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Sustaining growth in Thailand

Interview - May 8, 2012
The Crown Property Bureau is the institution responsible for protecting and managing the royal assets and property as well as supporting other activities for the benefit of Thai subjects and society. Its Director General, Dr. Chirayu Isarangkun talks to us about the institution’s role in promoting social economic development in Thailand

A key issue in Thailand is inequality between the wealthy and the less well off. As the director of the Crown Property Bureau, how do you manage the balance between maintaining growth in royal assets while equally encouraging development throughout Thailand?

I see that there are three main types of assets that I have to look after—that it is my duty to look after. One is the investments that we have made in listed companies, going back 100 years. They are the two main flagships there. One is the Siam Cement Company, and the other one is the Siam Commercial Bank. The Siam Commercial Bank is a little bit older. It has just celebrated its 100th year a few years ago, and Siam Cement will celebrate 100 years in a few years time. So both of them are fairly old. One is an industrial conglomerate, and the other one is the first commercial bank in Thailand. Both of them are quite independent. What we are sure about is that they are operating under the most stringent corporate governance. Corporate governance includes social responsibility. In that regard, I think that we as the major shareholders are seeing that they are behaving as very good corporate citizens, and are contributing not only in their duty as banks and industrial conglomerates, but they are also leaders in their social contributions and social responsibility.
For instance, you might find it surprising that two weeks ago I visited a province in the north where there is a cement company. I went there to celebrate 30,000 check dams that the cement company there, Siam Cement Lampang, was instrumental in working with the communities to develop. When you are talking about inequality, we have to go to the roots of the inequality. These are communities and villages that are not having a very good life. Why? The rain comes and it goes right down into the sea. It creates damage on the way, and it does not retain moisture and things like that. But by using His Majesty’s initiative, and working with the communities of villagers, we are now celebrating 30,000 dams built by the villagers, empowering the communities. Speaking this language, you might be a little surprised that an urban industrial conglomerate is speaking like an NGO. We have now come to the stage whereby the responsibility of social contribution has come to the stage of not only merely contributing money, but also creating some sustainable development. So this is just an example of one location.

So it sounds as though the royal assets are used in a way that is in tandem with forward thinking and a socially responsible philosophy in mind?

It is consistent with the general policy wisdom of His Majesty, which is consistent. Two weeks ago we had a chance to have a session at the world level with United Nations Conference on Trade and Development (UNCTAD). UNCTAD is thinking about these things, and trying to find a way to solve or alleviate these problems. People say it has to be the government, but the government has great difficulty. They are short-term. They want results very quickly, but in fact you need a lot of patience. You need cooperation or support from the other sectors, NGOs and companies.

Regarding the recent flooding in Thailand. It has been well documented that the King was aware of the potential for such a disaster. But it appears he was unable to influence to the extent within his constitutional rights to make a major impact on preventative measures. Can you explain some of the challenges that the royal household faces in influencing such changes that are important to society as a whole?

My view is that as the country progresses, for instance, during His Majesty’s reign, Thailand’s population has increased four times. The economy has increased 32 times. It was cited that it was one of only 13 countries in the world that had an average annual growth rate of at least 7% for 25 years, one of thirteen countries. The World Bank report said that it is unlikely that any country will achieve 7% annual growth rate for 25 years ever again in the future. It was during a period of time when countries had the opportunity to do this. But only growth is not enough.
Population growth has increased, environmentally there has been a big cost to this growth, lots of cutting down of forests, and also, attitudes were against long-term sustainability. Everyone was trying to grow faster and faster. All through the King’s reign, he has tried to balance this.
He cannot solve all the problems. Problems increase because of environmental problems, attitudes of people, and the number of people has increased. So, with the floods that you mentioned, he came out to speak about flooding 17 years ago. Someone got the clip out. He has done it throughout his life, but the last time Sonkiat Onusimon, who is a big media person, got out a clip from 17 years ago, when the King came out to speak to the people about impending floods. But 17 years have elapsed. New villages have been created which are in the path of the water, so lots of changes have taken place during this time. I think, personally, that you should not blame the government entirely for not doing what the King said 17 years ago. Things have changed. It is the responsibility of everyone that they should monitor and look after the affairs of the country. You cannot put all the burden onto the government or anyone; everyone should have that responsibility.

Coming to the philosophy of a sufficiency economy, this is increasingly becoming synonymous with Southeast Asia. How does this philosophy apply to Thailand?

I have been a follower of these World Bank development strategies since I came back to work in the 1960s. I did not really know that His Majesty had been saying these things. Mostly, he has been saying these things at university graduation ceremonies when speaking to the graduates. But to me, it is quite amazing going back 30-40 years, when everyone was so happy that Thailand is making rapid growth. The last thing he said was that being a tiger, because at that time they were talking about the Asian tigers, he said “Being a tiger is not very important. It is much better to have balanced growth, and that most people have enough to live and to eat.”
This became known as sufficiency economy. But most people, when they listen to His Majesty, they look at him admiringly, and sometimes they do not understand what he is getting at. So this statement passed by for almost 20 years, until the 1997 crisis. At that time, he said, ‘I have talked about this before, that being a tiger is not very important.’ This is what happened in that financial crisis, out of taking too much risk, being interested only in high growth without the foundation of the economy so everyone said: ‘OK, now we can really take heed of his advice.’
Without the 1997 crisis, no one would have paid all that much attention to the sufficiency economy. After that people decided to heed His Majesty’s advice.
It was the NESDB’s (National Economic and Social Development Board) eighth or ninth five-year plan since 1960, when they started to say they would use this philosophy as a guide.

As Director General you lead in this direction, what are the core functions of the bureau in trying to influence and emphasise strategy in this direction?

I think it was lucky that during this time I became interested—everyone became interested. I thought, if I am working here and I do not put this into practice, I would not be doing my proper duty. So I applied it to the work here at the CPB. Before, strictly looking at the legal duties of the Crown Property Bureau, I thought that it was my duty to, just like people who look after assets, to make maximum use of the assets. And at that time, of course, we at the Crown Property Bureau suffered because of the 1997 crisis as well. The Crown Property Bureau was not prepared for the 1997 crisis. You can understand that at SCG, which was our main flagship, they did not pay any dividend for about three years after the crisis. Siam Commercial Bank, apart from not being able to pay any dividend for even longer, I think about four or five years, they needed massive recapitalisation, drawing upon their main source, the Crown Property Bureau.
So at that time, I felt that the legal definition of the Crown Property Bureau did not help me much at that time. Fortunately, SCG did not need any capitalisation. They were able to solve their problems with a lot of perseverance and ability. But after we came up again for air, after being in the water for a few years, now we thought that now we have to think not only about the legal duty of the CPB. But, there are chapters in the new book that will answer a lot of the questions that have been asked. Let me point to two. One is called “more from less”. It is a very good assessment of the sufficiency economy, and His Majesty’s development thinking.
There is one chapter on the Crown Property Bureau. But I am trying to give you my opinion of how we are developing into this present situation and present policy. It was like the rest of Thailand, and because I was involved in the dissemination of the sufficiency economy philosophy trying to get an understanding, the first place I have to apply it is towards the Crown Property Bureau. So for the last ten years, after we recovered, and we performed our duty about financial security, we are turning more and more to social projects.

Thailand’s international image has undergone some damage in recent years due to political instability and natural disasters. But how much of a priority is it for the King, and the royal household, to rebuild that image?

I am glad for one thing. In my opinion, the role of the Crown Property Bureau itself only, not the whole of the monarchy, but the Crown Property Bureau, since the last 40-50 years, its role in national development has decreased because the economy has grown. There are other players now. In the 60s we were almost the only institution foreign investors spoke to. ‘Please, CPB, come into the project for a little bit, have a 2-3% share, so if we have any problems, it would be reassuring to have you there to advise us.’ That is no longer true because there are so many good players available, the role of the Crown Property Bureau is less. But we are in the limelight, especially at the present time, the monarchy being part of the centre stage, we are being closely watched. We have to be exemplary in our actions. That is what we are concerned about at the moment. We are quite confident about our own security, and the fulfilment of our legal duties, but I think we have to be on the lookout at all times for how to behave appropriately, and to do as much good towards the solving of the problems that Thailand is facing. But how? Through His Majesty’s thinking and initiatives in trying to alleviate and help the government. If the government is expected to do everything on its own, they will fail.

Thailand has strong links with the United Kingdom. The Royal Family, the education system, etc… How important do you regard these?

Oh, I think that not only with the UK, but I think Thailand has to recognise, and I think His Majesty, if you look through his reign, he made a lot of effort to go out to create good relations with so many countries. If you look at another book called ‘The King of Thailand in World Focus,’ that was produced by the foreign correspondents’ club.
And I think that especially with countries that have royal families you will see this. Queen Fabiola of Belgium for instance is a very good close friend of Her Majesty the Queen. They really have a very good relationship, and the royal family in Belgium has a great deal of affection for the Prince and Princess here. Japan also has a very close relationship, Spain also has a close relationship. I am lucky to be a person who has seen this, rather than just read about it. For instance, Her Majesty still talks about the naval ship called Chakri Naruebet. It is the only small aircraft carrier that we have. We only have one aircraft carrier, and it is a very small one. It was built in Spain, and Her Majesty the Queen always says that it was the only ship christened by two queens. I saw the champagne hit the bow, and also by our Queen and Queen Sofia.

What direction we can expect the Crown Property Bureau to be moving forwards in?

You can see that there are lots of social projects. We have lots of slums. We have pockets of what we call ‘Congested Urban Areas,’ and the other word is a slum. We have surveyed that we have 100 of them in Bangkok. You will see that this is one of our main objectives at the moment. We want to improve their quality of life, but by empowering the community. If they come and ask for help only, wanting to help themselves, then we have to be strong willed and ask them to empower themselves first. But out of those 100 congested communities we have got 39 that we are working on. I am glad that now we have set up a fairly strong organisation within our bureau, working especially on community development and community empowerment.