Royal Rehab

Thailand's Crown Property Bureau gets a corporate makeover

July 10, 2003

By Eric Ellis


Thailand's royals live off the income of the Crown Property Bureau, created in 1936 as the absolute monarchy evolved into a constitutional one. The deal, which gave the bureau about half of downtown Bangkok and vast tracts elsewhere in the country, ensured that the royals would be supported in style without burdening the state. The CPB retains most of those holdings, as well as 35% of the country's biggest company, Siam Cement, and 10% of Siam Commercial Bank, both founded a century ago by royal decree.

All told, the royal portfolio has been conservatively estimated at about $20 billion. But when a financial crisis hit Thailand in 1997, the CPB saw its income plunge by a reported 75%, and it was forced to borrow about $200 million from its bankers to support the royal household.

Enter Yos Euarchukiati, 62, a rich, Western-educated scion of a prominent Thai banking family. What he saw was that the CPB had become an easy touch. When approached to buy shares in local companies, it almost always did, so as not to signal a lack of royal confidence. Although it is Thailand's biggest landlord, with 35,000 leases on its books, it didn't act the part. Many tenants stayed put after their leases expired. Others traded CPB plots without approval, fueling speculation. And rents hadn't been raised for decades. Thailand's police headquarters sits on a prime Bangkok lot, for which it pays about 1,000 baht ($23) a year.

After the financial crisis, Yos was asked to stir things up. "I have the trust of His Majesty," he says, "and that enables me to at least introduce certain ideas." One such idea: Raise the rents on CPB properties to levels approaching market value. Yos has also stopped the transfer of leases and restructured the agency, putting the property and equity holdings in separate divisions, both of which he heads. He has introduced a database to track leases and has begun selling unwanted holdings, including an 11% stake in Bangkok's famous Dusit Thani Hotel. He has also helped improve Bangkok's skyline, which is marred by as many as 300 unfinished buildings. One of them, the CPB-owned World Trade Center overlooking the CPB-owned Royal Turf Club, has a new tenant, who has resumed work on the tower, and the complex's mall is now packed with shoppers.

The CPB's new policy of instituting progressively higher rents across the board has made it unpopular in some quarters, but the agency is out of debt and generating about $50 million a year in income, according to one insider. And the market seems to approve. The CPB "is at absolute pains to do everything by the book," says James Moss of HSBC Securities in Bangkok.

But for all its modernization, the CPB remains opaque, its finances known only to the king and a handful of advisors. "We cannot be viewed through a Western prism," says Yos. "We are transparent in our own way—to survive the judgment of the big boss, the king."