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(Executive Summary)Government Economic Policy And Conflict Of Interest Problem

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Executive Summary)

Government Economic Policy And Conflict Of Interest Problem

      Objective

      This research’s aim is to analyse Thaksin Shinnawatra’s government economic policy and programs during 2001 – 2005 to see whether they have caused conflict of interest between the public officials private interest and the public interests or not.It will also try to answer how such cases will affect different social groups and country’s economic and social development and how we can conclude from this research a proposal for strategies and measures to prevent and curb the conflict of interest problem.

      Definition

      “Conflict Of Interest” is defined here as any situation in which an individual, usually the public official, exploits official capacity in some ways for his  or her personal benefits.

      Findings

      Our study has revealed that  there are many government’s economic policies that benefit public officials private interests but harm public interests , For example :

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    • Thaksin and other former businessmen in his party divested shares in the companies they owned to their family members  rather than to the independent blind trust.These companies either  do business with the government or get some privilege from the government.The spouses of several serving ministers have reported big increases in their wealth in the recent disclosure notices.
    • Shin Satellite, another company in which Thaksin’s family holds a majority stake, won an eight-year tax holiday worth 16 billion bath ($401.5 million) for its soon – to –be-launched IPSTAR broadband satellite system from Thailand’s Board of Investment. The tax break  represented the first time the state agency, historically charged with attracting foreign investment, had offered such incentive to a Thai-owned company.
    • Thaksin’s government favor the interest of his family – it save Thai AirAsia ;which is part of Shin Corp,  more benefits than Thai International Airway by giving  more right to AirAsia to fly to ChiengMai. Moreover,it plans to transform ChiangMai into a regional aviation hub so that AirAsia can use Chiang Mai as a base for flights China and other neighboring countries.
    • The signing of free trade agreement with Chaina, Australia, New Zeland and some other countries will benefit some politician’s businesses in telecommunication and car manufactaring , including some,  big agricutural companies and harm small and medium farmers who are less competetive and are less subsidized than farmers in those countries.
    • The privatization of monopoly state enterprise such as Petroleum Authority of Thailand (PTT) benefits  politician related big private  investors who can make huge capital gains from buying PTT shares at par value of 35 baht per share in 2002 when PTT share value had increase to  250 baht  per share in 2005. The government who has smaller number of share (from 100 % to around 51 %) gain less from PTT profis. The plan to privatize the Electrical Generating Authority of Thailand, if wasn’t being interrupted by the order of the central administrative court, would bring even greater profits for some big private investors.
    • In the stock market during 2001 – 2005, companies with had some  members  relating to those who held positions in the government had seen their market share values increased significantly more than companies which did not have such a political link. This was because there were many policies which benefited the former companies .For example : discretionary tax breaks; reduction of concession fee; restriction or the discouragement of new entrants, as well as delaying of policies which may affect the incumbent firms.
    • Under Thaksin’s government’s new Thai Telecommunication Act (2006) which allow Thai telecommunication companies to sell 49 % of their total shares to foreign companies is  passed on Friday January 20th three days later, Thaksin’s family sold all stake in Shin Corporation, a leading communication company in thailand to Temasek Holding with tax liability exemption. The Shinawatra and Damapong (Thaksin’s wife’s maiden name) families netted about 73 billion baht (about $1.88 billion) tax – free from the buyout, exploiting a regulation that allows individuals(as opposed to corporations) sell shares on the stock exchange to pay no capital gain tax. Critics have accused him of insider trading and structuring the deal to avoid paying hefty taxes, among other irregularities.

    Impacts of conflict of interests on country’s development

      Conflict of interest  has negative influences on government’s decisions as well as economic growth.Hence government’s decisions might not be for the best interest of the country. For example, if a contract or concession is awarded to firm that has the most direct political connections rather than to the most efficient firm, then the national economy loses some benefit.

      Efficient firms which do not have political influence may eventually go bankrupt as they can’t get contracts.  If this is so,then the politically connected firm can become more slack and less efficient since they  no longer have competitors.This means that is a loss of welfare to the economy.

      Conflict of interest will also have a negative impact on political development. Those businessmen and politicians who benefit from the conflict of interest have a vested interest in hiding their actions from public scrutiny. Government that has a problem regarding conflict of interest may be tempted to use its powers to obstruct transparency.

      For example, the government might try to disable institutions such as anti-corruption agencies, remove effective corruption-busters from office and place compliant allies in sensitive positions.It might invest heavily to gain political support or even pervert the democratic process to prevent the opposition party from monitoring its action.They might restrict the freedom of information by using state-owned media and intimidate journalists and editors by legal proceedings. In short, the government may try to sabotage  the system of checks and balances, human rights and transparency. Disguised conflict of interests can have long-term impacts on political development and citizen rights.

      Preventing and Suppressing the conflict of interest problem and other related means corruption 

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    • Establish an independent and strong anti corruption agency (with adequate staff and funding) and enhance transparency in the financing of election campaigns and political parties. The anti corruption organization should also educate the public to make them aware of the seriousness of conflict of interests problem and become more involve in helping the prevention and suppression of corruption.
    • Reform public sector services by ensuring transparency, efficiency and recruitment based on merit. Public officials should be subject to codes of conduct, requirements for financial and other disclosures and appropriate  disciplinary measures.
    • Promote transparency and accountability in public finance and establish specific requirement for the prevention of corruption in the particulary critical areas of the public sector such as the judiciary and public procurement. Moreover, there should be open access to public record to make it possible for individuals and associations to control the exercise of official authority.
    • Improve institutional measures such as positive external audit and verification, other internal supervisory measures, publication of disclosed interests, development of a strong management culture supporting intergrity, recusal of the public official from involvement in an affected decision  making process.
    • Promote actively the involvement of non-governmental and community – based organization as well as other elements of civil society such as mass media, academics , trade unions and trade associations; and to raise public awareness of corruption as well as what can be done about it.
    • Cut red tape to minimize opportunities for public officials to solicit or accept bribes from some members of the business sector to facilitate the processing of their applications for license or any state permissions.
    • Reduce opportunities for corruption in public agencies especially the police bureau, internal revenue department, custom department and public work department because of their access to the fee paying public and the ample opportunities for corruption.The selection,training and monitoring of the public officials should be improved to a higher standard.Public officials should get better salaries and allowances, but  punished severely if they are caught for corrupted practices.
    • Revise and effectively implement the law enforcing politicians who have public official titles  to transfer  more than 5% of their share in private companies to the juristic person or “Blind Trust”, and can not get involve in any kind of management  of their former private companies.

      In conclusion, Thai people can learn from experiences of other countries such as Singapore and  Hong Kong to establish strong and efficient organizations,measures to prevent and suppress every forms of corruption including conflict of interests which is a new phenomena  and is rather too complicate for the general public to understand.The priority is to do research and communicate data on this problem to raise awareness and understanding, as well as to encourage the general public to become more committed in helping the prevention and suppression of corruption at the national level.

 

One response to “(Executive Summary)Government Economic Policy And Conflict Of Interest Problem

  1. mythailand

    เมษายน 15, 2010 at 4:54 pm

    Don’t blame others, if you could have never done such them.
    Everything they did, not only make them richer but also increase social welfare of Thai people. In case of launching IPSTAR , it will bring benefit to Thailand uncountably, such as rural people who’d never known of internet , education, Technology progress also reduces cost of livings , or not?
    For Thai Telecommunication Act (2006) , is it unsuitable? Do you know other countries launched this law for along time, It is rarely to find that government in developed countries still be stupid as Thai(Democrat’s party)
    I must to say for the case of selling stake in Shin Corporation to Temasek Holding with tax liability exemption.
    If everyone respects law, law whenever it be launched or whoever lanches it , you may accept it and not give him an accuse of exploiting a regulation that allows individuals sell shares on the stock exchange to pay no capital gain tax, it is part of Act .
    Oh! I can’t forget to tell you that the act which involves with The privatization of monopoly state enterprise such as Petroleum Authority of Thailand (PTT) , it was launched in the reign of Democrat’s party, or not?
    Please thinking with reason not envy !!!

     

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