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Thailand: The Rocky Road Ahead

15 May Thailand: The Rocky Road Ahead

Last week, Thailand’s Prime Minister Yingluck Shinawatra and nine cabinet ministers were removed from office by the National Constitutional Court. The third dismissal in less than a decade has further deepened the country’s protracted political quagmire.

The Pheu Thai Party maintains limited political power through Ms. Yingluck’s replacement, Mr. Niwattumrong Boonsongpaisan, and his caretaker government. Nationwide parliamentary elections are slated for July 20 this year.

Following Ms. Yingluck’s ouster, the anti-government People’s Democratic Reform Committee (PDRC) has urged that the Senate, Election Commission and courts install an interim prime minister. Political watchers say that if they did so, the courts would risk committing illegal action and are unlikely to meet with the PDRC’s demands.

Meanwhile, Bangkok’s Centre for the Administration of Peace and Order, the enforcer of the Internal Security Act, has issued warrants of arrest for PDRC leaders including Mr. Suthep Thaugsuban, on charges of insurrection stemming from the anti-government protests.

Outlook and implications

Thus far, the violence has not reached levels seen in 2010, both in terms of number and visibility, but the unrest is unlikely to stop. The tighter loan conditions of financial institutions, a possible rise in interest rates, a forecast drought and falling global crop prices are expected to hurt Thailand’s domestic economy this year.

The political turmoil is also affecting Thailand’s global economic standing. For instance, Thailand’s appeal as ASEAN’s largest automotive production hub is waning. Japanese automakers are reconsidering future investments there. Chinese automakers, hoping to gain a foothold in the country and the burgeoning markets of Indonesia and Vietnam, are also facing even more delays and political obstacles.

The near future does not bode well for Thailand. Experts have cautioned that the country will likely continue its sluggish economic performance over the next few years due to the political impasse and the increased competition for foreign investment from the creation of an ASEAN Economic Community in 2015.

Given the increasingly precarious political situation in Thailand, a plausible scenario would be continued unrest as the July polls loom.

Sources:

Economy ‘headed for collapse’ [Bangkok Post, 15 May 2014]

Warrants mount for PDRC leaders [Bangkok Post, 15 May 2014]

PDRC call for interim PM ‘likely to fail’ [Bangkok Post, 12 May 2014]

Thai Rival Factions Vie to Fill Political Vacuum After Yingluck’s Ouster [Wall Street Journal, 11 May 2014]

Honda Delays Construction of Thai Assembly Plant — 2nd Update
 [Wall Street Journal, 30 April 2014]