Government Economic Policy a Conflict of Interest

10 ก.ย.

The aim of this research is to analyse the Thaksin Shinawatra government’s economic policy and programs over the period 2001 – 2005 to determine whether they have caused conflict of interest between public official’s private interests and public interests. The  effects of conflict of interest cases on various social  groups and national economic and social development are examined Strategies and measures to prevent and curb conflict of interest are proposed.


Conflict of interest is defined here as any situation in which an individual, usually  a public official, exploits official authority in  some way for his or her personal benefits.

The study revealed that many of the government’s economic policies benefited public official’s private interest but harmed public interest. For example :
– Thaksin and other former businessman on his party transferred shared in companies they owned to family members rather than to independent blind trusts. These companies either did business with or received privileges from the government. The spouses of several serving ministers reported  large increases in wealth in recent asset disclosure notices.
– Shin Satellite, a company in which Thaksin’s family held a majority stake, won an eight-year tax holiday worth 16 billion baht (U$401.5 million) from Thailand’s Board of Invesment for the launched IPSTAR broadband satellite system. The tax break represented the first time the state agency, historically charged with attracting foreign investment offered such an incentive to a Thai-owned company.
– Thaksin’s government favored his family’s interests – it helped Thai AirAsia, which is part of shin Corp, by favoring it over Thai Airways International by giving it more right to fly to Chiang Mai. Moreover, it plans to transform Chiang Mai 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 agreements with China, Australia, New Zealand and other countries will benefit some politician’s businesses in telecommunication car manufacturing and agriculture while harming small and medium farmers who are less competitive and are less subsidized than farmers in the partner countries.
– The privatization of monopolistic state enterprises such as the Petroleum Authority of Thailand (PTT) benefited politicians by allowing major private investors to make huge capital gains. PTT share were value at 35 baht per share in 2002 but had increase to 250 baht per share in 2005. The state, with only a 51% stake,  gained less from PTT profits. The plan to privatize the Electrical Generating Authority of Thailand, if it had not been interrupted by a Central Administrative Court order, would have brought even greater profits for some big private investors.
–  Between 2001 and 2005, companies with ties to people with positions in the government saw their share values increase significantly more than did share value of companies without political connections. This was because there were many policies that benefited the former companies, such as discretionary tax breaks, reduction of concession fees,  restriction or discouragement of new entrants to certain industries as well as delaying of policies that may affect incumbent firms.
– The Thaksin government’s new Thai Telecommunication Act (2006) which allows Thai  telecommunication companies to sell 49% of their total  share to foreign companies, was passed on Friday January 20th, three days before Thaksin’s family sold all their shares in Shin  Corporation, a leading Thai telecommunication company to  Temasek Holding with tax liability exemption. The Shinawatra and Damapong (Thaksin’s wife’s maiden name) families netted about 73 billion  baht (about U$1.88 billion)  tax-free from the buyout, exploiting a regulation that allow individuals (as opposed to  corporations) who sell shares on the stock exchange to pay no capital gains tax. Critics have accused Thaksin of insider trading and  structuring the deal to avoid paying hefty taxes, as well as other irregularities.

    Impacts of conflicts of interest on national development

    Conflicts of interest have pernicious effects negative influences on government decisions as well as economics growth.  Government’s decisions might not be in the best interest of the country. For example, if a contract or concession is awarded to the politically well-connected rather than the most efficient firm, then the national economy suffers. Efficient firms that do not have political influence may eventually go bankrupt if they can’t get contracts.  If this occurs, politically connected firm can become less efficient because they no longer have competitors. This weakens the economy.

    Conflict of interest can also have a negative effect on political development. Those businessmen and politicians who benefit form conflicts of interest have a vested interest in hiding their actions from public scrutiny. A 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 oversight 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 opposition parties from  monitoring  its action. It might restrict freedom of information by  using  state-owned media, or intimidate  journalists and editors with legal  proceedings. In short, the government may try to sabotage the  system of checks and balances, human rights and transparency.  Disguised conflicts of interest can have long-term impacts on political development and citizen’s right.

    Measures to prevent and suppressing  conflict of interest and  other types of corruption

    – 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 raise awareness about conflict of interest and encourage people to become more involve in helping prevent and suppress corruption.
– Reform public sector services by ensuring transparency, efficiency and merit-based recruitment. 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 for the prevention of corruption in particulary critical areas  of the public sector such as the judiciary and public procurement. Moreover, there should be open access to public records 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 integrity, and recusal of public officials from involvement in an affected decision-making process.
– Promote 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 raises public awareness of corruption and what can be done about it.
– Cut red tape to minimize opportunities for public officials to solicit  or accept bribes to facilitate the processing of applications for licenses or permits.
– Reduce opportunities for corruption in public agencies, especially the Police Bureau, the Internal Revenue Department, the Custom Department and the Public Works Department, because of their access to the fee paying  public and the ample opportunities for corruption. The selection, training and monitoring of public officials should be improved to a higher standard. Public officials should get better salaries and allowances, but be punished severely if they are caught for corrupt practices.
– Revise and effectively implement the law requiring politicians who hold public office title to transfer shareholding in excess of 5% of the listed shares in private companies to an independent juristic person or blind trust, and strictly avoid involvement 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 and measures to prevent and suppress all forms of corruption including conflict of interests, which is a new phenomena that is too  complicated 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 prevent and suppress corruption at the national level.

ที่มา นโยบายรัฐบาลด้านเศรษฐกิจ :
การทับซ้อนของผลประโยชน์ทางธุรกิจ (Conflict of Interest)
วิทยากร เชียงกูล
ISBN 974-449-285-6  


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