logo logo

US-Thai FTA: Shin Corp deal could affect FTA talks

The Nation, Thailand

US-THAI FTA: Shin Corp deal could affect FTA talks

By Wichit Chaitrong

17 January 2006

TDRI researcher warns of risk to telecom sector liberalisation.

The Shinawatra family’s reported plan to sell off its stake in Shin Corp Plc to Singapore’s Temasek Holdings might complicate the Thai-US free trade talks and stall negotiations, said a researcher from the Thailand Development Research Institute.

Somkiat Tangkitvanich, a TDRI research director, expressed concern that the Thai negotiating team on telecommunications service liberalisation may be influenced by Prime Minister Thaksin Shinawatra’s telecom business, especially now that the US has stated its interest in providing satellite service directly to clients here in Thailand in direct competition with Shin Corp unit Shin Sat.

Telecommunications service is one of main agenda items in the Thailand-US free trade talks. Assistant US Trade Representative Barbara Weisel, who heads the talks, said Thai and US officials hadn’t gone through the details of market access for telecommunications service liberalisation during last week’s meeting in Chiang Mai. But she expected both sides would discuss this issue soon.

“We expect marathon talks on this issue,” she said last Wednesday. Both sides discussed telecommunications service liberalisation late last week.

Sources said the negotiations over market access of telecommunications liberalisation were tough. The US called on Thailand to treat US investors in the same way it treats domestic investors under a “national treatment” requirement.

Somkiat yesterday raised concerns about whether the Thai negotiating team on the telecom sector would be independent enough to make a decision about opening a sector in which the Shinawatras have holdings.

Over the past weeks, the market has been jumping on speculation over the Shin Corp deal and the intense debate over the Thailand-US FTA talks. There is a linkage between the two events as Prime Minister Thaksin’s family has a vested interest in the telecom sector while the US has put telecom market access on the table for negotiations.

Some critics have challenged Prime Minister Thaksin Shinawatra to open the telecom market for the United States to demonstrate that he does not have a personal interest in the trade deal.

Other speculated that selling of Shin Corp might be a signal that the telecom will be liberalised.

Somkiat, who specialises in the information economy, said there were many possible outcomes related to the Shin Corp deal and free trade negotiations. The National Telecommunications Commission (NTC) which joined the trade negotiations may come under pressure from vested interests, according to Somkiat.

The FTA talks involving the NTC have nothing to do with the premier, according Choochart Promphrasid, chairman of the National Telecommunications Commission.

“We have done everything according to procedure and with transparency,” he said.

However, there are several issues on which both sides could not bridge their differences. For instance, questions remain whether US companies would be able to use joint facilities such as power poles in providing services to local clients.

Moreover, the US is likely to raise the question of whether its companies would be able to lay cable networks in Thailand’s coastal areas.

The next round of talks will resume in around six weeks. However, a date and venue have yet to be set.

In case the Shinawatra family decides to sell its entire stake in Shin Corp, the Thaksin camp may promise the buyers that the Thai government will not fully liberalise the telecom sector to protect the industry for a certain period of time, said Somkiat.

Even if the Shinawatras choose to retain a majority in parts of their telecom empire, like satellites, the government might still provide protection for the whole telecom sector.

The US has demanded market access to the telecom sector including the operation of satellites, the new generation of 3G mobile phones and lease lines. Somkiat said that an open satellite market would affect Shin Corp which holds a stake in Shin Sat which operates satellites. Giving US firms access to the mobile phone market would also pressure Shin Corp’s affiliate Advance Info Services, the largest mobile-phone operator, and other local operators waiting to win 3G mobile phone contracts.

Somkiat said telecom market liberalisation was much needed in Thailand as businesses and individuals currently shoulder high costs for using information technology. He said market liberalisation would lead to lower costs of broadband Internet services and television broadcasts in particular.

“We have to wait and see what the Shin Corp deal is and what the outcome of the free trade agreement will be,” he said.

After the trade talks in Chiang Mai last week, Nitya Pibulsonggram, head of the Thai negotiators, said that the two side had yet to discuss market access for the telecom sector.