“Now that public sentiment is going this way it’s not as difficult to talk about privatization,” she added. “I think it’s a good move (the privatization) and could probably set a precedent for other state-owned enterprises that are not performing well,” said Kirida Bhaopichitr, director of the Economic Intelligence Service at the Thailand Development Research Institute (TDRI), a Bangkok-based private think tank. THAI has suffered from a pandemic-driven collapse of tourism, representing as much as 20% of gross domestic product (GDP) in Thailand, but the flagship carrier was already wracking up losses in 2017-19 while tourism receipts were running high. A Thai Airways Boeing 747 passenger jet comes in for a landing in a file photo. The lack of a public outcry over THAI’s demise surprised many observers and analysts and is likely a reflection of the kingdom’s dire economic straits, with analysts predicting anywhere between a 5-10% contraction in 2020, and a general weariness of THAI’s long-running financial malaise. Some 70% of THAI’s estimated 245 billion baht (US$7.7 billion) debt is owed to foreign entities including large foreign banks.
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With less than 49% state ownership, THAI is no longer officially an SOE and thus not bound to SOE regulations or labor union contracts, a necessary step towards full privatization and rehabilitation.ĭespite signs that the Transport Ministry, which has traditionally controlled THAI along with the Thai Air Force, might still be trying to steer the rehabilitation plan, ultimately it will be up to the Bankruptcy Court and, more importantly, THAI’s chief creditors, to approve the plan. THAI lost its SOE status on May 22 when the Finance Ministry sold a 3.17% stake of its previous 51% holding in the national carrier to the Vayupak Mutual Fund, a state-backed fund set up in 2003 to manage and rehabilitate distressed assets left over from the 1997-98 Asian financial crisis. The question now is whether former army commander Prime Minister Prayut Chan-ocha’s coalition government can muster the political will to push for SOE reform after his first attempt wholly failed under his previous coup-installed regime that ruled from 2014-19. The landmark decision is potentially good news for shaking up the kingdom’s remaining 57 state-owned enterprises (SOEs), many of which are known for their loss-making, inefficient and corrupt ways. BANGKOK – Given the powerful vested interests involved and a general antipathy towards privatization of state assets among the Thai populace, many were surprised by the government’s decision to allow Thai Airways International (THAI), the national carrier, to go bankrupt rather than lend a lifeline.
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