KEY POINTS:
When the going gets tough, the tough get buying football teams.
This twist on an over-worked phrase aptly describes Thaksin Shinawatra. Last week, the ousted Thai prime minister took time out from his busy schedule rehabilitating his image to buy English football team Manchester City.
Thaksin has long been Asia's answer to former Italian prime minister Silvio Berlusconi. Both are larger-than-life, self-made billionaires. Both are famously combative. Both were removed from office amid a swirl of corruption allegations (Berlusconi by election, Thaskin in a coup last September). And both now own football teams (Berlusconi owns AC Milan).
Shelling out £21.6 million ($56 million) for Manchester City may seem an odd vehicle for a comeback, political or otherwise. Sports experts already are questioning the wisdom of the deal; in the season just ended, the team finished 14th of 20 teams and last won a trophy 31 years ago.
From a PR standpoint, though, Thaksin's move is brilliant, especially as it came on the same day Thai prosecutors formally charged him and his wife over the acquisition of land from the central bank. Thaksin's saga says much about Thailand as the 10th anniversary of the Asian crisis approaches - and it's not all good.
Thailand's move to devalue the baht on July 2, 1997, set the crisis in motion. Its economy rebounded impressively from the turmoil; just two years ago, it was the star pupil among chastened Asian economies. In Manila, Jakarta, Kuala Lumpur and elsewhere, leaders were eyeing "Thaksinomics" as a means of spreading the benefits of economic growth.
These days, Thailand is an abject lesson in what not to do.
The generals who grabbed control wanted to restore the democracy and transparency lost after Thaksin rose to power in February 2001. After all, those who arguably benefited most from Thaksin's policies were his family and business associates.
The final straw came last year with the sale of Shin Corp, the holding company founded by Thaksin. It enraged Thais because his family did not pay taxes on the proceeds. The deal exacerbated street protests that culminated in Thaksin's ouster.
Yet if you're going to remove a democratically-elected leader, it's best to have a plan for success; a clear way forward to convince the populace and investors all's well. Sadly, that wasn't the case.
Earlier this year, Thaksin, who's been living in London, raised eyebrows by reportedly agreeing to pay Edelman Public Relations as much as US$300,000 ($392,000) to counter the negative press he was receiving. Thaksin thought better of it and scrapped his PR associations.
Perhaps Thaksin realised he'd be wasting his money. All the good PR he desires is being generated by the hapless generals running Asia's ninth-biggest economy. Their biggest accomplishment seems to be making people who despised Thaksin nostalgic for his leadership.
Controversial post-coup policies include capital controls, tighter foreign ownership laws, changes to visa rules, restrictions on retail expansion and curbs on alcohol sales, all of which opponents say discourage foreign investment.
Waffling on plans for the economy, on whether Thailand would do battle with Singapore's Temasek Holdings to reclaim Shin Corp and on which of Thaksin's policies would be revoked did not help.
Moves to freeze Thaksin's assets and dissolve his political party actually made many Thais feel sorry for him. These days, the Thai media is buzzing about another coup to replace the generals who grabbed power. Not knowing what to think, many investors have avoided Thailand.
As if orchestrated to tease the generals, the Manchester City deal reminds us the exiled Thaksin is still free, wildly rich and moving on to other things. It also reminds us that he continues to win the PR war against officials in Bangkok.
What has become of Thailand is a cautionary tale for Asia.
Leaders such as US President George W. Bush see free elections as the elixir for stable markets and prosperity. Perhaps, but only if popularly-elected leaders respect the principles of democracy when in power. Thaksin used his office undemocratically and Thailand's 65 million people will long pay the price.
It's something Asia's other leaders should take to heart 10 years after the Asian crisis. As important as it is to reform banking systems, reduce foreign-currency debt and amass currency reserves, it's also vital to create a stable political environment. Politics is the kind of wildcard that can scare investors away, indefinitely.
There's also a lesson for investors: Asian economies that one day drip with potential can unravel the next.
For all Asia's progress since 1997, political surprises are still a major risk that investors need to navigate.
Thailand is Exhibit A. Junta leader Sondhi Boonyarataklin and other officials in Bangkok need to leave the central bank to do its job. They need to be more transparent in their decisions. They must remember that investors controlling the capital Thailand needs to grow faster are watching carefully and will invest accordingly.
Finally, the generals need to do a little less worrying about new Manchester City boss Thaksin and think more about not scoring anymore economic own goals.
-BLOOMBERG
