Stumbling Thai economy lends urgency to junta’s revival efforts; Thai coup: Sweep the house – then return it to rightful owners quickly

Stumbling Thai economy lends urgency to junta’s revival efforts

6:32am EDT

By Aukkarapon Niyomyat and Orathai Sriring

BANGKOK (Reuters) – Private investment and consumption remained stagnant in Thailand in the run-up to this month’s military coup, further evidence of a stumbling economy that will lend urgency to the junta’s efforts to get the country working again.

Southeast Asia’s second-biggest economy has been battered by political turmoil since late last year, when protesters backed by the royalist establishment launched a bid to oust the populist government of Prime Minister Yingluck Shinawatra.

The government clung to power even after a court forced Yingluck out of office for abuse of power on May 7, but the military ousted it in a coup on May 22, saying a takeover was necessary to restore order and prevent further violence.

Gross domestic product shrank 2.1 percent in the first quarter of 2014 as the lengthy anti-government protests damaged confidence and scared off tourists.

With only caretaker status after dissolving parliament in December for a February election that was later annulled, Yingluck’s besieged government had lacked the power to take policy decisions or approve new spending.

A senior central bank official, Mathee Supapongse, said on Friday that under the new military government, “the overall picture looks better, but it’s not easy to get to the central bank’s economic growth forecast of 2.7 percent”.

“We need time to assess the situation first,” said Mathee, head of the bank’s macroeconomics department. “It’s been half a year now and stimulus measures will not come all at once, but gradually, so the effect will rather be felt next year.”

He was speaking at a briefing after the release of central bank data that showed private investment in April, the first month of the second quarter, was 4.7 percent lower than in the same month last year and consumption was down 0.8 percent.

It followed data on Wednesday that showed factory output fell for the 13th straight month in April, imports plunged and exports remained weak, underscoring the difficulty the military government faces in averting recession.

“REFORM BEFORE ELECTIONS”

While the United States and other allies have urged a quick return to democracy, Thailand’s new military rulers have held out little hope for early elections.

Army chief and coup leader General Prayuth Chan-ocha has spoken of the need for broad reforms before an election. Another top officer said on Thursday that conditions had to be right and divisions healed before a return to civilian rule.

Despite martial law and a ban on gatherings, small peaceful protests against the takeover have been held daily in Bangkok. Activists, spreading word through social media, say they will hold a big show of opposition on the weekend.

A military spokesman said on Friday the junta was “carefully checking” the Internet for the planning of protests.

“If there are gatherings then we will start with negotiations with the crowd but if there is no understanding then we will have to apply the law strictly,” deputy army spokesman Winthai Suvaree told reporters.

Thailand has become polarized between supporters of Yingluck and her influential brother, deposed premier Thaksin Shinawatra, and the royalist establishment that sees Thaksin and his populist ways as a threat to the old order.

Despite the animosity of the elite and the Bangkok middle class, Thaksin’s popularity in the rural north and northeast has ensured that he or his allies have won every election since 2001.

‘PRESSING TASK’

Navy commander Admiral Narong Pipattanasai, the junta member overseeing tourism, told reporters on Thursday that 26 million people were expected to visit this year, down from a targeted 28 million, because of the unrest.

He said revenue from tourism was expected to drop to 1.8 trillion baht ($55 billion). The authorities had been banking on 2 trillion.

“We will do our best to improve the situation,” Narong said. “The next pressing task is to build confidence among tourists and to show them that they can travel in Thailand freely … through campaigns and other methods.”

Tourism accounts for about 10 percent of the economy. Many foreign governments have issued warnings about traveling to Thailand, which can affect insurance cover.

Narong said a nationwide night-time curfew, imposed on the day of the coup for seven hours but cut to four hours on Wednesday, could be shortened again in tourist areas. Even in Bangkok, the curfew is not being strictly enforced.

The protests in Bangkok have been rowdy and tense at times but there has been no serious violence. For a day or two after the coup there were also small protests in the northern city of Chiang Mai, but tourist resorts have been unaffected.

The National Council for Peace and Order, as the military junta is known, has imposed rigorous security and censorship, detaining more than 200 people including Yingluck and ministers of the ousted government, though she and many other detainees have since been released.

An ardent supporter of Thaksin and leader of his “red shirt” activists said upon release from detention he was washing his hands of politics for the sake of national reconciliation.

Suporn Attawong, known by followers as “Rambo Isarn” after the northeastern heartland of Thaksin support, said he had not been pressured by the army to quit politics.

“I had a lot of time to contemplate and realized that some of us need to back down for Thailand to be at peace. I have been in politics since I was 20 years old, it’s time to step away,” Suporn told Reuters on Friday.

 

Thai coup: Sweep the house – then return it to rightful owners quickly

Friday, May 30, 2014 – 11:16

The Nation/Asia News Network

Our latest military coup – or “power seizure” as the National Council for Peace and Order (NCPO) prefers – took place less than eight years after the previous one on Sept 19, 2006. Both times the coup-makers cited the need to prevent further political violence and bloodshed as a major reason for their intervention.

The military is now viewed by many as “referee” and the only hope we have of putting a stop to months of political warring between the ruling Pheu Thai Party and the People’s Democratic Reform Committee (PDRC).

For many observers, the coup was a “necessary evil” to combat rampant abuse of power by the ruling politicians, who turned the electoral mandate to their personal benefit. A large sector of the public has welcomed the power seizure in the hope that it will bring an end to violence and eventually see corrupt politicians punished.

The military did not stage the coup out of the blue. It waited until it was clear that the deadly violence would continue unabated and that those in power would do little to stop it. The take-over is certainly a violation of democratic principles, causing dismay among the international community, but so far it has met with only limited resistance in Thailand.

Meanwhile, the take-over has halted the violence, which had mostly targeted those protesting against the government. Arrests have been made and war weapons seized in raids that have unearthed suspects found to have connections with politicians. Many of those arrested are being described as red shirts, including two suspected of carrying out the attack on a PDRC protest site in Trat in early February that left two children dead and more than 20 people injured.

Army and NCPO chief Prayuth Chan-ocha maintains that the military took power in the national interest rather than to benefit one side or the other. The junta’s actions so far have supported his words, with measures taken to tackle problems that are the legacy of the ousted caretaker government and the political deadlock. These include making payments to rice farmers owed some 100 billion baht (US$3 billion) under the previous administration’s loss-making and corruption-plagued price-pledging scheme.

But there are other issues that it must urgently consider, including restoring freedom of speech and providing a timeframe for the return to democracy. The junta chief has not made clear who will become the next prime minister or when the next election will be held. Even more important is the need for a reform process that includes all the warring parties. The military must recognise that, without such an inclusive process, sustainable results that satisfy disaffected factions and ensure lasting peace will not be possible.

Judging from his recent moves, General Prayuth appears to be avoiding mistakes committed by previous coup leaders. Hopefully he will not be lured by the sweet scent of power, a temptation to which many of his predecessors succumbed. He must assure the public that the troops will return to their barracks after completing their house-sweeping mission and hand over the power to an elected government.

 

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 (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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