Asia

Time Is Running Out for Thailand's Embattled Government


Will they or won’t they? Thais are waiting to hear whether elections scheduled for Feb. 2 will take place as planned. Embattled Prime Minister Yingluck Shinawatra wants them to take place; the country’s Election Commission wants a postponement because of widespread opposition from critics of Yingluck and her exiled brother, former Prime Minister Thaksin Shinawatra. The country’s Constitutional Court ruled Jan. 24 that the election can be delayed and that both the prime minister and the Election Commission have the power and responsibility to set a new date “if holding the election as scheduled will create serious damage to the country,”

Regardless of whether the election takes place in February or later, chances are Yingluck’s days as prime minister are numbered. “The current political deadlock should eventually lead to the fall of this government,” Pimpaka Nichgaroon, head of research in Bangkok for Thanachart Securities, wrote in a report published Wednesday. While the crisis may drag on for a few more weeks, Pimpaka expects a resolution by the end of March. “We assign the highest probability to military intervention followed by court cases in bringing down the government and a slim chance of the caretaker administration returning as a functional government in the next election.”

That means some of the signature populist policies of Yingluck’s government will be on the way out, too. For instance, the controversial plan to support farmers by offering them above-market prices for rice is already in trouble. Thailand was once the world’s top exporter of rice, but sales have dropped because Thai rice is now more expensive than rice from rival suppliers in Vietnam and India. Last month, the United Nations’ Food & Agriculture Organization said Thailand’s “huge” rice stockpiles would increase another 17 percent in 2014.

The program has become a costly embarrassment, with a price tag of $21 billion and counting. Rural voters from the north and northeast have long been strong supporters of the Shinawatra family’s political parties, but Yingluck may be losing some of them, too, since rice farmers are up in arms after the government missed a deadline to pay for their rice on Jan. 15. The anti-Yingluck movement, dominated by middle-class Bangkok residents and Democrat Party supporters from the South, would get a significant boost if rice farmers were to turn against her.

The rice program could even turn out to present a convenient option for Thailand’s generals. If they want to get rid of Thaksin’s sister without yet another coup, they might be willing to wait for the kingdom’s graft fighters to bring down Yingluck. The National Anti-Corruption Commission is investigating the prime minister for alleged negligence in overseeing the controversial program, a NACC spokesman said on Jan. 16. The NACC is also investigating 308 members of Parliament from Yingluck’s party and could bar them from political office for five years.

Whether it’s via military coup or corruption probe, an end to Yingluck’s government wouldn’t come soon enough to save the tourist industry from suffering a hit during Chinese New Year. The Year of the Horse starts Jan. 31, and the number of tourists from China is likely to drop significantly.

Still, some Thais are already looking ahead to better days. Regulators, for instance, are moving ahead with a plan to allow foreign companies to list their shares in Thailand, Vorapol Socatiyanurak, secretary general of the Securities & Exchange Commission, told Bloomberg News this week. Given the turmoil in the capital, this isn’t the ideal time to think about Bangkok competing with orderly Asian financial hubs. Yet the Thai SEC sees an opportunity for the country to become a destination for companies looking to expand their reach into such developing markets as Myanmar and Cambodia. “Thailand wants to compete with Singapore and Hong Kong to become one of Asia’s funding centers,” Vorapol said. “Thai investors are also in desperate need for new stocks and investment alternatives for their savings.”

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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.

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