No connections, no opportunities

The government should ensure that policies and regulations do not provide unfair benefits to particular groups, especially by giving monopolistic rights to control certain businesses. A report by the Thailand Development Research Institute shows that the expansion of corporations with monopolistic advantages comes at the expense of the country's economic growth.

The research report showed that a number of government regulations are the cause of the monopolistic nature of some businesses in the Thai economy. For instance, a number of state enterprises enjoy a monopoly in certain sectors. Moreover, the regulations for certain business licences are written with strict requirements that block newcomers from entering the business.

Monopoly businesses have unfair opportunities to profit from, at the expense of consumers. It is easy for them to raise fees, and consumers continue paying for their services because there are no competitors in the market. They also block the opportunities for small and medium-sized companies that are disadvantaged by unfair monopolistic regulations.

History has shown that a number of large businesses enjoy monopolistic privileges because of their close connections to politicians or government officials. Large conglomerates - like Japan's Keiretsu corporate model - are common in many East Asian countries, with governments promoting these giant companies in their worldwide expansion. Many big corporations in Thailand have flourished under similar circumstances.

The growth of these companies helps widen income disparity between the rich and the poor. It limits the opportunities for potential entrepreneurs to shine because, most of the time, contracts are awarded to the same groups of businesses that have strong connections to politicians.

According to a TDRI survey of companies on the stock market from 2004 to 2008, the distribution of revenue is becoming concentrated at the top. The top 77 earning companies (the top 20 per cent) saw their share of revenue rise from 81.02 per cent to 86.28 per cent, while the 77 lowest-earning companies (the bottom 20 per cent) saw their share drop from 0.93 to 0.53 per cent.

The survey also shows that the growth of the top-earning companies on the stock market was a result of government contracts. Large listed conglomerates tend to flourish in the non-trade sector that does not have a presence in overseas markets. These include telecommunications, construction, energy and banking. This is different from big listed companies in other countries - such as Acer or Evergreen of Taiwan - which generate substantial income through their services and products on the world market.

Some large Thai corporations are subsidiaries of state enterprises, and at times their staff are resistant to change, even though the companies may run in the red and are affected by poor performance. Unfortunately, this situation is likely to become worse because Thailand does not have effective laws to prevent monopolistic business practices.

The government and concerned agencies must show that they are serious about correcting this unfair structure. They should address the issue by adjusting rules and regulations to create a fair environment for smaller businesses with potential. Otherwise, the Thai business environment will continue to be dominated by large corporations with special connections. And this could lead to a never-ending source of political tension that may erupt at any time.