State enterprises monopolize Thai business

BANGKOK, 25 November 2009 (NNT) – Research by the Thailand Development Research Institute (TDRI) pointed out that state enterprises were the main factor creating business clusters and monopolizing Thai business.

The TDRI’s executive Dr Duenden Nikhomborirak said that top 20% of registered companies accounted for over 80% of overall wealth in the Stock Exchange of Thailand (SET). Bottom 20% shared less than 1%.

From 2003 to 2008, the top 20% companies have expanded its growth from 81.02% to 86.28% with an average growth rate of 20%. Growth of the bottom 20% has contracted from 0.93% to 0.53%.

“It is obvious that a small company could grow to a certain extent then stop, contrary to a conglomerate” said Dr Duenden.

She claimed that these conglomerates were state enterprises since its total revenue accounted for over 50% in the SET, allowing them to dominate Thai business sector. Most of them operate in non-trade sector.

Dr Duenden added that in the past 10 years there have been just only 74 complaints submitted, but she believed there would be many more.

Thailand was the first country in Southeast Asia who passed Trade Competition Act10 years ago, but did not declare direction of business integration. State enterprises and cooperatives are also excluded in the law.

“I can say the law cannot control inequitable business conduct. It does not only exclude state enterprises, but also allow high-ranking managers from the public sector chair the board. It creates overlapping interests”, Dr Duenden explained.

Dr Duenden suggested that the act should be amended to re-consider a mix of a committee, not allowing a commerce minister chairing a board. Committee members should also be qualified with long experiences regarding laws, economics or other fields directly related to the act.

The government should define clear processes and directions of regulation drafting concerning good governance. Regulatory Impact Assessment should also be considered.