voyager1970 » 26 июл 2009, 09:47
Thailand 'Elite' program in tatters
Thaksin's dream of luring the elite lies in tatters
BANGKOK: -- It started with a flourish and some wildly optimistic predictions but it looks like it may end with a whimper
It was one of the most ambitious plans initiated under the Thaksin Shinawatra regime and intended to give birth to the country's richest state enterprise.
In November 2003, Mr Thaksin proudly presented 80 gold Thailand Elite cards to international VIPs and eminent people, including Japanese trade chiefs and US banking and financial supremos. The cards promised fast-tracked immigration, discounts at luxury resorts and golf courses, and many other perks.
The optimistic estimates to attract the world's wealthy were mind-boggling; a million subscribers to generate a trillion baht in revenue.
But early signs were not encouraging. After four months, a meagre 400 memberships had been sold, barely a dent in the 100,000 target for the first year of operation. Panicky officials talked of targeting China's nouveau riche, and predicted they would attract 30,000 Chinese within 12 months.
But six years later, the total number of members is a risible 2,570, and the Thailand Privilege Card Company (TPC), set up by the Tourism Authority of Thailand (TAT), to run the scheme has a crippling net loss of 1.4 billion baht.
Next month, the Cabinet will be asked to decide the company's fate. The TAT is due to decide this Wednesday on whether the company should be closed, privatised, form a joint partnership with the private sector, or, come under the control of the TAT.
Reality has overtaken fantasy. "It was unrealistic in the first place with such an ambitious target of one million members," said Udom Metatamrongsiri, acting president of TPC.
The scheme was developed by TAT staff under the directive of the Thaksin government, which hoped that it could help generate income at "the rate of a leap of a frog", according to an internal company report.
Under the scheme, members obtained five-year visa entry, which was renewable once it expired. They also had access to unlimited privileged leisure services which included golf, spas and VIP transport in BMW 7 series vehicles.
"In principle, we cannot totally say that the scheme was unfeasible in the first place," said Mr Udom, a board member who took over the presidency earlier this year.
"I think the first generation of the company's executives would never think that what they offered as secondary benefits would become the company's big burden."
In the first year of operation, the company sold 139 Elite Card lifetime memberships. However, the number so far this year is a measly two. The total memberships equate to 2.5 billion baht in revenue, which has not all been declared in the company's annual financial statements. By law, Thai companies are permitted to spread income figures over a 10 year period, a practice which is stated in TPC's annual report (see graphic).
So how is it meeting financial commitments with companies involved in the scheme? According to Mr Udom, TPC has to pay every service fee to tourist facilities that its members use, including the golf courses, spas and luxury transport. This costs up to 100 million baht a year on average.
For example, the company pays 4,600 baht for its members to a play a round at one golf course. So far this year, there were 5,300 visits to golf courses by its members and 11,200 spa visits. Only 200 applied for the main privilege, renewal of the five-year visa.
Besides the big financial burden from the luxury services, Mr Udom has found flaws in the company's previous management. For instance, it paid some golf courses in advance with amounts of up to 20 million baht.
Another case involves the planned purchase of an IT system for 100 million baht to improve the company's communication services for its members. But there was never a clear explanation as to why the new system was needed, and the new board decided to suspend the project.
Mr Udom admitted that the company has been plagued with transparency problems, and some of its spending is now subject to investigation by the Office of the Auditor General.
A review by Thammasart University's Economic Faculty's Economic Academic Services Centre - commissioned by the company around two years ago - found the scheme would lose 26-60% on each million baht membership fee, based on modelling done on 2006 figures. The review recommended raising the membership fee to 1.8 million to generate a 20% profit on each membership.
But it found positive long-term economic spin-offs from the Elite Card service, as based on interviews they discovered members spent three billion baht in Thailand in 2006 and would invest 21 billion baht in future projects.
After the Democrat-led government instructed the company to review its operations in January, one option that emerged is closure.
If it does close, it risks having to pay back 2.5 billion baht to present members and the prospects of lawsuits if it cannot fulfil its commitments.
Mr Udom said another proposal is joint investment, with private firms boosting capital to run the company. The other option is that the company is transferred to the TAT, and run as an internal department.
"I don't know which will be picked by the government, but the first option [closure] is unlikely, as this will yield only bad results," said Mr Udom.
Mr Udom said he had cut down the company's costs for this year to 200 million baht. This has angered card holders as a number of premium leisure services and venues have been removed. The membership contract carries a clause that the company "reserves the right to change, revise, or withdraw the service without advance notice".
According to the major agent selling Elite Card membership, only about 12 golf courses are now available to members, down from 35 at the beginning.
Soontaree Chanprasit, president of Aktiv Holding, TPC's sales agent, said the scheme had run into problems partly due to inconsistent government policy.
She said whenever there is a change of government, the scheme is subject to review, and this affects the sales of cards and services for members. Currently, the situation is at its worst, as the company's board has suspended operations, including the sale of new memberships.
The cut in premium services have also prompted many complaints to her company from existing members. Up to 200 complaints have been reported by TPC so far this year.
One card member wrote to the company expressing that he felt sorry about what had happened to the scheme.
He said he personally could see how it should be improved, but "it might be too late now".
-- Bangkok Post 2009-07-26
Carpe Diem
"He who controls the present, controls the past. He who controls the past, controls the future."
-- George Orwell