Not-so Happy New Year

The Year of the Rat came quietly upon us. People were in a rather subdued mood, depressed for months now by so many bad and sad news, political uncertainty and economic woes. Many people chose to welcome in the New Year praying and meditating at temples. Some went up the mountains or stayed by the sea to be closer to nature. Most people just stayed home with their families and loved ones. Apparently people have become much more careful with their money. Stores were not doing too well with the weak year-end consumer demand. Hotels and restaurants have being pricing themselves to cater only to the very rich and the free-spending foreign visitors, numbering 14.8 million in 07.

A gem of a princess

On 2/1/08, the Thai people woke up to hear the sad news that HRH Princess Galyani (84) had passed away during the night. To everyone’s surprise, public mourning has become quite personal and intense. Most people voluntarily observed the 15 days official mourning period. Tens of thousand queued up to pay their last respect. Books written by and about HRH were selling like hot cakes. Suddenly people felt that they had taken Princess Galyani for granted all these years. Once she was gone, they came to realize how much she had been working, quietly and consistently, for her “King and Country” throughout her life. People were also touched to see how much HM was grieving for his only sister. The princess had indeed been the hidden tower of strength for HM and her demise was a great loss for the royal family as well as the nation.

Tangled-up results

The general election on 23/12/07 went smoothly, with exceptionally high turn out (32.08 million or 70.27%). The official results were not unexpected: PPP 233 (mostly in the North and the Northeast)/Democrat 165 (highest number ever, in Bangkok and the South)/Chart Thai 37/Puea Phaendin 24/Ruamjai Thai 9/Matshima 7/Pracharaj 5. For the constituency-based seats, however, PPP and Democrats won more or less equally. PPP’s “nominee-leader” Samak declared that he would announce the formation of the new government by 4/1/08. In Hong Kong, jubilant former PM Thaksin announced that he would be going back to Thailand in a few weeks and might return to politics. The Democrats said they would step aside but should the PPP failed to put together a government then it would be their turn to do so. It therefore fell upon the in-between SME parties to decide which “boat” they would take, individually or en mass!

The game they play

According to the 2550 Constitution, leading party would need to gather over 240 MP’s to nominate a Prime Minister. To run a proper government, however, the PM would need to have the unconditional support of at least 300 out of 480 MP’s. Intoxicated by the prospect of premiership, Samak became more aggressive and even abusive. The CNS, the anti-Thaksinists as well as the “neutralists”, all had reasons to worry about renewed political stalemate of the pre-coup era. Meanwhile, veteran “electioneers” were meeting daily to try and work out, by hook or by crook, their most acceptable formula to join the next coalition government. Election promises were conveniently forgotten or completely ignored. The voters have suddenly become mere on-lookers. Sickened and disgusted, they have had to endure the ugly song and dance that politicians were putting on show to cover up their own horse-trading negotiations behind the scene. Another vicious political cycle has begun.

Our honorable MP’s

Up to the first week of 1/08, 407 out of 480 elected MP’s have been officially endorsed by the Election Commission (EC). The remaining 73 names, involved in election fraud complaints, were being screened by the beleaguered EC. Frauds and wrongdoings were reported everywhere, with tens of billion Baht cash being paid out to vote canvassers. Hard evidences and witnesses however were most difficult to come by, due to the clever strategies, complex methods and illusive tactics used. So far, only 6 MP’s have been red carded and barred from future elections. Only 16 yellow cards were given out - to compete again in by-elections in mid 1/08, mostly in the Northeast. Even then, some PPP MP’s have already taken the EC to court for unfair rulings. They also threatened to bring mobs to the EC office! Against all odds, the EC has stood firm and promised to complete all their rulings by 21/1/08, in time for the House to be convened (with at least 95% of the elected MP’s) on 22/1/08. In spite of their big win, PPP has not been able to form their coalition government up to now.

Surayud’s swan song

Through out 12/07, the Surayud Government and the CNS have kept a low profile. Quietly the cabinet approved 4 new power plants (4,400 MW) and awarded concession rights to 7 groups to explore offshore oil and gas blocks. They also approved 4 out of 7 BOI applications to set up multi billion production plants for eco cars (Suzuki THB 9.5 billion/Nissan THB 5.5 billion). All in all, the Board of Investment approved new investment projects worth THB 700 billion in 07. On 14/12/07, the Supreme Administrative Court announced their verdict. PTT was ordered to separate and return to the state, their gas pipeline and related assets. Somehow the Surayud Government was able to handle the highly sensitive situation rather well. Trading of PTT shares was briefly suspended and their prices initially dipped only 2.2%. Details were being worked out to determine what PTT would have to pay to the state for the rental of the THB 15 billion pipelines.

How they see us

According to Deutsche Bank’s recent forecast, the Thai GDP should grow by 4% in 08, based on an increase of 3% in private consumption and 4% in overall investment. The new Government would have to be bold to increase their fiscal spending from 7% of GDP in 07 to 15% in 08, thereby doubling the budget deficit from 1% of GDP to 2%. Export was forecast to grow by only 4.3% in 08. In line with other Asian currencies, the Baht was expected to strengthen further to around THB 32.5 by end of 08. Interest rates should soften further, notwithstanding climbing inflation rates. Since Thailand has been more affected by the high oil prices than any other Asian countries, the expected softening of oil prices (down 15% to USD 65 towards end of 08) would also benefit Thailand more.

US - a changing

Immediately after the 23/12/07 election, the SET shot up to 850, before plunging back again to 800 in the first week of 1/08. This was due from sales by foreign investors who have been spooked by USD 100 oil price and by global market’s fear of an impending US recession - even in an election year. The Obama fever too seemed to have shocked the world’s corporate sector. A Democrat victory could mean a more protective trading environment in the US and a drastically reduced American interest in both Asia and Europe. Other Democrat presidential hopeful, Hillary Clinton, was reported to have promised workers in Detroit that she would “ban” import of one-ton pick-up trucks from Thailand! Like the rest of the world, Thailand would have to adjust to the new American government.

Rough road ahead

In Thailand, even if PPP were to succeed in forming the new government, they would never be able to run the country like Thaksin’s TRT Party did. It would be more difficult to control the MP’s now that they could vote freely, without toeing their party’s line. The composition of the Senate (50% to be nominated by various elite groups) as well as the constitutional requirement that important issues were to be jointly voted by MP’s and Senators, would make it almost impossible for the new government to bulldoze their way in the parliament. The Democrats, as the sole Opposition Party one more time, would have more clouts and enjoy greater support, especially from their powerful Bangkok constituencies. The independent watchdog organizations and NGO’s too have been better armed by the new Constitution to move against corrupt politicians, bureaucrats and their collaborators. With Thaksin & Co. still to be tried by a no-nonsense court, and, a stronger and larger base of disappointed and still-angry middle-class taxpayers, it would indeed be wishful thinking to expect political stability, let alone “business as usual”, to return so quickly to Thailand, under the PPP coalition government, even with Banharn were to be made the Prime Minister.



Vongthip Chumpani
7/1/08