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Foreign investors keep their heads as pressure grows on Thailand's PM
Amy Kazmin, FT Syndication Service

          BANKOK: Over two weeks ago, Thaksin Shinawatra, Thailand's prime minister, said his family's decision to sell Shin Corp -- the telecommunications empire he founded -- would allow him to focus on running the country undistracted by criticism that he was using his influence to benefit family business interests.
Instead, the Shinawatra family's Bt73bn ($1.8bn) sale of its 49 per cent stake in Shin Corp has sparked a sudden storm, marked by calls for Mr Thaksin's resignation, heightened tensions in the ruling party, and the biggest anti-government rally in Bangkok for more than a decade.
But so far, foreign investors appear unfazed by the business and political drama that has mesmerised so many Thais.
After pouring a record Bt75bn into Thailand's stock market in January -- lured by attractive valuations, signs of economic pick-up and prospects of better corporate earnings growth -- equity fund managers show no sign of changing their minds.
"Fundamentally, we are fine with Thailand," said Robert Penaloza, deputy chief executive officer of Aberdeen Asset Management in Bangkok. "All the signs show improvement, barring any more political unrest or any sort of destabilisation of the current administration."
Most investors expect Mr Thaksin, who was re-elected by a landslide a year ago, to ride out the storm.
However, some are concerned that large infrastructure projects and other sensitive policies, such as negotiations with the US on a free trade agreement, could stall as Mr Thaksin concentrates on shoring up his support to ensure survival.
Mr Thaksin, founder of the Thai Rak Thai ("Thais love Thais") party, appeared caught off guard by the outpouring of anger that followed his family's January 23 sale of its stake in Shin Corp to Temasek Holdings, the Singapore government's investment arm.
As the Thai public was digesting the complicated transaction, including the Shinawatra family's Bt73bn tax-free profit, the hot-tempered premier lashed out at the sale's initial critics, accusing them of being "jealous" of his family's wealth.
But many urban Thais found it tough to stomach the idea of Mr Thaksin, who portrays himself as a defender of Thai sovereignty, condoning the sale of such an important Thai company to an arm of the Singaporean government.
Shin Corp's assets include Thailand's largest mobile phone operator, a regional satellite company, a television channel and a low-cost airline, and many Thais have expressed reservations about allowing these to fall under the control of a foreign government.
Public anger was fuelled by the suspicion that Thai authorities had bent the rules to help the Shinawatra family avoid paying income tax on the deal, even as Mr Thaksin was polishing his image as the champion of Thailand's poor.
"People are disgruntled because they feel they have been had, but they aren't sure how," said a political analyst.
But while dismay at the Shin Corp deal led to a big turnout at the latest protest, an Assumption University poll found that more Bangkok voters would prefer Mr Thaksin in power than out. And while two cabinet ministers have resigned amid the controversy, the prime minister seems to be holding together the main factions of his ruling party.
Still, Supavud Saicheau, chief economist at Phatra Securities, said the deal, which had unleashed demands from the Thai public for "a higher moral standard" from its leader, would remain under scrutiny, leaving politics unsettled for the foreseeable future.
If anger did not abate, he warned, growing protests and tensions in the ruling party could eventually force elections.
Prolonged uncertainty could impede policies such as privatisation. Chai-anan Samudavanija, chairman of Egat, Thailand's state-owned electricity company, resigned last Monday citing fears that the planned privatisation could result in a foreign takeover of the utility.
Mr Penaloza said the nationalist fervour provoked by the Temasek takeover could undermine Thailand's otherwise strong appeal to investors.


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