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A very wealthy monarch grows wealthier

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Special To The Japan Times

On July 17, King Maha Vajiralongkorn once again intervened in Thailand’s legislative process by requesting a reorganization of the Crown Property Bureau, to pave the way for his total control of this financial wing of the monarchy. This could, in part, be perceived as the new king striving to consolidate his power in the early stages of his accession to the throne.

The new legislation was approved by the military government of Gen. Prayuth Chan-ocha, which appointed Vajiralongkorn as the sole authority over royal wealth. This dismantled the traditional mechanism put in place by his father, the late King Bhumibol Adulyadej, who appointed a government official to manage the crown property. Instead, under the new bill, Vajiralongkorn will set up a board of directors to oversee his assets.

There are two key characteristics of the legislation. First, the king is entitled to appoint the board members, as well as to remove them, at his discretion. Second, the law prohibits the taking away of royal assets without the king’s approval.

This is the first time since 1948 that laws governing crown property have been amended. Under King Bhumibol, the board of directors for the royal assets answered to the finance minister. Now it is independent of the government. As a result, the independent status of the Crown Property Bureau augments Vajiralongkorn’s power in making decisions about the future of the royal wealth.

For years, Forbes Magazine listed Bhumibol as the richest monarch in the world — a status often rejected by the Thai palace, ironically, as it was seen to be contradictory to the king’s own philosophy of self-sufficiency. The Crown Property Bureau is the corporate arm of the monarchy, performing as the major shareholder of the kingdom’s biggest cement company and one of the largest commercial banks.

But the most valuable assets owned by the royal family are huge swaths of land, much of it in prime areas in central Bangkok. Historian Thongchai Winichakul states that Bhumibol and his family as individuals, and the Crown Property Bureau as a corporate entity, hold majority stakes in myriad domestic and international businesses. These include luxury hotels in Europe and the United States (the Kempinski group, for example), a huge theme park in Spain, the largest insurance company in Thailand and several shopping complexes in Bangkok.

In 2004, the Crown Property Bureau recorded over $150 million in earnings. Reportedly, it controls assets close to $60 billion, which, according to the previous law, could be spent “at the king’s pleasure.” Undoubtedly, the financial status of the monarchy has dominated Thailand’s economic landscape. The superrich status of the king played a vital part in buttressing the political power of the royal family.

The success of the Crown Property Bureau derived from special privileges granted to the monarchy in conducting business in Thailand. For instance, the bureau pays no taxes. Its books are closed; it is not subject to audit by either public or private authorities. It is not accountable to any institution except to the king himself.

Moreover, the massive profit and revenue do not go to the treasury. Although the Crown Property Bureau is not a public property, in the aftermath of the financial crisis in 1997, which devastated the Thai economy, economic rescue came from public funds. At the same time, the regular operations of the Bureau of the Royal Household and the expenses of the monarch and his extended family members are taken care of by government budgets.

Despite the wealth of the Crown Property Bureau, the monarchy is allocated generous funds from the government for private and public expenses. Around $170 million annually in state funding covers the salaries of staff working in the Royal Household Bureau and other palace offices, including protection provided for the royal family by the security forces.

Separately, there is the “budget for the promotion of the dignity of the monarchy,” which is granted to government offices for propaganda works. This came to almost $400 million in 2003, increasing to $438 million in 2015, one year before the passing of King Bhumibol. Even royal projects, once funded by the Crown Property Bureau and royal purses, have been financed by the state budget since the 1980s.

Many royally initiated development projects were designed to uplift the quality of life of countless poor Thais in remote villages. From grand projects like irrigation and artificial rain, to smaller programs such as handing out goodies from the “royal pouch,” these became essential parts of Bhumibol’s usage of state funds to create an image of a people-centric and caring king.

Now with the newly organized Crown Property Bureau under the firm control of Vajiralongkorn — oft-criticized for enjoying an eccentric lifestyle — it is expected that the spending behavior of the monarchy will become even more obscure. Recently, he bought a mini-chateau outside Munich, called Villa Stolberg, with a price tag of €10 million. These days, he spends most of his time in Germany, often piloting a plane over Europe as a pastime.

But his absolute control over the Crown Property Bureau might not please the political elites. Some fear that political rewards could be diverted to the king’s favorites. This is not to mention that his notorious reputation could fatally damage the prestige of the institution from which such goodies flow. Although Vajiralongkorn seems to be able to work with the junta, the question is how long will it be before the latter falls out of royal favor.

Pavin Chachavalpongpun is an associate professor at Kyoto University’s Center for Southeast Asian Studies. He is currently visiting senior fellow at the Center for International Studies, London School of Economics and Political Science.