Approaching the endgame: A messy poll leaves Thailand in an even worse pickle

Approaching the endgame: A messy poll leaves Thailand in an even worse pickle

Feb 8th 2014 | From the print edition

ELECTIONS are supposed to provide political solutions. The one Thailand held on February 2nd served only to further exacerbate its problems. Both sides of the political divide claimed a victory. The governing Pheu Thai party, which had defied protesters’ efforts to scupper the vote through disruption, intimidation and a boycott, could boast that nearly 90% of polling stations opened for business and that nearly half of voters turned out. But the protesters and the main opposition Democrat Party which backs them thwarted voting in enough places to mean that, constitutionally, no government can be formed. They may now succeed in having the whole election annulled by the courts. And these might even find a reason to dissolve Pheu Thai. The enemies of Yingluck Shinawatra, the prime minister, are inching closer to their goal of forcing her to resign.

The evening after the election the mood was buoyant in camps the protesters have set up to block major junctions in Bangkok. Loud music blared from stages, fist-brandishing speeches were cheered and hawkers flogged the movement’s T-shirts (“Shutdown Bangkok. Restart Thailand” was a favourite). The next morning Suthep Thaugsuban, a Democrat bigwig who quit the party last year to become a full-time rabble-rouser, led a 14-kilometre (9-mile) march through the capital to rally supporters.

Yet sustaining the momentum may be hard. Mr Suthep launched his movement three months ago as a series of mass protests against the alleged corruption of Ms Yingluck’s government, and it has since escalated into a round-the-clock, if half-hearted, “shutdown Bangkok” agitation. But he has little to show for his campaigning. Ms Yingluck has not quit, and her government insists it will now hold by-elections where voting was blocked, persevering until a parliamentary quorum is elected.

Some of Mr Suthep’s supporters are out-of-towners, mainly from the south of Thailand, where the Democrats enjoy most support and the election boycott was widely observed. But many are respectable and peaceable members of Bangkok’s middle classes who see themselves, as one puts it, as “better educated and more informed” than the people who keep electing governments, like Ms Yingluck’s, loyal to her brother, Thaksin Shinawatra. Mr Thaksin, prime minister from 2001 until he was ousted in a coup in 2006, now lives in self-imposed exile to avoid a jail sentence for corruption. For Mr Suthep and his followers he is the root of all evil in Thai politics. But the Democrats’ image has been dented by its efforts to prevent people peacefully exercising their franchise, and by the occasional violence the protests have provoked, in which ten people have died.

The government’s predicament, however, looks if anything even worse than its opponents’. Electing a constitutional parliament could take forever. The army, which has attempted 18 coups since the end of absolute monarchy in 1932, seems loth to intervene directly, perhaps remembering the mess it made after the 2006 coup. But the establishment has other ways of getting rid of governments it does not like. Various corruption investigations are under way against Ms Yingluck and her parliamentarians.

Of these, the most dangerous involves her government’s disastrous rice-purchase scheme, in which it promises farmers far more than world-market prices. Ruinous to the government’s fiscal position, the policy has also provoked protests from some of its core rural supporters, who have not been paid. Korn Chatikavanij, a Democrat and a former finance minister, reckons that 1.3m families are owed an average of about 100,000 baht (a bit more than $3,000). For many this would be their only source of income. But the government may find it hard to raise money by selling down its swelling rice stockpiles. That would force it to realise the enormous loss. And buyers will be deterred by the political controversy—and by the hope that Thailand may soon become a very distressed seller. This week China pulled out of a contract to buy 1.2m tonnes, citing the corruption inquiry. Worse, the Thai government, with the election incomplete, is in a tenuous legal position, and, with banks nervous of getting embroiled in the mess, it is unable to borrow to meet its commitments.

Mr Korn outlines an elaborate road map out of this political cul-de-sac. The government would have to announce a referendum on the sorts of reform that the protesters demand and how to design and implement them: decentralising power away from Bangkok; making the elections less prone to vote-buying; restructuring the police, seen as a Thaksinite force; and, of course, curbing corruption. Then would follow another election, which Pheu Thai, even after all this, could expect to win.


Ms Yingluck would have to go, however. And it is hard to see why she and her brother would accept such a deal. Their critics have a point that they have sometimes ruled in their own interests and those of their voters, rather than the country’s—most notably over the issue which prompted this uprising, when they pushed through a bill (later withdrawn) that would have given Mr Thaksin and thousands of others an amnesty. Winning an election is not an excuse for riding roughshod over the views of huge numbers of Thais. But then, as the Shinawatras might say, the same is even more true of losing an election.

Even now—with the economy slowing sharply, tourist arrivals in January at half the levels of a year earlier, and the threat of more widespread violence mounting all the time—Thailand seems in a sort of denial about how deeply it is in trouble. “Stalemate” is an analogy often used to describe the political endgame. A better chess metaphor might be perpetual check, where, by repeatedly electing pro-Thaksin governments, Thai voters threaten the old establishment with the king at its centre. The risk is that, fed up with shifting the pieces in a game with no hope of a conclusion, somebody kicks over the board.


About bambooinnovator
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 (, 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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