absolutelyBangkok archive · Business & Economics
Originally published Sept. 8, 2009
As long as it takes:
August was a hot, humid and stormy month in Bangkok. Residents were feeling less miserable because of the heavy rain and traffic jams than the on-going political pantomimes, staged in and outside the parliament by the red shirts and the opposition. With so many permanent secretaries and key ministerial officials going into mandatory retirement on 30/9/09, pressure was mounting from every direction as politicians jockeyed for the coveted seats for their protegées.
Simultaneously, there was intensive horse-trading for larger allocations of the newly approved budgets. It was touch and go a few times for PM Abhisit as he struggled with the cut-throat power-plays among his cabinet members. Much to the relief of his supporters, PM Abhisit kept his cool and kept the public well informed during his weekly Sunday talk show. By bringing the public into his confidence, he was able to win more sympathy and support. With so much power and money at stake, PM Abhisit had to be on full alert against those who continued to try to unseat him, by hook or by crook.
Changing the rules… again?!
After nine months, there seemed to be a consensus among intelligent voters that PM Abhisit was indeed the most suitable prime minister for the country right now. A snap election would be unwelcome not only by the public but also by both the government and the opposition MP’s. Many felt that a general election should be delayed at least until the economic situation has stabilized, the political atmosphere become less hostile, and the politicians satisfied with the still-to-be-amended election rules and regulations.
By Vongthip Chumpani*
To appease both the Opposition and his own coalition partners, PM Abhisit has called for a joint-house debate on constitutional amendments, based on the six issues suggested by the parliamentary committee for political reconciliation. Meanwhile, he tried to assure the country’s academics and “wise men”, who were voicing their objection against constitutional amendments “by politicians, for politicians,” that major amendments would have to be approved by a referendum.
Handle with care!
The Abhisit cabinet took a lot of beating before the Upper House finally approved the SP2 budget. The 40- hour marathon debate on the 2010 budget proved to be more exciting when MP’s started to exchange not only their verbal abuses but also their fists. On 4/9/09, PM Abhisit and the Minister of Finance could kick off implementation of THB 200+100 billion phase I of the THB 1.43 trillion” Thai Khemkaeng” scheme. Notwithstanding complaints from the manufacturing sector, major allocations were for the poor and the weak members of the society i.e.THB 48.1 billion for farmers (dams, water grid, land allocation), THB 39.9 billion for transportation projects (the Purple Line, village roads and logistics), THB 11.52 billion for public health (tamboon hospitals), THB 45.39 billion for education (teachers, administrators, schools, libraries and computers). Special fund has also been set up for “Creative Economy” scheme to boost R&D and productivity of locally made products. Although taxpayers understood the needs for this huge government spending and indebtedness, they were more than concerned about corruption and kick-backs (20% up) that were reported to go hand-in-hand with most government procurement contracts.
Forgive and forget?!
Throughout 8/09, Thaksin and his red shirts were in the news practically every day. Many however, believed that this could be the beginning of the end. With Thaksin’s blessing (and money), some 20,0000 red shirts staged another grand event to submit a petition, signed by some 3 million supporters, to seek a royal pardon for their beloved leader and to enable him to return home a free (from all court cases) and rich man (with his THB 76 billion frozen assets to be released). No sooner, have the people recovered from this unprecedented (albeit peaceful) rally, than the red shirts announced their plan to stage yet another huge demonstration on 30/8/09 at the government house to topple the Abhisit government.
To pre-empt a recurrence of the Songkran violent riot, the Abhisit cabinet quickly invoked the Internal Security Act in the Dusit area. The red shirts had to call off their rally at the last minute, as instructed by Thaksin who was annoyed by the sudden split between the red shirts who were for (Red Sayong) and those who were against (Red Siam) seeking royal pardon for him. The two sides, however, have since managed to agree to rally together to mark the third anniversary of the September coup on 19/9/09.
Let bygones be bygones?
In mid 8/09, the Bhumjaithai Party submitted to the parliament a bill to do away with all the pending court cases against the yellow shirts, the red shirts and the police for their wrongdoings during 08-09. The PAD rejected the Bill outright, citing their readiness to go through the judicial system and their willingness to go to jail if found guilty by the court. The yellow shirts were skeptical and accused the blue shirts of trying to help the police escape legal actions for their Oct. 7, 08 violent crack-down on PAD demonstrators.
They also feared that such amnesty could lead to the freeing some 200 political bosses who were banned from political activities for 5 years. For once, both the yellow and the red shirts seemed to agree that the blue shirts’ proposed amnesty would not solve the current political impasse. Sure enough, on 7/9/09 the NACC — National Anti Corruption Commission named two former PM’s, retiring police chief and his deputy as top suspects in malfeasance related to the Oct. 7th bloody crackdown on PAD protesters that left two dead and over 400 wounded.
A slow climb
With the stimulus package I coming into fruition and the global economy emerging from the bottom, the Thai economy seemed to be heading north, albeit slowly and painfully because of the on-going political struggles. Exports orders have continued to climb now that developed countries need to replenish their stocks. Drought in India has also pushed up the prices of sugar and rice. Oil prices have been on the rise to end the month above USD70 level, along with strong gold prices well above USD950.
The dramatic change of government in Japan was expected to bring in more Japanese FDI to Thailand. China too has earmarked USD 20 billion for investment in Asean infrastructure projects. Alas, while there was light at the end of the tunnel for the Thai economy, continued political uncertainty has become the country’s major burden. This was reflected in the recent lowering of Thailand’s rating to BBB (from BBB+) with a stable outlook, and, long-term foreign currency rating to A- (from A), by Fitch Rating!
July figures
Although private consumption continued to be weak, private investment has turned positive with manufacturing confidence rising to the highest level in 2.5 years. Unemployment too has gone down by 70,000 to 480,000. The tourist industry however has been suffering badly with tourist arrivals now scaled down to 11.8 million (from 14 million) this year. Car sales have started to creep back and cement sales were up marginally. However, exports remained in the negative, down by 25.7% yoy to USD12.78 billion. Import down by 21.8% yoy to USD 11,894 billion.
Trade balance, current account balance and balance of payments were all in the black at USD799 million, USD378 million and USD1,106 million respectively. International reserves went up to USD 123.5 billion. Consumer price index was -4.4%. The Bank of Thailand has maintained Repo rate at 1.25% to prevent the weak economic recovery from going into a double dip. Liquidity remained ample notwithstanding the recently launched THB 80+30 billion government bonds. The THB remain firm at THB 34 to USD. The SET ended the month on a very stronger note at 653.
Moving ahead
In the last three years, Thailand has wasted so much precious time on stupid political squabbles and selfish power struggles. At the rate our politicians were going, another self-made economic disaster could be just around the corner. The Thai society could no longer leave the country in the hands of the politicians only. More and more people have pitched in to voice their opinions and criticizm in order to keep the politicians in line and mindful of national interest. To take Thailand out of the current political and economic mess, all Thais would have to work harder and more actively together to clear the political impasse, empower the people and strengthen the society so that the country would be ready to ride the next economic wave with other Asian countries.
* 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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