[Intl-tobacco] Thai Govt. Scraps Privatization Plan -- Arthur Andersen Contract on Hold

[Robert Weissman]

A great victory for the Thai tobacco control movement!

19 July 2002
Govt scraps privatisation of Thai Tobacco Monopoly
SALINEE SIRIPRAIWAN
staff writer

The government yesterday decided to pull the plug on the long-awaited
privatization of the Thai Tobacco Monopoly (TTM), saying it would have
better control of the unit under its wings than under foreign investors.

"This company will not be listed on the Stock Exchange of Thailand and there
will be no initial public offering, which is in line with the governmentÕs
policy not to promote cigarette smoking among Thai people," TTM managing
director Suchon Watanapongvanich said yesterday.
Suchon said if the unit was privatized, with foreign companies having a
majority stake or management control, they would use TTM as a base for
expanding the cigarette market and could present a health hazard to the
country. The Thai Tobacco Monopoly, which has a monopoly on cigarette
production in Thailand, originally planned to privatize, and list its shares
on the Stock Exchange of Thailand. Various multinational companies had
expressed interest in a partnership with TTM.

Initially, TTM planned to sell a 30 percent stake in an initial public
offering by the fourth quarter of this year. The privatization was part of
the governmentÕs plan to raise funds for its budgetary expenses, and also
part of the government's commitments to the International Monetary Fund. The
IMF said that privatization of state owned enterprises was one of the
conditions attached to the $17.2 billion economic bailout loan.

Global tobacco giants like Phillip Morris , RJR Nabisco, and
British-American Tobacco have in the past expressed interest in
acquiring a
strategic stake in TTM.

Officials at British American Tobacco were surprised to hear the news but
declined to comment on the issue, saying they required more information
before making any comment. They said they issue a statement only after
receiving an official letter from the authorities concerned.

The move is likely to generate controversy as it would raise the issue of
whether the TTM plans to gradually close down its operations.

TTM's Suchon said instead of privatizing the company, they would set up a
limited company and reform its operations. The Ministry of Finance would
continue to hold a 100 percent stake in the company.

"We have to improve and upgrade the efficiency of the TTM in order to
prepare for more intense competition from foreign brands cigarettes," he
said.

Suchon went on to say that the state-owned firm would also delay its
plan to
sign an agreement with Arthur Andersen, the consultant firm for TTM's
organization restructuring plan.