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More political and economic gloom predicted for the Thailand

Updated On: Apr 03, 2007

Given the current situation in Thailand, it really should not be surprising that the country is headed for troubles of a more severe degree.

At the Straits Times Regional Forum held in Singapore last Friday, journalists Nirmal Ghosh and Leslie Lopez, and academic Simon Tay all stated to the effect that “if the past year has been a difficult one for Thailand, the year ahead could prove to be even more fraught politically and economically. Major hurdles lie ahead, with the need to agree on a new Constitution and win people's backing for it, overcome divisions within the military and elites, and hold elections by the year end. The outcome of each of these is critical to the political landscape in Thailand, which could turn out looking markedly different from the past”, the Straits Times noted.

For one, Bloomberg has reported that the Thai currency restrictions have failed and “may keep gaining because investment restrictions aimed at protecting exporters have backfired”. Instead of lowering the baht, the “currency controls spawned an offshore exchange rate that has risen five times faster that the official price of the baht [creating] ‘vicious cycle of an inexorably strengthening baht’”. ' John Stuermer, managing director of Bear Stearns criticized the government saying, “Every time they do something stupid it decreases consumption and imports.”

The US envoy to Thailand Ralph Boyce has also denounced the economic policies of Thailand. He said “the government had stirred up controversy by proposing caps on foreign ownership of Thai companies and saying it would strip key drugs of their patent protection and give away generic versions… to people too poor to pay for the branded versions”. The Nation reported Boyce as saying that “advanced negotiations to craft a bilateral US-Thailand free-trade agreement had been put on hold as the vast majority of companies surveyed by us have expressed serious concerns about the future investment climate in Thailand”.

Conversely, Malaysia has a different outlook. It still views that “Thailand is still bustling with activities and offer potential for investors”, especially in the construction sector, the Star reported. Meanwhile, Temasek Holdings is relieved that Thai Finance Minister Chalongphob Sussangkarn has announced that” Thailand should not and likely will not take back telecom giant Shin Corp”. Temasek's chief for Thailand Goh Yong Siang was noted by the Nation as saying, “We welcome the assurance of Finance Minister Chalongphob. The statement he made on Friday signals a very positive development. We would like to assure the minister we respect the feelings of the Thai people and their government.” No further steps as to the deal were unveiled. On a separate note, the Japan-Thailand Economic Partnership Agreement (JTEPA) to be signed by PM Surayud on Tuesday in Tokyo could be deemed unconstitutional and therefore invalid.

All this is over and above the troubles in the South where violence “has shot up dramatically in the last few years… The number of cases has shot up from an average of 10 per year in the late 1980s to over 2,000 a year since 2004”, according to Nirmal Ghosh. Thai academics now “believe the conflict could last another 20 years –and that this year will be a crucial phase”. The insurgents are said to be “out of control”, the education system has collapsed due to the fighting and the religious divide between Muslims and Buddhists is very clear.

Things are set to get more violent and worrisome as terror expert Rohan Gunaratna has revealed that the extremist group Jemaah Islamiyah “remains the most capable and the most credible terrorist organisation in the region” despite being crippled in both Singapore and Malaysia and it wants to send fighters “and explosives experts to southern Thailand… to create a new front”, the Straits Times reported. (2 April 2007)

Sources:

Temasek happy as pressure eases off (Nation, 2 April 2007) Thailand still bastion of growth despite coup of 2006 (Star, 2 April 2007)

Signing of FTA is like policy corruption, NGOs tell govt (Nation, 2 April 2007)

Thai Trading Curbs Backfire, Set Stage for Baht Gains (Bloomberg, 2 April 2007)

Legal expert warns Thai-Japan trade pact could be invalid (Bangkok Post, 2 April 2007

Thailand faces tougher year ahead (Straits Times, 31 March 2007)

Violence in south rises dramatically (Straits Times, 31 March 2007)

US envoy tells of investor unease over govt's moves (Nation, 31 March 2007)

Insurgency could last for another 20 years, say experts (Straits Times, 29 March 2007)

JI seeks front in southern Thailand: researcher (Straits Times, 27 March 2007)