Thai Protesters Can’t Win by Dismantling System

Thai Protesters Can’t Win by Dismantling System

Hundreds of thousands of protesters bring the capital to a standstill. To placate them, the prime minister dissolves parliament and calls new elections. One might expect the crowds to declare victory and go home, right? Not in Thailand. The demonstrators who have filled the streets of Bangkok over the past several weeks say snap elections called by Prime Minister Yingluck Shinawatra are no concession, because her ruling party is certain to win. Their frustration is understandable — but it’s also irrelevant.

It’s true that Yingluck’s Pheu Thai party is almost guaranteed to win the new polls, which must be held by Feb. 2. The political machine created by her brother — exiled tycoon Thaksin Shinawatra — has built up insurmountable majorities in the rural north and northeast of the country by handing out cheap loans, rice subsidies and free health care. Two years ago the party won in a landslide. The opposition Democrats — whose support comes mostly from the less-populous south and the middle- and upper-classes in Bangkok — haven’t won an election outright in 20 years.

This, however, is democracy in action. Hoping instead for an army coup or a royally appointed government of “wise men,” as protest leaders have proposed, is no way to address Thailand’s chronic political dysfunction. To their credit, both the monarchy and the army have publicly refused to intervene in the standoff. Sooner or later Thailand’s Democrats, just like every long-irrelevant minority party, from the U.K.’s Labour before the rise of Tony Blair to U.S. Democrats before Bill Clinton, simply have to find a way to expand their electoral appeal.

To be sure, the Democrats have valid complaints about the current government, which has been obsessed with passing measures — many of them thought to have been instigated by Thaksin from afar — to erode the opposition’s influence and expand Thaksin’s own. An amnesty bill that would have allowed the tycoon to return home safe from corruption charges was needlessly provocative, as was an attempt to make the Thai Senate fully elected. (Judges and senior civil servants now appoint almost half its members.)

Even if many of the impeachment and corruption investigations initiated against the government have been politically motivated, the sheer number of them says something about its arrogant ruling style. Unless it wants to face continued gridlock, Pheu Thai would do well to focus less on politicking and more on improving its policies.

Here is where the opposition, too, could most effectively focus its energies. Some programs it opposes — such as a rice-subsidy deal that has cost the exchequer at least $4 billion, and possibly twice that — are undeniably popular among poor farmers. Yet in other ways the government has hardly delivered for its supporters. Inequality has increased under the Thaksinites’ rule. The richest 20 percent of Thais control 70 percent of the country’s wealth. Resources continue to flow predominantly to the capital, which receives 70 percent of government spending on health, education and other crucial services. The northeast, Pheu Thai’s heartland, gets only 6 percent.

On measures of official corruption, Thailand has made hardly any progress. The country ranks near the bottom of the World Economic Forum’s Global Competitiveness Index when it comes to the diversion of public funds and wastefulness of government spending.

These should be winning campaign issues. Whether in Bangkok or the northeast, Thais want to see results, not more protests and coups. A study conducted during the 2011 elections showed that being overtly linked to one or the other partisan movements — the Yellow Shirts associated with the opposition or the Red Shirts loyal to Thaksin — significantly reduced a candidate’s support.

Yingluck and Pheu Thai should understand by now that votes alone cannot confer legitimacy. If they want to keep forming governments, they’re going to have to get better at governing. And if the opposition wants to govern, it will have to challenge Pheu Thai on the hustings, not on the streets.

To contact the Bloomberg View editorial board: view@bloomberg.net.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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