Jump to content

Support our Sponsors >> Thai Friendly | Pattaya News | Pattaya Unplugged | Buy a drink for Soi 6 Girls | Thailand 24/7 Forum | TPN Property | La La Land bar | NEW PA website | Subscribe to The Pattaya News |Pattaya Investigations | Rage Fight Academy | Buy/Sell Businesses | Isaan Lawyers | Siam Business Brokers | Belts Of Mongering - Mongering Authority | Add your Text or Event here

IGNORED

Macro Roundup: Thailand's Political Groundhog Day


funlife

Recommended Posts

  • Opposition protests in Bangkok are the latest manifestation of Thailand's cycle of political instability.
  • The problems appear intractable. Similar protests in 2006 resulted in a military coup.
  • The current direction is unclear. A downside result is possible.
  • The economy is underperforming, likely due in part to the political situation.

The past week's opposition protests in Bangkok were the latest manifestation of a cycle of political upheaval and discontent in Thailand. The atmosphere has a depressing predictability. Prime Minister Yingluck Shinawatra assumed power is 2011 with a landslide electoral victory and an absolute majority of parliamentary seats. Since then she has governed largely on behalf of the country’s rural constituents, particularly in the north, who form her party's political base. The middle class and urban elite do not approve and voiced their discontent on Monday, demanding the government be replaced by an unelected “people’s council.”

We’ve been here before

The political drama closely resembles the lead-up to the 2006 upheaval. Then protests against the government of Thaksin Shinawatra, Yingluck’s older brother and perceived behind-the-scenes controller of the current government, precipitated a military coup. After an initial term of military rule and several short-lived governments, the current Yingluck-led government was democratically elected. The latest protests continue the cycle.

What lessons does 2006 provide? Despite parallels, there is a feeling of despair this time around, rather than the guarded optimism of 2006. The opposition has dug in its heels and refuses to compromise. The impasse looks intractable. Opposition protesters want a government that will serve their interests, but they can’t obtain it through democratic means. An election will return Yingluck or another of Thaksin’s disciples to power. The opposition Democratic Party hasn't won an election in two decades.

A way forward?

As the protests drag on and tensions escalate, military intervention appears increasingly likely. Beyond this, however, it is difficult to foresee a lasting solution. The cycle could simply continue, with unrest every five to 10 years leading to a political crisis. This is no solution.

Another possibility is that the tension will escalate into conflict, with the military likely intervening on the side of the opposition. Both sides are digging in and this is becoming a very real danger. There is growing talk of civil war. The 2006 coup saw little violence but another intervention could easily escalate.

A more hopeful possibility is that a democratically elected government will make substantial concessions to opponents. Given the country’s electoral map, this likely would involve a rural-supported government reaching out to the country’s business leaders and urban residents, while rolling back handouts to rural voters.

Such an outcome is difficult to imagine at this point. Neither side has shown an inclination to compromise. No charismatic or widely respected leader has emerged on either side to bridge the divide. Thailand’s weak institutions—courts, bureaucracy, and rule of law—tempt governments to manipulate them for political ends. There are few checks and balances except for the military and the ultimate arbiter, King Bhumibol.

Economic implications

Investors and businesses operating in Thailand allow for a moderate level of political and operational risk. Events such as the 2011 floods and various political disturbances barely register on financial markets and the real economy. Much recent investment in autos and chemicals manufacturing, for example, has been on Thailand's eastern seaboard, far removed from tensions in the capital. The baht and the SET stock index dipped as the military took control in 2006, but rebounded quickly, and the political disruption doesn’t register in the economic data. This week, Thailand’s stock market showed only a mild reaction on Monday and continued to rise, finishing the week almost 5% higher.

View gallery

.
gl_011714_1a.GIF

But this latest upheaval may be different. Investors may become more reluctant to tolerate Thailand’s permanently elevated risk profile, especially as global liquidity tightens in the coming years.

There may already be some impact in the economic data. Thai exports were curiously weak through the second half of 2013, even as the global economy stabilized and export competitors such as Malaysia saw better growth. Thai exports fell 2.2% y/y in the six months to November; Malaysian exports rose 5.2% over the same period.

View gallery

.
gl_011714_2a.GIF

Business sentiment is at multi-year lows and industrial production has been falling since April, down 11% y/y in November. Foreign investment, however, continues to grow, helped by the resurgent Japanese economy. Japan accounts for 60% of Thailand’s inbound FDI.

Our base case is that Thailand’s political system will muddle through, with mild disruption to the economy and markets. yet downside political risk has risen. Thailand’s economic performance in 2014 will be weaker than it should be in a time of better global demand.

Link to comment
Share on other sites

Interesting read, funlife. I left Bangkok last night after a week there on business right through the "shutdown" - that wasn't. 

 

As you say, businesses seem to have resigned themselves to the political cycle and factored it into their business plans. 

 

I feel sorry for the Thai people. They deserve better.

Link to comment
Share on other sites

Not often (like never) that the real power elite gives up power.  I think the stuff up (corruption/lack of payments) with the rice pledging scheme has really turned many against Yingluck's Government and their party.  This is from my thai wife who is up-country now.  Rice is a huge political issue directly affecting those majority supporters of PT party.

 

At the very least, the Shinawatra name is so divisive that all of the family needs to exit politics.

 

As always though, it is the same bunch of politicians getting voted in regardless, so hardly any change really.  The whole system is just so embedded it will just keep repeating and I think given certain highly revered person is of ill-health, it is more likely to get worse than get better, unfortunately.

 

3 very wise men required.

Link to comment
Share on other sites

Interesting read, funlife. I left Bangkok last night after a week there on business right through the "shutdown" - that wasn't. 

 

As you say, businesses seem to have resigned themselves to the political cycle and factored it into their business plans. 

 

I feel sorry for the Thai people. They deserve better.

In the long term, Thailand will suffer much more this time than any other time. The impact will show in within 5 years.

 

On the other hand, the lower the Baht's value, the better for expats and mongers.

 

In a dark sense, the unfortunate situation of Thailand is an opportunity for us.

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.



  • COVID-19

    Any posts or topics which the moderation team deems to be rumours/speculatiom, conspiracy theory, scaremongering, deliberately misleading or has been posted to deliberately distort information will be removed - as will BMs repeatedly doing so. Existing rules also apply.

  • Advertise on Pattaya Addicts
  • Recently Browsing

    • No registered users viewing this page.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.