absolutelyBangkok archive · Business & Economics
Originally published Dec. 7, 2010
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Moving laboriously forward:
The month of November has not been too unkind to PM Abhisit. With quieter and calmer political situation, PM Abhisit was able to travel to Guangzhou for the inauguration of the Asian Games before attending the 2010 Apec meeting in Yokohama, where world’s leaders continued their discussions on G20 Summit Meeting in Seoul, currency war, economic imbalances, climate change and trade protectionism. PM Abhisit also met with corporate Japan and signed a MOU with Peru. At home, post flood relief programs continued notwithstanding reports of corruption here and there.
To ease the plight of farmers who lost their crops in the flood, additional THB 380 million was allocated for free seeds. In spite of the looming shortage of both skilled and unskilled workers, PM Abhisit’s proposal to increase minimum wages to THB 250/day across the board was shot down by the employers association who opted instead for an THB 11/day increase. Together with the Board of Trade, PM Abhisit has been campaigning against corruption in both the public and the private sector.
During the 14th International Anti-Corruption Conference in Bangkok, 27 Thai companies publicly took their vow to refrain from all corruption practices! PM Abhisit also led a similar vow taking ceremony with senior government officials. New measures were expected to be announced soon to set up funds for those working in unorganized sectors e.g. taxi drivers, maids and hawkers etc. A Post bank will also be set up to provide them with micro financing. The restructuring of taxes as well as the licensing of 3G by TOT, however, seemed to have been stalled.
By Vongthip Chumpani*
Judgment Day:
Days before the constitutional court was scheduled to rule whether or not to dissolve the Democrat Party, daily scandals and rumors were abound. Phue Thai’s PR machine churned out some compromising video clips that caused 3 out of 9 judges to leave their bench on judgment day. With so much tension inside and outside the court, the unexpectedly short verdict to dismiss the case (for misuse of THB 29 million election fund) on technical ground (case filed after the 15 days limit had lapsed) was somewhat of an emotional let-down for the public.
The red shirts promptly cried foul and called the verdict another case of double standards. PM Abhisit’s supporters, however, breathed a sign of relief now that he could no longer be banned from politics, even if the court were to rule against the Democrat Party in the THB 259 million related case. According to political pundits, PM Abhisit was now in a position to call for an election at his most opportune time as well as to dissolve the parliament, if a military coup were to materialize!
Less colorful politics
After two days of grueling parliamentary debate, the joint parliament and senate approved two out of four constitutional amendment bills and set up a joint committee to scrutinize the bills for their second and third readings at the next parliament session. For once the yellow and the red shirts seemed to be of the same mind in opposing the Abhisit’s government’s proposed two constitutional amendments (out of six proposed by the coalition partners and by the independent political reconciliation commission).
Throughout 11/10 the yellow shirts were campaigning against PM Abhisit also for not scrapping the Thai-Cambodian MOU of 2543 on border dispute over Preah Vihear. Both the restless red shirts and the yellow shirts were “asked” by the CRES to reschedule their planned demonstrations on 5/12/10 and on 11/12/10 respectively. Meanwhile the red shirts have nominated a new leader, Thida (wife of a jailed core leader) who vowed to fight on against double standards without violence.
A “peaceful” demonstration was then scheduled for 10/12/10 in Bangkok. Now that a number of by-elections had taken place without any violent incidents, there were talks of lifting the emergency decree in and around Bangkok before the New Year. Meanwhile, PM Abhisit was making sure that all the jailed red shirts were also given legal assistance to fight their court cases.
Fired by foreign fund inflows
Contrary to expectations, the Bank of Thailand increased the policy interest rate by 0.25% to 2% on 1/12/10 in face of prevailing stronger USD (because of the EURO-PIIGS problems, North Korean bombing incident, the Wikileak on war insinuation). For months, the Thai central bank has been quietly taking prudent measures to deal with the recent foreign fund inflows while trying to stabilize inflation rates (2.8% in 11/10 but 3.4% for the 11 months) and deter speculative bubbles in bond and property markets.
Going forward into the New Year, we can expect further rate increases to cope with climbing prices of food and commodities domestically and internationally. With political worry temporarily out of the way, the SET was poised to take another big leap, ending the month above the 1000 psychological level. The Baht moved side-way up between THB 30-29 to USD in 11/10. There seemed to be a consensus that it was a matter of time before it reached THB 28. Gold prices too were shooting up, trailed by oil prices, as confidence in major reserve currencies continued to weaken.
Goodbye 2010
2010 would probably become another historical year for Thailand. The May political nightmares could have turned the country upside down, but for the fortitude, steadfastness, compassion and love for “King & Country” of those who manned the nation’s steering wheel. Although political divide has not quite disappeared (and would never disappear completely), the political situation seemed to have turned around for the better. Similar to the unforgettable economic lesson of 1997, we have learned an unforgettable political lesson this year.
Hopefully, most of us have become wiser and more mindful of our missions and roles in the shaping of our shared destiny — economically, politically and socially. The majority of our people have shown once again that they shun dictatorships (of any kind), abhor violence, prefer moderation and the “middle path.” Following our self-created political debacles and the terrifying economic meltdowns in most major developed countries this year, more and more people have come to embrace HM the king’s sufficient philosophy as a way of life.
Hello 2011!
In spite of the seemingly joyful and peaceful month of 12/10, some political pundits and their gurus have been predicting a severe dip in the global economy in 2011 as well as a more terrifying political uprising that could end in another military coup. The more optimistic people were predicting an election in 4/11 that would result in another Democrat led coalition government to carry out the current policies and directions for gradual and progressive changes, with less corruption and conflicts of interest. In the mean time, most local businessmen and investors were expected to remain prudent and conservative.
With the stronger Baht, still-low interest rates and healthy foreign fund inflows, many would deem it necessary to expand and diversify their business in order to become more competitive when the Asean Economic Community became effective in 2015. With the GDP expected to slow to 4-5% next year, the more adventurous souls would be confident enough to venture abroad and make the most of strong Baht and low interest rates. For once, foreign investors were saying that Thailand now has the problems of an economically healthy country. Cheers and happy holiday season to you and your families!
* Vongthip Chumpani is an advisor to and former president of Bangkok Bank and a former advisor to the Senate Foreign Relations Committee. All views and opinions expressed herein are entirely from her own personal observations.
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