Loxley and the Thai way of doing things

19 Mar 2012

People often dismiss the Thai way of doing business as typical Asian family business norms with a healthy dose of nepotism, but even for someone used to a handful of elite companies winning every government contract, the scale and the amount of dirt swept under the carpet can be surprising.

Take, for the example, the conglomerate Loxley. The company does everything from household foods such as oil and nuts to communication networks.

Loxley recently won two large contracts in the telecommunications sector in Thailand. First was a three billion baht ($97 million) submarine fibre cable for state-owned CAT Telecom. The 1,340 km cable is to link Thailand and Sri Lanka and was won by a consortium of Loxley and Italian Thai, another one of those companies who thrive solely on government contracts.

The other was a 1.5 billion baht ($48 million) for NedNET - the National Education Network for the Ministry of Education. Never mind the fact that Thailand is already swamped in unused fibre, of course the MoE needs another network of its own to connect 7,606 schools.

In total, Loxley announced that they have almost 13 billion baht ($423 million) of government projects pending this year, including 5.6 billion baht ($182 million) for TOT 3G’s network expansion. That is a lot.

Loxley was one of TOT’s 3G MVNO partners under the brand of i-Kool. They took almost nine months to get their billing system online and after all that was over, essentially gave up and decided to focus on the easier part of network building for TOT instead.

But looking at the big picture, Loxley is not about technical excellence or best practices. It is about lobbying; about knowing the right people; about doing deals in closed circles.

Take, for example, its subsidiary Loxley Pacific. This company has the distinction of being the first to launch a GSM network in the Democratic People’s Republic of Korea back in 2002 and runs an ISP there too.

Other major players in the North Korean communications industry are Shin Satellite, Egypt’s Orascom and some company called Lancelot holdings.

Obviously the Thai way of doing things translates well to the North Korean way of doing things.

Of course, simply running a couple of communication networks in one of the world’s most repressive and closed states is not a crime in itself, but in April 2003 a company in Japan, Meishin, attempted to export parts for nuclear centrifuges to North Korea. The intermediary was a Thai telecom company, Loxley Pacific, and the consignment was declared as telecom equipment in an attempt to avoid scrutiny.

The sad thing was that because of the proper and elite image of Loxley in Thailand, the news blackout was almost absolute within the country. Editors did not wish to make an enemy of Loxley as their owners, the Lamsum family, have a banking, food, commercial and advertising empire that is no less omnipresent than that of True and CP owned by the Chearavanont family. Only the Lumsums prefer to keep themselves to themselves unlike the publicity hungry Chearavanonts.

No publication would risk losing their advertising income by pointing out that they were part of North Korea’s nuclear program. No politician would dare to lose party funding by taking them on - the Lumsums were the fifth largest official donor to the Democrat party. The Chearavanonts, meanwhile, topped the 2011 list.

The Bangkok Post’s Post Database section ran the story, but what should have been front page news on every newspaper in the country was instead run as a story on the back page of the the technology section. Such was the scale of denial.

Time to wake up and smell the roses.

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