The Shin Saga: It takes two hands to clap

Singaporeans might accuse the Thais of being fickle and having a poor legal and regulatory framework when it comes to managing foreign acquisitions of their national assets. Indeed, prevention is much better than cure, and moving in using the Thai military to seize assets is not an action that instills confidence in foreign investors.

The U.S., for example has strong regulatory bodies which are required to give their approval when major acquisitions are made. Cases in point are that regulatory bodies intervened and oversaw both the proposed CNOOC acquisition of Unocal and the Lenovo acquisition of IBM's PC arm. Thailand would do well in learning from other countries in developing a strong mergers & acquisitions regulatory framework to oversee politically-sensitive business assets, and to raise confidence to promote foreign investments. Jil in Pattaya has a smartly written post on this issue.

Yet pointing the blame at the Thais without doing some introspection with its own investment process does no favours for Temasek. It doesn't matter that the Thais ****ed up, you still lose your money! Billions of dollars of it!

As a nationally owned corporation, Temasek has to factor in the unique political risks it faces when making transnational acquisitions. Insisting on running Temasek as a private sector investment company systematically ignores the political risks it faces, and exposes Temasek to the risk of another similar incident reoccurring. Temasek needs to revise and reconsider its approach as "just another commercial investment firm," and build a unique investment framework for the unique investment firm that it is.

Indeed, it takes both hands to clap. The Thais need to get their regulatory framework in order, and the Singaporeans need to recognise the unique nature of their politically-linked investment company.

Incidents similar to the Shin issue can be avoided if either party properly takes these points into consideration.