Seoul, Hong Kong, Kuala Lumpur and Ho Chi Minh City. See above.

The sixth application has come from Thai-owned AS Aviation, which aims to fly air taxis and charter flights for business people, using three small aircraft.

SEE Sky, the seventh applicant, wants to run non-scheduled flights for advertising purposes.

Finally, Air Mark Aviation Thailand, will offer scheduled and non-scheduled flights.  But no one knows where to !

Also, a group of Chiang Mai politicians and business people are investing Bt200 million to establish Chiang Mai Airways - a new airline to cater for tourists from southern China. The new airline will be positioned somewhere between a general commercial airline and a low-cost carrier.

Meanwhile, regional and local budget airlines, including Singapore's Tiger Air, JetstarAsia of Australia, Jet Airways of India, AirAsia of Malaysia are eyeing Thailand for new opportunities.

And local low-cost operators, One-Two Go and Nok Air are planning to expand their operations, especially into China, Indo-China and India.

The department has urged the Transport Ministry and Airports of Thailand to carry out a feasibility study for building an airport terminal specifically for low-cost operators to tap the market, which is growing 40 per cent per year.

The new terminal should be able to accommodate an additional eight million passengers annually.

However, some budget airlines are calling for a return to Don Muang because operational costs were lower there.

Apart from the setting up of new airlines and the emergence of low-cost carriers, some major airlines, including national flag carrier Thai Airways International (THAI) are expanding their networks from Suvarnabhumi Airport.

THAI recently added Bangkok to Johannesburg in South Africa and Bangkok to Hyderabad in India, as well as increasing flights to Munich, Sydney, Beijing and Madrid.

Worth the risk ?

6 January 2006

The Bangkok Post today leads with a story about a charitable flight that has raised Baht80 million (over US$2milion) for flood victims and hospitals.

While the cause is clearly a good one; was this a sensible risk?

Piloting the plane was Thailand's Crown Prince, the heir to the throne, His Royal Highness Crown Prince Maha Vajiralongkorn. There were 118 guests on board the Thai Airlines Boeing 737 that headed for Chiang Mai last night and returned (I hope!!) today.

Aboard the plane were the Prince's Consort and his two children.

Each VIP donated at least Baht 1 million for their seat. The Prime Minister Surayud Chulanont was on board, as were two other cabinet members. Various heads of banks were on board and other top business people.

Back in the days when I worked for the evil empire we used to restrict the number of senior executives who could board any flight to a maximum of three....just in case.

Perish the thought; but what is something had happened to this flight. And given the recent bombings in Bangkok, was this really worth the security risk?

The Crown Prince was in commercial pilot's uniform to fly the plane and appears from the pictures to have occupied the left had seat. But he is only a three striper, without the four stripes necessary to be a commercial airline captain.

Air Asia announces ambitious long haul plans

6 January 2006

Malaysian aviation tycoon Tony Fernandes has unveiled a new no-frills long-haul airline, Air Asia X. The venture is a tie-up between Air Asia and Fly Asian Express (FAX), both basically controlled by Fernandes. The airline proposes to launch in July and fly to destinations in India, China and Europe, initially to the UK.

AirAsia, meanwhile, has a fleet of 50 planes and flies to over 40 destinations in Southeast Asia and China. The airline also plans to significantly increase its own fleet of aircraft. Air Asia has ordered 100 A320 planes from Airbus and could now double that order, deputy chief executive Kamarudin Meranun said. The group is expected to finalise its fleet expansion plan by the end of the month.
 

Coup Rumours across Bangkok

4 January 2007

In the post News Year's Eve bomb confusion and among the barrage of claims and counter claims the latest bizarre twist in Bangkok is a widespread rumour around the city that the September coup leaders are planning another coup.

The rumours appear to have started from the second Army Region in Ubon Ratchathani. Convoys apparently departed the province for southern provinces, sparking widespread rumours of a counter coup.

Meanwhile, Thai Army chief Sonthi Bunyaratglin, who staged the Sept 19 coup that ousted Thaksin Shinawatra, denied rumours of an impending coup Thursday night, hours after Prime Minister Surayud Chulanont warned of more attacks following the new year explosions.

The local media reported Sonthi as saying that there was no truth to speculations sweeping the capital that the Second Army based in Nakhon Ratchasima was being mobilised to Bangkok.

The army-run Channel 5 television station reported in its news bulletin that there was no such movement of troops while the Nation Daily said that it would provide updates on the situation.

The rumours suggested that the September 19 coup leaders were about to stage another coup to boost their own power. A coup within a coup ! Very strange.

The first coup rumours came Wednesday night and intensified Thursday evening, with 9.30 pm proclaimed to be the time to launch the coup.

At about 8 p.m, Army-run TV 5 denied there had been mobilization of troop against the authorities.

"The army urges the citizen not to believe the rumors and be confident in the our ability to control the situation. By now, the army chief General Sonthi Boonyaratglin assured the situation is normal," it said.

It is hard to define what exactly "normal" is in Thailand at the moment.

As the following article from the Asia Sentinel suggests there may be a serious power struggle within the military and indeed even between the key leaders of the September coup.

All seems quiet tonight. But as the article concludes things are likely to get worse before they get better.

"Thailand’s Bombing Mystery Gets Murkier

4 January 2006 - The Asia Sentinel

Allegations, conspiracy theories and bomb threats continue to swirl in Bangkok

Although Thailand’s junta leaders have been generally praised by the local press in the wake of the bombings that rocked Bangkok's peaceful ambiance at the start of the year, concerns are growing about their competence in the wake of contradictory statements and a seeming lack of political, economic and law enforcement direction.

Contending forces appear to be emerging across a wide range of the power structure including within the police and military. Some political analysts are also theorizing that the bombings, which took the lives of three and injured nearly 30, could be the manifestations of a power struggle within the junta that took power after pushing deposed Prime Minister Thaksin Shinawatra from power.

Certainly, there were conflicting statements aplenty Wednesday from the military junta and the country's appointed civilian leaders. Although General Saprang Kanlayanamitr, a leading junta member, told reporters that the "evidence and intelligence information proves that the bombs were the dirty work of politicians who lost power and benefit. Some bad soldiers loyal to the bad politicians collaborated with them with the intention to topple this government," an hour or so later that statement was contradicted by military-appointed Prime Minister Surayud Chulanont.

"The investigation has not progressed at all," Surayud told reporters after the weekly cabinet meeting. "I will discuss this with the appropriate officials, including the National Police Office and the Internal Security Operation Command (Isoc)…. As of now, there's no evidence to bring the perpetrators for prosecution."

Any evidence that may exist is not available to the public at large, which has frustrated a public yearning for answers. Then again, pundits don't expect any answers anytime soon, particularly since the junta has failed to levy any formal charges against deposed premier Thaksin Shinawatra three months after seizing power despite plenty of allegations of widespread corruption.

"It's not good to make allegations without hard evidence," said Thitinan Pongsudhirak, who heads the Institute of Security and International Studies at Chulalongkorn University. "It sounds like what Thaksin would've done, to quickly pinpoint culpability. I don't think you can draw conclusions on anything. But people want answers quickly."

Answers seem unlikely to come quickly from the police investigation. Jeth Mongkholhatthi, a top official with the Bangkok Metropolitan Police, told reporters Wednesday police have failed to come up with leads after questioning victims and witnesses. "There is no eyewitness in this case and the footage from closed-circuit television is not clear. So police have not found any suspects," Jeth said, according to news reports.

Bangkok is still very much on edge. Anonymous callers made bomb threats on Wednesday against a school and The Nation, a leading English-language daily. Other seemingly suspicious packages were found at high-end shopping malls Central Lad Phrao and Gaysorn Plaza. The typical opaque nature of Thai politics and infighting among military and police has many thinking this mystery may never be solved. That would fit with many other conundrums in Thailand over the past few years, from the daily killings in the Muslim south to murdered human rights lawyer Somchai Neelaphaijit to the small bombs planted in Bangkok last year to the failed assassination attempt on Thaksin a few weeks before the September 19 coup.

Things are further confused by the fact that quite a number of groups have a motive to undermine the unelected military government and see it pushed from power. For sure, the list seems to grow by the day. In addition to the southern insurgents, who have killed more than 1,800 fellow Thais in the past two years, the usual suspects would be those who the coupmakers deposed or sidelined: Thaksin, Thai Rak Thai lawmakers, loyal army generals, loyal police officials, loyal bureaucrats. Then there are those who have been hurt by the generals after they seized power: pro-democracy student activists, farmers who have seen subsidies taken away, businessmen who saw their portfolios diminish after the central bank imposed capital controls, and Chavalit Yongchaiyudh, a former army commander and Thaksin defense minister, who turned on the coupmakers after his allies failed to secure lucrative positions in the new government.

Any one of these groups, or a combination of several, could logically have reasons to strike. In large part due to statements by Surayud and the junta leaders, speculation that southern insurgents have shifted their deadly campaign to Bangkok has been pushed aside.

Despite the similarities—coordinated attacks, deadly bombs, no claim of responsibility—the differences—type of explosive device, use of digital watches as triggers instead of cell phones, not enough casualties—have won over many analysts. Thus, the spotlight is now shining on the shadowy elements within the police and armed forces that may have the capability and motive to pull off such a caper. Of these the most interesting theories appear to revolve around the actions of Chavalit, the planned restructuring of the police force and a power struggle within the junta itself.

Junta member Saprang made a thinly disguised reference to Chavalit in his comments on Wednesday, claiming the bombers had "used an old soldier to launch a war of words against the government and the (council)." The 75-year-old Chavalit served as army commander-in-chief in the late 1980s and prime minister for a brief period in 1997, when his cabinet floated the baht and ushered in the Asian financial crisis.

When Thaksin came to power in 2001, Chavalit came aboard and served as defense minister for a few years. Then he left the government, and adeptly managed to cozy up to the royalist military factions that launched the coup. When Prem Tinsulanonda, president of King Bhumibol Adulyadej's privy council and a respected former prime minister and army commander, gave a speech in July that many saw as giving the green light for a coup to take place, Chavalit stood on stage with Prem, coup leader Sonthi and military appointed premier Surayud.

But the spoils of victory were not shared with Chavalit, and he lashed back. At first, the former general enlisted Chanapat Na Nakhon, a former member of his now-defunct New Aspiration Party, to lead anti-coup protests against the generals. Then in November, he blasted the junta for taking lavish positions on the boards of state enterprises, and called on them to let Thaksin back in the country. The public tit-for-tat resulted in an awkward face saving meeting with Sonthi and other coup leaders.

Lately, Chavalit has been mentioned as a potential candidate to replace Thaksin atop Thai Rak Thai. Press reports also link him as the prime mover behind allegations that Surayud illegally purchased land in a forest reserve. Besides that, the coup leaders may want to pounce on whispers that Chavalit met with Thaksin last month when he paid a visit to China.  Many discount this theory, including the prime minister himself.

In a faxed open letter from Beijing distributed to reporters on Tuesday, Thaksin wrote: "I strongly condemn this act (of bombing) and I swear that I never ever think of hurting the people and destroying the country's credibility for my own political gain…. Even during the time of political conflicts, when people who lost influence and those who were deceived by false information tried to topple my government, I did not resort to the use of force."

Members of anti-coup groups also strongly question the generals' presumption that Thaksin may be directly linked to the bombings. "Chavalit works for Chavalit only," said a member of the anti-coup group White Dove who knows Chanapat. "Thaksin could just sit back and watch this government crumble. They are incompetent. They don't need help from us to make them look bad."

Speculation is also resting on certain elements of the police force. As a former police lieutenant colonel, Thaksin found widespread support in the notoriously force. Immediately after he was kicked out, however, Surayud embarked on an ambitious campaign to reform the Royal Thai Police. A key part of this plan is to decentralize the force to be under the control of provincial governors, and be held accountable by civilian boards.

Top police officials immediately blasted the proposal. "Please, don't treat the police organization with contempt. Give us some respect," Pol Lt-Gen Achirawit Suphanphesat, spokesman of the national police office, told reporters in mid-November. "The day we are transferred to local organizations, the country will go up in flames."

Whether the spokesman meant that literally is unclear, although the distaste for the measures is clear. They come as the army widely expands control of Isoc, which could end up putting the police directly under the control of the military.

"The police are always suspects," Chulalongkorn's Thitinan said. "We are engaging in speculation, which I don't like to do, but one could say that the theory that this was an inside job by disaffected military or disaffected police has great weight."

Besides Chavalit and pro-Thaksin elements of the police or military, analysts are also tossing around the possibility that the bombings may signal a power struggle within the junta. Some members of the self-styled Council for National Security, such as leader Sonthi, appear content just pushing Thaksin out of power. Other leading members, however, such as Saprang, are said to want the junta to completely take down the former prime minister, and change the rules so a strong premier can never rise again.

Saprang has positioned himself to succeed Sonthi as military leader when the latter retires next October. Diplomats have described him as leading a "holier-than-thou" clique of generals who want to destroy Thaksin completely.

Indeed, Saprang has expressed himself far more eloquently than the other generals. And his talk of "good" vs "evil" is reminiscent of US President George W. Bush in his perpetual War on Terror.

"We're sincere," Saprang told The Nation newspaper last month. "If there hadn't been a calamity on the way, we wouldn't have [staged the coup]. We only wanted to defend our motherland, the monarchy and the public interest. We believed that dharma should  prevail: that good should subordinate evil, courage should overcome fear."

But Saprang may face a tough challenge for the job from Anupong Paochinda, the First Army chief who proved essentially in securing Bangkok on September 19. The Bangkok Post reported in October that Sonthi was grooming Anupong to be his successor by giving him responsibilities over logistics, a greater task than had been assigned to Saprang.

"At stake is the post of army chief," said a former lawmaker from Thaksin's ruling party who is familiar with the junta members. "Anupong is seen as the real force behind the coup. Saprang is more vocal, but he has no real base. The only way he could be seen as a
promising leader is by pushing the country to the brink."

Again, the truth may never present itself. But the many intermingling subplots have perplexed even the most knowledgeable Thailand watchers. While Bangkok's chattering classes may disagree on whodunit, they are near unanimous in saying things will get worse before they get better.

"This year will be a continuation of last year," Thitinan said. "But the stakes are higher.""

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