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Thailand: Grinding to a halt because of political turmoil?

Updated On: Mar 03, 2006

Thaksin’s troubles do not seem to end.

Not only do the opposition parties intend to boycott the snap elections in April, but political activists also plan to ask the Administrative Court to revoke the royal decree on the dissolution of the House on February 24 to force PM Thaksin to resign. Senators have also proposed invoking Section 7 of the Constitution for the King to install an interim government when PM Thaksin leaves.

The situation is made even more precarious with the threat of a military coup even if there are assurances otherwise. Supreme Commander Gen. Ruengroj Mahasaranond denied a rumor on a coup attempt, saying, “I think the ongoing political turmoil has not yet been in deadlock. We have to wait to see which form it will come out. In my view, there will be no violence. The Royal Armed Forces has not made any deployment… I don’t understand why there is a rumor of a coup attempt. Maybe, it is released by people who benefit from such an action. But I confirm there won’t be a coup attempt.”

All this makes for bad political economy. Already the signing of a bilateral FTA with Japan scheduled for April 3 is delayed. Commerce Ministry adviser Suvit Maesincee said, “The government is an interim government, so we should not go forward with the signing… I have already informed Japanese officials that we should postpone the signing until we have a new government, which should be in June.” Commerce Permanent Secretary and chief negotiator Karun Kittisataporn has also announced that the 7th round of US-Thai FTA negotiations will also be postponed until the new government takes office. He added that the US officials were not overly concerned about the current Thai political situation.

Even if the Thai officials are optimistic about Thailand’s economic growth, overseas investors are not. “We are concerned that the dissolution of parliament could cause political confusion and create negative impact on the economy,” the Japanese Chamber of Commerce said. “When you have countries in the headlines with people in the streets, then investors and their boards of directors have to think twice,” said Ernest Bower, former head of the US-ASEAN Business Council. Analysts warn that US$44b public works project that the government hopes will drive the economy may not take off. “Given the current political turmoil, it is almost impossible for the government to start the mega-project,” said Thanyalak V. Surapol, an economist at Kasikorn Research Center. “Any delay of the project should be a serious concern because of its large impact on the economy. It would potentially trim GDP by one percent.” Moreover, domestic consumption will inevitably be affected as citizens “becoming more concerned about the political situation and may refrain from making big spending.”

With the present government under siege, management of the Southern conflict could falter. In recent days there has been an escalation of violence with bomb attacks happening on 1 March in Songkhla.

Sources:

Trade Negotiations Command Attention BangkokPost, 26 February 2006

FTA negatives overlooked Bangkok Post, 26 February 2006

FOCUS Thai political uncertainty puts key investment projects at risk AFX News Limited (Forbes.com), 28 February 2006

Supreme commander denies rumor on coup attempt Thai News Agency, 2 March 2006

Spectre of the military hangs over conflict The Nation, 2 March 2006Thai-US FTA talks postponed pending new government Thai News Agency, 2 March 2006

Democracy takes a beating AP, 2 March 2006

Democracy fragile in Southeast Asia Straits Times, 2 March 2006

Nine injured in bomb blast in Songkhla The Nation, 2 March 2006