Death of a Monarch or an Oligarch?

At the end of a king’s long reign, it won’t just be a game of thrones that plays out in Thailand – it will be a game of gold.

The Associated Press recently published an article on the “Thai monarchy’s billions.” This makes for an important, if brief, reminder that there is more than just the power of quasi-governmental position or the power of ideology to the elite role that the late monarch held within the Thai polity.

Because the King could also readily command a power of mobilisation and could have, at least theoretically, commanded a certain power of coercion if the Thai nation were to ever actually slip into a prolonged, violent emergency, he also commanded a remarkable degree of power in terms of raw material wealth.

An extreme concentration of material wealth has political consequences. Thailand, in this regard, is no different than any other polity across the globe. What is unique about Thailand is that its wealthiest citizen also happened be the focal point of so many other bases of elite power. The late monarch was both an elite and an oligarch. And as he was arguably the top elite amidst a network of various elites, he was also the top oligarch.

Thus, as objectively and level-headed as one can be about such things, we should do well to review the state of Thailand’s oligarchy at this juncture of the late monarch’s—the late top oligarch’s—death.

As a side note on motivation for this piece, it should also be plainly stated that one does not mull over economic inequality simply for the sake of getting a pat on the back by our overly-represented, Left-leaning colleagues in academia. Nor does one do this in order to conjure up even rarer arguments for the late monarch’s well-recorded and, at times, patently undemocratic tendencies. Rather, one ought to review the late King’s material wealth as social power simply because in Thailand it is an empirical fact that money matters quite a great deal on the political stage, both locally and nationally.

With the King’s passing, what has changed about oligarchy in Thailand? What has stayed the same? Beginning with the latter, the overall structure of oligarchy has not changed within Thailand since Thursday, 13 October 2016.

There are still incredibly… [click here to continue to read full text]

*Originally published in New Mandala by T. F. Rhoden; any original credit for image/photo at the top of this post via Bloomberg. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

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Yangon’s Stock Exchange in Comparative Analysis

Abstract

In the political sphere, the citizens of Myanmar have witnessed and taken part in an expanding and deepening process of democratization and political liberalization in the past few years. In the economic sphere, changes are also underway that indicate a growth of economic liberalism. One part of that process is a slowly increasing financialization as indicated by the new Yangon Stock Exchange (YSX) set to begin trading operations in late 2015.

This paper will analyze what this new stock exchange means for the citizens of Myanmar by placing it within a regional comparative analysis of stock markets across Southeast Asia, including the Ho Chi Minh City Stock Exchange (HoSE), the Hanoi Stock Exchange (HNX), the Lao Securities Exchange (LSX), and the Cambodia Securities Exchange (CSX). The main argument is that despite calculable risks in terms of business transparency and national politics, the potentialities for a successful YSX are in place. The main socioeconomic conditions that warrant investment, both from the domestic as well as international perspective are 1) the depth and diversity of Myanmar’s adult population size, 2) Myanmar’s rallying industrial sector, 3) Burmese businesses’ current lack of bank financing, and 4) Burmese citizens’ little-to-no holdings in financial assets as compared to other non-financial wealth holdings.

The YSX will not be an overnight success for either domestic Burmese investors or for domestic Burmese enterprises seeking new avenues to finance growth and project investment. However, the systemic socioeconomic conditions are in place for the Yangon Stock Exchange to parallel more closely the experience of the Vietnamese HoSE and HNX than that of the other Indochinese exchanges of LSX and CSX.

Keywords: Yangon Stock Exchange, YSX, Myanmar, political economy, finance, wealth

Introduction

For the first time in its nation’s history, Myanmar will soon possess a full-fledged, independent, and computerized national bourse: the Yangon Stock Exchange (YSX). Though a late start has already been announced, a visit to the neoclassical Palladian building on the southeast corner of Sule Pagoda Road and Merchant Street in Yangon, where the old Reserve Bank of India used to issue banknotes during the 1940s, allows one to see the hustle and bustle of construction and renovation—all evidence that a stock market is indeed going up. Entering from the front stairs and into the center of the building, one sees a large square pit in the center of which will be placed a massive LED screen to display trading activities. To the left, a glass-paneled conference room for future investors is being built, whilst to the right, small rooms to be rented for representatives of underwriters, brokers, and advisors are being partitioned. The press corps will also have their own spot in the balcony. And to the very far right, one sees the shell of a future coff ee shop meant as something of a historical tribute and “for good luck since the world’s oldest stock exchange was in a coffee shop.”

But then again, this is just a building. Though it is a good sign that there is active construction, there is nothing here that suggests at first glance that the Yangon Stock Exchange will be a success. Two other grand-looking buildings in Southeast Asia also house exchanges—these are the Lao Securities Exchange (LSX) off Kampheng Meuang Road in Vientiane, Laos; and the Cambodia Securities Exchange (CSX) along Preah Mohaksat Treiyani Kossamak in downtown Phnom Penh, Cambodia. However, neither of these bourses are, by any standard definition, successful stock exchanges. What might indicate that the upcoming YSX will be different?

To varying degrees, other more successful stock exchanges can be cited in Southeast Asia. Examples include, from newest to oldest: the Hanoi Stock Exchange (HNX); the Ho Chi Minh Stock Exchange (HoSE); the Indonesian Stock Exchange (IDX); the Stock Exchange of Thailand (SET); the Singapore Exchange (SGX); Bursa Malaysia (MYX); and the Philippine Stock Exchange (PSE). The two exchanges in Vietnam, unlike the neighboring LSX and CSX, are the best example of stock exchanges begun in the twenty-first century that are performing at, and in some ways exceeding, what a successful stock market exchange means for a developing country in Southeast Asia. The HNX and HoSE have become invaluable to both companies and investors of the capital market in Vietnam. What might indicate that the exchange in Yangon will follow the example in Vietnam as opposed to the one in Cambodia or Laos?

This article contends that despite the many challenges facing the introduction of a new stock exchange in Myanmar, the Yangon Stock Exchange will likely have more in common with… [click here to continue to read full text]

*Originally published in Journal of Burma Studies by T. F. Rhoden; image-photo credit for this post via Frontier Myanmar. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

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Myanmar’s Stock Exchange: Open For Business And Soon To Foreign Investors

…Still, Myanmar had no market infrastructure to speak with, so Daiwa brought in the Japan Exchange Group as a partner, while the Japanese Ministry of Finance helped the Myanmar government draft up a new law to set up the creation of the bourse. According to Masutomo, JPX’s interest in Myanmar was due partly to the fact the Korean Stock Exchange, which had helped set up the Lao and Cambodian exchanges, was so ahead of them in the region.

Today, however, the Lao and Cambodian bourses are seen as a cautionary tale of what the Burmese exchange could become. Skeptics argue that YSX will likely mimic the fate of its neighbors, which both failed to take off after debuting to much acclaim. Each now holds less than 5 stocks.

For T. F. Rhoden, an independent researcher and doctoral candidate at Northern Illinois University, the comparison is misguided, as Myanmar’s population of 54 million people gives it a potential depth of domestic investors that’s much more comparable to Vietnam than Laos or Cambodia. In addition, Myanmar’s $64 billion economy is over three times the size of its smaller neighbors.

The more important lesson from the Lao and Cambodian exchanges is that their failure to enforce strong disclosure procedures and regulation destroyed their credibility. For emerging markets — whether in Asia or elsewhere — the need for international standards of accounting and disclosure is more than ever crucial.

The Yangon Stock Exchange has tried to push for higher standards by asking applicants to appoint compliance officers and set up systems to prevent insider trading, but without stringent regulation of the capital market, it likely won’t be enough.

“The two companies that have listed so far are… [click here to continue to read full text]

*Originally published in Forbes by Fanny Potkin; photo image credit via WTOP. Unless otherwise stated, all posts on this website are under Creative Commons licence.

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Unequal Thailand

Book review published in New Mandala by T. F. Rhoden on Pasuk Phongpaichit and Chris Baker’s Unequal Thailand: Aspects of Income, Wealth and Power (Singapore: NUS Press, 2015.

Does Thailand have an oligarchy? If so, how do we define it? And most importantly for this collection of essays, what is the proof of its existence in contemporary Thailand?

These are some of the main questions that pervade Unequal Thailand: Aspects of Income, Wealth and Power, edited by Pasuk Phongpaichit and Chris Baker. Translated and reworked from a Thai-language edition, Su sangkom thai samoe na [Towards a More Equitable Thailand] published in 2014 by Matichon, this volume is a timely and useful review of some of the political economy issues facing Thailand today.

With nine chapters by Thai scholars and technocrats, the aim of the book is to provide up-to-date data and analysis on those material foundations that have fostered a growth in inequality and a strengthening of oligarchy in recent years. Some chapters do this better than others, but all provide insight into these issues.

In terms of raw empirical analysis, all of the research essays are a success, particularly the second chapter on… [click here to continue to read full text]

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*Originally published in New Mandala by T. F. Rhoden; photo credit for re-post from Matthijs van Oostrum via Atlantis. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

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Myanmar Needs to Forgive Tax Dodgers

Whether motivated by greed or virtue, granting a one-time tax transparency amnesty to past evaders will help the country’s economic and political transformation.

With the new Yangon Stock Exchange (YSX) set to open in less than five months, now is good time to reflect on, not just the political liberalisation of Myanmar away from military authoritarianism and towards democratisation, but also on the evolution of the economic sphere.

And in particular, increased transparency.

A successful national bourse requires more than a modicum of transparency. “Transparency” itself can mean more than one thing. Openness to outside investigation, whether it be a corporation’s financial statements or a government bureau’s budget, can be a good thing or a bad thing depending on the situation.

However, I argue that there is more good to be had — that is, not just more economic efficiency or effectiveness, but genuine honesty in the development process — if something like a “tax transparency amnesty” for domestic businesses in Myanmar were promulgated by a democratically elected parliament.

We all understand that “politics” and “money” often intersect, particularly at the commanding heights of a national state. Some manifestations of the politics-money nexus are useful whilst others are more than a little depressing; but there is one avatar in particular that is a scourge on Myanmar’s political economy. A tax transparency amnesty could prove analgesic to that still lingering sick-man of Myanmar’s economy: the crony capitalist.

If cronyism between government and businesses is one type of economic activity that could use a dose of transparency, Thomas Fuller’s recent piece in the New York Times is a dismal reminder of another kind of less-than-ideal investor-backing for some of Myanmar’s corporate entities. Illicit trading of items like poppy (now often as methamphetamine), timber, and precious stones are hidden on the former balance sheets of more than a few companies. A tax transparency amnesty could prove useful here as well, helping to highlight wealth and income that is more or less clean (though underreported in the past), whilst also reasserting the illegality of some commercial goods.

But what exactly is a “tax transparency amnesty” and how would it work?

A tax transparency amnesty would be a one-time opportunity for businesses and individuals to declare past hidden income or wealth for an agreed upon fee. Regardless of where the funds came from, all money in the system would be declared white: everyone would get a clean set of books.

The one-time fee would probably be a… [click here to continue to read full text]

*Originally published in New Mandala by T. F. Rhoden; photo credit goes to Dustin Main. Unless otherwise stated, all posts on this website are under Creative Commons licence. white-compass-rose-th

Myanmar’s Military Still Hold the Purse Strings

The release of the official list of Myanmar’s 1,000 top taxpayers for 2013-2014 shows the wealthiest are still overwhelmingly tied to the old guard of military cronyism and elite government corruption. Many are on the US government’s blacklist.

The list, released by the Internal Revenue Department (IRD) of the Ministry of Finance in December, is an indication of how much – or how little –progress the Burmese political economy has made in terms of the separation between civilian versus military investment in Myanmar’s highest grossing companies. The reporting process remains frustratingly opaque to investors.

Despite the move away from military authoritarianism toward more democratic institutions in government in the political sphere, a similar move away from military-tied businesses which either have ties to or a part of the military toward completely independent trade, investment, and entrepreneurship in the economic sphere has yet to really begin.

The three public companies along with top taxpayers on the Internal Revenue Department lists serve to highlight the continued challenge of transparency and continued involvement of investments tied to military families.

For example, AGD Bank is part of the Htoo Group of companies, which has included at various times numerous other subsidiaries like Air Bagan, Htoo Wood Products, Elite Tech IT Services, Htoo Trading, and many others. The chairman of this conglomerate is U Tay Za, well known for his ties to the military elite, particularly Than Shwe, the former general who headed the junta from 1992 to 2011.

Both U Tay Za as an individual and his portfolio of companies are blacklisted by the United States government. For better or worse, this designation ends up trickling down to Htoo Group’s 30,000- odd employees and illustrates how cronyism at the highest levels becomes a system-wide problem affecting the middle and lower classes.

In fact, a comparison of the… [click here to continue to read full text]

*Originally published in Asia Sentinel by T. F. Rhoden; photo credits for image used in post appear on New Mandala. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

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Thailand’s Oligarchs Are Fighting

I want to believe that those who have taken to the street recently in Bangkok really do wish at heart to simply have a political system that is free from the influence of money. Or maybe we should say extreme amounts of wealth, like an ultra-extreme amount of wealth available only to the—not the top 1 percent—but the top .01 percent, top .001 percent, and, empirically speaking, really the top .0001 percent of Thailand’s 67 million people.

The influence of extreme inequalities of material wealth on national politics is a very good reason for those who work in salaried, white-collar professions in Bangkok to protest en masse. Honestly, the influence of extreme wealth on politics is a good reason for anyone to protest. And so, we should acknowledge that those on the street right now are acting of their own volition, correct? All of us have friends and colleagues who, whether we agree with them or not, are part of this protest, people whom we respect. We can acknowledge their passion. If this is a passion stirred by the direct consequences of extreme material wealth—the most salient example of this in Thai national politics being former PM Thaksin Shinawatra—then it is a legitimate passion, and more importantly, a legitimate reason to protest.

When political equality is hampered by economic inequality, can Thailand still have a liberal democracy? I wonder if this is at the heart of the problem. Does Thailand have something like a national oligarchy that is affecting, whether negatively or positively, some political outcomes? Does it make sense to ask if, casually speaking, the presence of a robust Thai oligarchy after Thaksin’s emergence on the national stage has conditioned, constrained, shaped, or some other way constituted the various events leading up to the 2006 coup, the crackdown of red-shirted protesters in 2010, the national elections in 2011, and the current round of protests in a way that if there were no Thai oligarchy would quite simply have not have occurred? Does Jeffery A. Winters’ thesis in his 2011 book Oligarchy apply to national case of Thailand as well?

PM Yingluck has made a public statement saying that… [click here to continue to read full text]

*Originally published in New Mandala by T. F. Rhoden; all other written and photo credits appear on New Mandala. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

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