Understanding the formation of the Crown Property Bureau and why it matters to protesters

On November 19, 2020, King Rama X appointed former army chief General Apirat Kongsompong deputy director of the Crown Property Bureau (CPB). Seemingly in response, pro-democracy protest leader Panupong ‘Mike Rayong’ Jardnok announced that the next major protest would be held at the Crown Property Bureau. 

The institution has been central to both political and economic development in Thailand but is shrouded in mystery. Labeled “the monarchy’s investment arm” by Associate Professor Porphant Ouyyanont, the institution is the holding company of the Siam Commercial Bank, the Siam Cement Group  (two of the largest companies in Thailand), and has billions of dollars in landholdings. 

It has been estimated that the royal wealth portfolio is worth more than US$40 billion. In contrast, the Queen of England’s assets are worth around $500 million. It will be the primary beneficiary of the Siam Cement Group’s IPO of its packaging arm, which is set to be Thailand’s second-biggest listing this year raising an estimated $1.5 billion. 

The power and prestige of the Thai monarchy depend on the income derived from this institution – giving the Crown Property Bureau huge financial and political influence. 

How did the institution emerge, evolve, and what role does it continue to play in the Thai economy and Thai politics? 

The Foundation and Rise of the Privy Purse Bureau

According to the Crown Property Bureau website, the institution traces its lineage to the Department of the Treasury under King Chulalongkorn.

In 1890, as part of the overall modernization of the Thai administrative system, expenses for royal life were formally separated from the government budget and placed in the hands of the Privy Purse Bureau (PPB) within the Treasury.

Approximately 15% of the government’s revenue was funneled into the Privy Purse. 

Initially, income was used to fund the overseas education of princes, honoraria for palace officials, the upkeep of concubines and to maintain the public presence of the royal institution. However, as surpluses accrued, members of the royal family began using Privy Purse funds for investments in commercial real estate and infrastructure development. Professor Akikra Suehiro described the Privy Purse Bureau as “a kind of proto-investment bank which exclusively served as the core organization to undertake private business on behalf of the king.” 

There was no better time for such an investment institution to come to market. Thailand at the turn of the century was a rapidly developing country, a Southeast Asian entrepot in a colonial-era trading economy. Between 1890 to 1900, more than 100 roads were built. Bangkok was becoming increasingly settled and developed as Siam’s modern capital. Tax revenue skyrocketed with a system of centralized tax collection under the Treasury Department. 

This not only increased Privy Purse funding, but also increased opportunities for investment. The royal family acquired land along Rattanakosin Island, developing the shop-houses to accommodate the huge influx of migration to Bangkok and marketplaces to accommodate increased economic activity – “to provide housing and increase opportunities for trade,” reads the official website.

By 1902, according to Ministry of Agriculture statistics, 4,085 rai had been acquired under the Privy Purse Bureau, 45% of which was located in Sampeng, 42% in Dusit, 11% in Bangrak and 2% within the city walls.  

In addition to accumulating land in Bangkok, the Privy Purse Bureau founded two other organizations: the Siam Commercial Bank, established in 1907 as the first Thai bank, and the Siam Cement Company, established in 1913 to make investments in various parts of the growing economy. Its lending and land accumulation activities were synergistic, as the land was often obtained through mortgages when non-business minded aristocrats and senior bureaucrats failed to repay their debts to SCB. 

The Privy Purse Bureau also served nationalist purposes.

In 1914, well after England’s industrial revolution and emergence as a financial hegemon, most of Siam’s infant industries were funded by European investment. Royal investment in private enterprise became a way of asserting Siamese independence from foreign capital. In 1918, SCC had launched its first shipping venture called Siam Steamship, ostensibly to compete with the likes of the Dutch East India company.

By 1910, the end of Rama V’s reign, the Crown was the country’s largest property holder and largest land investor. The Thai monarchy held immense economic power. 

The Crown Property Bureau: Decline and Stagnation

The Privy Purse Bureau continued to receive 15% of government revenues but soon fell into debt. King Vajiravudh (Rama VI), King Chulalongkorn’s successor, spent Privy Purse funds on lavish nation-building projects and on royal display, moving the institution away from commercial investment. By 1919, the Privy Purse Bureau accumulated 15 million baht of debt. 

By King Prajadhipok’s (Rama VII) reign, scrutiny on royal finances became intense. This was in line with increased tension over the monarchy’s role in politics, which built up to the 1932 Khana Ratsadon revolution. The so-called ‘People’s Party’ catalyzed the nation’s political transformation from absolute to constitutional monarchy. 

In the wake of the revolution, the Privy Purse’s allocation was reduced and its properties divided:  properties personally belonging to the king were separated from those that belonged to the state, such as palaces. State properties, SCB, and Siam Cement ownership were transferred to a new body called the Crown Property Bureau, administered by the Ministry of Finance with directors appointed by the government.

In the 1930s and 40s, politicians used CPB funds to finance state enterprises as part of a war-like culture of economic nationalism. 

The (re)turning point came in 1948, amidst the Cold War, when the political role of the monarchy was once again on the rise. In April 1948, Plaek Phibunsongkram was brought back to government in a royalist coup. That same year, the Crown Property Act reconstituted the CPB as a juristic person controlled by the palace. Board members were to be chosen by the king.   

The CPB, however, did not return to its role as a driver of domestic capitalism. Rather, it remained a passive investor until 1987 when Chirayu Isarangkun Na Ayuthaya took the reins. He developed a much more aggressive and commercial outlook for the institution. Prior to the 1997 Asian Financial Crisis, CPB’s annual revenue was around 3 billion baht. 

The CPB was hit hard by the financial crisis with revenue dropping by one third, to 2 billion baht. The organization underwent a large-scale restructuring process, which saw SCB and Siam Cement refocus on core businesses, and more CPB control institutionalized in both portfolio companies. Eventually, it built itself back as a more commercially savvy, internationally-oriented institution – albeit one that had a much lower domestic profile, even if it retained its economic clout. 

As it stands today

The CPB was catapulted back into the public spotlight under King Vajiralongkorn (King Rama X). The official website alludes to this: it dates the CPB’s reconstitution as a juristic person to the Royal Assets Structuring Act of 4 November 2018. 

In reality, the Act did far more than that: it granted King Rama X full, personal ownership of the CPB’s assets. The distinction between the royal family’s private holdings and state assets – introduced in 1935, respected at least nominally in 1948 – no longer exists. 

“All crown property assets are to be transferred, and revert to the ownership of His Majesty so that they may be administered and managed at His Majesty’s discretion,” the Crown Property Bureau said on its website in 2018.

Under the current act, the King can set up a board of directors to oversee his assets based on his own discretion while the law also prohibits the transaction of any royal asset without His Majesty’s approval.

During the reign of Rama IX, the board of directors for the royal assets answered to the finance minister, until the law was changed with the approval of Prime Minister Prayut Chan-ocha’s junta government in 2018.

For some pro-democracy protesters, the transfer of CPB ownership represents a step in the wrong direction.

In the United Front of Thammasat and Demonstration (UFTD)’s 10-point manifesto for reforming the monarchy, first read to the public by Panusaya “Rung” Sithijirawattanakul, students call for the reversal of the 2018 Act. 

The UFTD is part of the latest student-led pro-democracy movement, Ratsadon, whose protests against Prayut and his administration have gripped the nation in the past five months.   

They believe the act should be withdrawn so that control of the Privy Purse does not solely belong to His Majesty the King.

Now, the CPB, which gains its yearly budget from taxpayers’ money through the government’s fiscal budget, is acting independently of the government.

According to the fiscal budget for 2020, the government has set aside 29.73 billion baht (nearly $1 billion) on the royal institution, amounting to 0.93 per cent of the total fiscal budget.

Another one of UFTD’s 10 demands calls on the government to lower the budget allocation for the Privy Purse, especially as the country heads into one of the worst economic recessions in the country’s history due to the COVID-19 pandemic. 

The 2018 Act has also been highlighted by Anon Numpha, one of the protest leaders of Ratsadon.

“There should once again be a clear differentiation between the King’s personal assets and royal assets that belong to the state,” he said.

By Jasmine Chia and Erich Parpart


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