Welcoming the (Mad) Bull

While celebrating the New Year with their families and friends, people were wondering what kind of a Bull year 09 would turn out to be. After months of having been mauled by the year of the “Fiery Rat” and devoured by “the Angry Bear” in 08, people had become so stressed out that they were more than willing to take off and forget about all the political and economic hoop-la’s. The 5-day break was good also for the local economy as bonuses were spent on gifts, food and drinks. Alas, the holiday cheer was marred not only by the usual road accident deaths (367) but also by a shocking New Year Eve fire at one of Bangkok’s most popular nightspots, that claimed the lives of 64 people!

Strange bedfellows

During the first week of 12/08, Thailand continued to walk through political hell-fire as MP’s went back and forth trying to negotiate the best possible deals to form a new coalition government. It was touch and go until on 8/12/08, most of the MP’s from the coalition parties and 37 from the former PPP suddenly switched camp and joined the Democrat Party to vote (237:198) for Abhisit Vejjajiva as the 27th PM of Thailand. On 17/12/08 Abhisit received the royal appointment and became the 4th PM of Thailand in 08! When the 36 cabinet members were finally appointed on 22/12/08, however, the public was more than disappointed to see only 15 well qualified ministers from the Democrat Party. The rest were mostly poorly groomed “nominees” of the banned coalition party-bosses! In spite of PM Abhisit’s 9 iron-clad codes of conduct for his cabinet members, most voters remained skeptical. They were wondering how the less-than-perfect cabinet would be able to lead Thailand through a perfect economic storm that has already started to rage. Many were heard betting that the Abhisit/1 government would not last 3 months!

Bridge over troubled waters

With 16 years of experience in politics and 5 times as MP, PM Abhisit seemed to be well prepared as he eased into the premiership under tumultuous circumstances. Notwithstanding a great deal of doubts and apprehension, PM Abhisit seemed to have managed to win over more and more sympathizers, from the elites as well as from the grassroots. They were attracted, less by his looks, than by his cool, calm, polite yet determined manners. Notwithstanding aggressive (and often abusive) protests and nasty threats from the Red Shirts, the unassuming PM has remained unperturbed yet reconciliatory. From the start, he has systematically made courtesy calls on key political bosses, held meetings with key civic groups (farmers, youths, handicapped) and confer with key business leaders, in order to seek their cooperation, support, advice and recommendations. PM Abhisit has managed to hit the ground running and has been working against time to deliver within 99 days what he has promised in his policy statement i.e. to restore shattered investors’ confidence, unify the nation, set up a permanent body to tackle southern unrest and form a political reform panel.

Down but not out

The unexpected parliamentary defeat that ended the TRT/PPP/Puea Thai regime, has infuriated and put Thaksin & Co. in a complete disarray. Meanwhile the Red Shirts have tried to step up their offensive demonstrations and unruly street protests. On 28-29/12/08, they surrounded the parliament to prevent the Abhisit government, MP’s and Senators from holding the required policy-statement meeting there. After 2 days of a cat-and-mouse chase, a parliament meeting (330 MP’s and Senators) was finally called on 30/12/08 at the Ministry of Foreign Affairs. PM Abhisit read out his two-hour policy statement, responded to questions raised by a few Senators and went on to chair his first cabinet meeting at the newly restored Government House. Apparently, the sudden change in government has also made it more difficult for Thaksin to continue to champion his own cause with foreign governments and mass media abroad. When his red passport was finally cancelled, his whereabouts have become “unknown” although he continued to phone-in to address his faithful followers whenever they gathered. It was also reported in the foreign press that his fortune has dwindled from USD 5 billion to USD 500 million, as the result of the 08 Global Market Crash. Meanwhile, his divorced wife, Pojaman, has quietly returned to Thailand and their son, Parnthongtae, has made his appearance at some of Puea Thai political campaigns.

Changing fortunes

The global recession and the internal political turmoil have brought Thailand’s 11/08 economic figures into the negative. Export plunged 10.9% to $11.8 billion (excluding extraordinary items). Import was up 0.2% to $ 12.65 billion. Trade deficit $894 million. Current account deficit was $935 million. However, balance of payment showed a $2.2 billion surplus and international reserve increased to $ 106.3 billion. Tourist arrivals slumped 22% with only 1.1 million (14.5 million in 08). Manufacturing capacity fell to just 61% vs an average of 74% for the whole year. Business sentiment index sank to a record low of 34 vs a median of 50. The 12/08 figures were expected to improve marginally with more tourist arrivals and lower oil prices. Now that inflation has plunged to 0.4% in 12/08 (9.2% peak in 7/08 and averaging 5.5% in 08), interest rates should be lowered as the focus has now shifted from inflation to deflation. The Baht has softened to end the year at around THB 35. The SET remained firm at 450 (P/E 7), down 48% for the year and in line with other regional markets. GDP growth for 08 should be around 4.5%.

Cloudy weather ahead

Many have come to believe that 09 might not be as catastrophic as the doomsayers have been saying. Seemingly, the Thai economy has been comparatively resilient and diversified, standing on three legs i.e. manufacturing, agriculture and services. As expected, foreign and local OEM manufacturers would be closing down more factories as their export orders disappeared. Many SME’s and retailers too would not be able to survive the lack of customers and the credit crunch. Unemployment was expected to reach a million this year. Like other countries in the region, Thailand could go into a recession if the government’s THB 100 billion extra stimulus budget were proved to be too little too late. However, with greater political stability, more earnest government, closer public-private sector cooperation, improved consumer confidence, lower interest rates, weaker Baht, better tax incentives, and more focused schemes for the weak and the poor of the society – all these should go a long way to keep Thailand floating above the water - at least until the global recession eased in 2010.

Rebuilding confidence

So far, it seemed that the international community has been rather pleased that Thailand has managed to overcome her worst ever political crisis without any bloodshed or military coup. The Abhisit coalition government too appeared to have encompassed most of the key political, business and social interest groups to ensure stability. The much feared “new politics” has proved to be quite groundless. The PAD has announced they would be setting up a political party of their own. Threats from the Red Shirts have become more of an irritation than much else. With better public communication, through more effective management of the public mass media, the Abhisit government should be able to reach out to the unhappy voters in the north and the northeast. Given more time, efforts and education, the deep divide in the Thai society should narrow significantly once the majority of the people realized that the country’s survival would depend on national unity, respect for the rule of law, and a clean and transparent government.

Repairing image

To lift the sentiments of both local and international business community, the new government seemed to be working hand in hand with the private sector through the Board of Trade, the Federation of Thai Industries, the Thai Bankers Association, the Bank of Thailand, the SET and the Joint Foreign Chambers of Commerce, to conduct public hearings and seminars. Plans were also being finalized for international road shows to promote Thailand, export, foreign investment and tourism. PM Abhisit has quickly scheduled the ASEAN Summit Meeting, to be hosted by Thailand, from 27/2/09-1/3/09 in Hua Hin. The ASEAN+3 and +6 have been tentatively set for end of 4/09. Meanwhile, the Parliament would be convening on 21/1/09 to ratify the ASEAN Charter and to pass all the long-impending Bills.

Happy New Year

In conclusion, may I take this opportunity to thank you, dear readers, for your kind support throughout 08 and to wish you and your loved ones a Happy New Year. May you be blessed with the best of health, happiness and prosperity. May all your hopes and dreams come true - in spite of those dire predictions!



Vongthip Chumpani
7/1/09