Friday Asia Digest – Thai King’s Fund Far From Benevolent | Foreign Investment in India Hits Rock Bottom


“The Crown Property Bureau” (CPB) is the main fund supporting Thailand’s king – at 85, the world’s longest reigning monarch – and his family. For decades, the fund fought to maintain it’s image of altruism and benevolence, with its annual reports emphasizing helping society over making profits – this in spite of the fact that its portfolio is estimated at 41.3 billion USD – more than three times that of the British throne(!)

A quick web search for the definition of “Benevolent”, however, reveals the meaning of the word to be “Well meaning and kindly” or, alternatively, “(of an organization) Serving a charitable rather than a profit-making purpose” – definitions that Amporn Pannarat, facing eviction from her home of six decades, would most likely be hard pressed to agree with. As the CPB seeks to boost returns and regenerate Bangkok (whose typical slums are pictured on the right) with its first commercial development project, it has for the first time become exposed to scrutiny it has largely avoided because of laws used to shield the monarchy from criticism – Thailand’s constitution states the king “shall be enthroned in a position of revered worship”, and its law mandates jail sentences for defaming, insulting or threatening the king, queen, heir apparent or regent. Non-Thai entities aren’t bound by these laws, however, and international attention has now turned to the CPB’s activities, with extensive coverage in “Bloomberg” and various other media outlets world-wide condemning its practices, lack of transparency, and all-but-absolute immunity to scrutiny.

The lack of clarity regarding royal property became apparent last year, when German liquidators seized the Crown Prince’s airplane to force payment on a claim against the Thai state. The government, which said the plane was the prince’s personal property, provided a letter of guarantee for 38 million euros (49 million USD) to secure its release. An adviser to the CPB has dismissed calls for more transparency, saying the CPB has undergone a voluntary government audit. “You cannot go into the bedroom of the king,” he was quoted as saying. “This is unlike in the U.K. – you can take the picture of the naked someone in the palace. That’s not our culture.”

Thailand, which in recent years has been hailed as one of Asia’s stellar property markets, with the capital, Bangkok, and the island resorts of Phuket topping the world’s most rapidly growing luxury market lists, is caught between a rock and a hard place, as it seeks to cement it’s position as a major Asian economy, similar to Singapore and Hong-Kong, while at the same time struggling to preserve it’s centuries old traditions of monarchy, devout Buddhism and associated moral values. The country’s reputation as one of the world’s largest child prostitution tourism hubs, however, as well as accusations of rampant and officially-sanctioned corruption, which in recent months has also made international headlines, as covered in previous digests, is seriously hampering these efforts.

India’s Corruption Also Takes Its Toll

A survey titled ‘Emerging trends in real estate 2013? by the Urban Land Institute and Price Waterhouse Coopers reveals that India‘s top three cities, Bangalore, Mumbai and Delhi, have sharply slipped to 19th, 20th and 21st positions respectively in the list of 22 investment destinations in the Asia Pacific region. “The uncertainties in the real estate market is holding back international investors from investing in the country as they were doing in the last few years. Given the current scenario, where there is little or no clarity on policies, foreign investors will continue to adopt a cautious approach”, the report claims. As mentioned in last month’s digest, even the country’s biggest developers are often requesting as much as 30% payments on all new properties in cash, or “Black Money”, as it’s known in India – with accusations of improper dealings, bribes and other illegal connections between the country’s leading politicians and its largest developers a common theme in national and international newspapers. As a result, it would seem, the country, which has also been hailed in recent years as one of Asia’s “rising stars”, is no longer considered an attractive investment destination for international investors.

Global Gossip

* Topping the list of Asia-Pacific investment destinations in that same report was Jakarta — Indonesia’s burgeoning capital of nearly 10 million people — which is predicted to be Asia’s top real estate market in 2013, ahead of cities such as Hong Kong, Singapore and Sydney, in Australia. Growth in demand helped Jakarta jump 10 places from its 2011 ranking, but PwC warns the city’s real estate scene is not entirely rosy. Difficulties in finding inexpensive bank loans, trustworthy local partners and land with disputed ownership all mean “caveat emptor” — buyer beware.

* Speaking of Singapore (pictured to the right), the city-state has not only beaten Hong-Kong as preferred investment destination for 2013, but also as the preferred home away from home for “mobile millionaires” – high-net-worth individuals who spend 50% or more of their time away from their countries of origins. Almost 33% the millionaires in Asia who live, work or spend more than 50% of their time outside their countries of origin prefer Singapore, while 24% pick Hong Kong, the second most popular in the region, RBC and The Economist Intelligence Unit said in a joint research report.

* The International Monetary Fund (IMF) has joined the chorus of voices cautioning Hong-Kong authorities against an impending property crash, as previously reported on various digests. “A sharp price correction would lead to falling collateral values and negative
wealth effects, which could trigger an adverse feedback loop between economy activity, bank lending, and the property market”, the Washington based organization has been quoted as saying. Hong Kong leader Leung Chun-ying had warned last week that the city needed to
boost its housing supply and create more living space or risked losing its “best and the brightest” talents.

(Partial list of sources – “CNN“, “Live Tradings News”, “FirstPost, India“, “Bloomberg“, “Channel News Asia”)

(Pic 1 – A spiked wall separating a Christian Mission from a Slum in Bangkok / “WordCat57“, Singapore Skyline / Dinukshan Kuruppu)

About Author

Ziv Magen

Ziv Magen (G+) is an Australian, and has been living alternately in Japan and Australia for the past decade. "Born and bred" an IT project manager, he has made the transition to full-time real-estate investing several years ago, and subsequently opened a buyers' and proxy agency - assisting others in remotely capitalising on Asia's booming property market.

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