Thirteen out of 100 families surveyed were found to have political connections. These families - including the Shinawatras and the Bhodaramiks - witnessed a 107-per-cent increase in capital gains from their companies between January 2001 and December 2003, and 368 per cent from January 2001 to December 2004.

These are considerably higher than those with no political links by 57.3 per cent and 218 per cent, respectively, during the two periods.

While the companies they owned enjoyed a higher market share in their respective markets, the study showed that their expansion in the absence of good governance practices cost the nation billions of baht.

The TDRI paper also points out how the Thaksin government, manipulating telecommunications policies, allegedly cost the country around Bt71 billion. The Shinawatra family is the founder of Thailand's largest telecom holding firm Shin Corp Plc. The family disposed of its entire stake in January to Singapore state investment arm Temasek in a deal worth Bt73 billion.

The paper, completed by TDRI researcher Somkiat Tangkitvanit, will be presented at the TDRI annual conference this weekend. Somkiat's study is based on the research of Pramual Bunkan-

wanicha and Yupana Wiwattana-kantang this year on the capital gains of politically connected firms.

The TDRI scholar pointed out that one alleged case of favouritism is the 2003 resolution of the deposed Thaksin government, which permitted telecom concessionaires to deduct part of their concession fees to be paid as excise. This prompted a decline in concession revenue of the state concession owners.

The current government will consider terminating that resolution on December 19. Somkiat pointed out that the excise tax has hit the state concession owners' revenue.

Another case is when the previous Board of Investment granted a corporate foreign income tax break to the iPSTAR broadband satellite project of Shin Satellite on November 19, 2003, the third year of the Thaksin government. The tax privilege period is eight years.

Somkiat reasoned that the iPSTAR project should not have investment promotion privileges as the satellite could easily compete with rivals with its low operating cost and higher capacity.

He added that the TOT decision to allow Advanced Info Service Plc to pay a flat rate of 20 per cent of the concession fee on its prepaid phone service until the end of its concession period also favoured AIS at the expense of TOT. AIS, which is the cellular subsidiary of Shin, holds a TOT concession. The story began in 2000 when the second-largest cellular operator Total Access Communication, which holds CAT Telecom's cellular concession, asked TOT to change the access charge payment of its prepaid phone revenue to 18 per cent per month from Bt200 per user.

The access charge is the cost that all CAT's cellular concessionaires, including DTAC and True Move, have paid to TOT for access to different networks through TOT's facilities.

Shortly after that, AIS asked its concession owner TOT to change its share of prepaid phone revenue with TOT to a flat rate of 20 per cent per month throughout the remaining concession period. TOT granted a 25-year cellular concession to AIS in 1990.

Under the original concession, AIS had to share the prepaid revenue with TOT at incremental rates, starting at 20 per cent, then moving to 25 per cent and later 30 per cent. TOT decided to grant the requests of DTAC and AIS in April 2001.

Somkiat said that TOT lost concession revenue of Bt13 billion from 2001 to September this year as a result of the reduction of revenue share for AIS.

Another case is the TOT cancellation of the concession of paging firm Advanced Paging in 2002, which meant TOT lost the total concession revenue of Bt500 million it should have gained from 2002 until the Advance Paging concession expired in 2005. Advanced Paging is an AIS subsidiary. However not only Advanced Paging, the paging firms of CAT Telecom Plc at that time also exited their concessions, given that all paging firms were experiencing huge losses due to competition from cellular services.

Telecom Reporters

The Nation