Attempts by Government to Privatize the Government Tobacco Monopoly were Successfully Obstructed
ATTEMPTS TO DENATIONALIZE THAILAND TOBACCO MONOPOLY (TTM)
The TTCs have made several intrusions, i.e.:
- July 1993 - Philip Morris proposed to pay the TTM for its factory to 'finish' its products from prepared materials. It was refused. If the TTM agreed it would get some extra income from PM but the government would lose the import tax and step 1 (courtship) of denationalization would begin ( Krungthep Turakij Newspaper 21 July 1993, p.1)
- August 1993 - The newspaper Bangkok Post dated 12 August 1993, page 24 titled “Tobacco Monopoly hard to privatize, director says”
- “THE Thailand Tobacco Monopoly (TTM), despite being on a list of state enterprises which the World Bank recommends the Government should privatize, is likely to be among the last to be privatized.
- TTM director Seri Pansuwan told Business Post this was because there would be many problems if the monopoly was privatized.
- The first main problem involves ownership of the land on which the TTM’s headquarters is located.
- The plot belongs to the Treasury, so the Government will have to introduce legislation to transfer the land to the TTM. After that, another act will have to be enacted to change the TTM’s status from a state enterprise to a juristic one before its shares can be sold to the private sector.
- “These processes take time,” Mr. Seri said.
- The second problem is that the monopoly is a major income-earner for the Government. Each year, the enterprise pays about 16,000 million baht in excise tax and retail sales tax to the Government. It also contributes about 4,000 million baht in profits to the Government .This means the Government has a fixed income of about 20,000 million baht per year from the TTM.
- “If is was privatised, the Government would lose this huge sum of income,” Mr .Seri noted.
- The other problem concerns the enterprise’s powerful workers’ association.
- TTM’s labor union was previously one of the most powerful in the country and played leading roles in labour movements in the past. At present, although state-enterprise workers are not allowed to set up labour unions, their workers’s association is somehow still powerful, Mr Seri said.
- Privatization could also affect the Government’s popularity, he said.
- If The Government really wants to privatize the enterprise, Mr Seri suggested that it should explain how it would benefit the TTM and the nation.
- Instead of fully privatizing the enterprises, Mr Seri said the Government might partially privatize them by allowing the private sector to invest in certain areas of their activities.”