Mending the fences

Thanks to FIFA, Thai football fans put away their politically colored shirts to spend sleepless nights watching the World Cup matches in South Africa. News of favorite teams and players dominated most newspapers and TV screens. An avid football fan himself, PM Abhisit has, however, managed to accomplish most of what he had promised. On 7/6/10 he left for half a day trip to Vietnam, to attend the World Economic Forum and meet up with Asean leaders at the Greater Mekong Sub-region summit meeting. He took the opportunity to brief world’s business leaders of the current political situation in Thailand and to assure them that his government was taking every possible step to restore law and order while moving the country forward toward national reconciliation. On 7/6/10 he announced another cabinet reshuffle (5th), with 8 new ministers mostly from the Democrat Party. Throughout the month, the Abhisit government continued to address the country’s most urgent economic issues i.e. severe El Nino drought (worst in 18 years) that had delayed rice planting by at least 6 weeks. The Mapthaput environmental problems were finally sorted out, with 18 activities to be banned and clearer rules and regulations to become effective by year-end. After years of frozen salaries, civil servants were granted a special bonus to be paid out in 10/10 and a 5% salary increase to be effective in 4/11. Farmers’ problem loans too were being refinanced or restructured with hefty haircuts. The first lot of community title deeds was given out. Shooting prices of sugar and eggs were promptly addressed and lowered. Rescue package for those affected by the Rajprasong shutdown and arson was fine-tuned and extended to include foreign businesses in the area. To ease the burden of the urban poor, free electricity (max 90 kw), free (hot) bus, free (third class) train and subsidized LPG, were extended till year end, when PM Abhisit hope to make some of them permanent.
 
Reform Thailand

To restore social equilibrium, PM Abhisit quickly launched his 5-points National Reconciliation Roadmap. Sombat Thamrong-thanyawong, a respected academic was appointed to chair the panel to scrutinize changes to the Constitution. Former Attorney General Kanit na Nakorn was chosen to head the independent fact finding panel called Truth and Reconciliation Committee, to probe into the root causes of the violent clashes in 5/10 within 2 years. On 18/6/10 former PM Anand Panyarachun agreed to head the independent panel to set out national reform policies. He would be working closely with Dr. Prawase Wasi, a highly respected social commentator, who was asked to lead the National Reform Assembly to gather public views on how reforms should be implemented to overcome social disparities. Implementation plan would be worked out within three years, with an annual budget of THB 200 million. PM Abhisit also appointed Yubol Benjarongkit to set up a panel to kick-start reform of the media. Last but not least, Pol Gen. Vasist Dejkunchorn was invited to chair the panel to restructure the police force.

Do you hear what I hear?

In the belief that public policies should come from the people, not from a few people with their own agenda, PM Abhisit has initiated a number of public hearings in earnest. On Rice Day 5/6/10, farmers were invited to air their views at the government house. In successive events, PM Abhisit extended his invitation to various sectors of the Thai society e.g. NGO’s, civic groups, academics, local and international business groups, foreign diplomats, foreign investors, local and foreign mass media, to share and exchange their views with him on national reconciliation and reform issues that were important and of special concern to them. For 6 days, the PM, his cabinet members and hundreds of civic minded volunteers took turn to man some 300 telephone lines opened to any callers who wished to air their needs, recommendations and complaints. Most of the issues raised were related to the current economic hardships. Many were to give encouragement to PM Abhisit and his government. As expected, there were earfuls of abuses and insults from those who sympathized with the red shirt movement. Based on the number of calls on the subject, the ministry of finance had to set up a special hot line to record problems related to loans in the unorganized market. All input were documented and sorted out for further analysis and solutions under the national reconciliation framework.

CRES’ emergency

The Centre for the Resolution of the Emergency Situation has estimated that some THB 30 billion was spent on financing the red shirt movement’s political activities. Some 83 individuals and firms suspected of funding and acting as financial proxies for the red shirts were identified and told to clarify their financial transactions from 9/09 to 5/10 to CRES investigators representing the DSI – Department for Special Investigation, the Revenue Department, the Anti Money Laundering Office and the Office of the Narcotics Control Board. Through it all, there were death threats against key government officials and a few bomb explosions at some of the 68 targets identified by the security people. Two red shirts were arrested in Siemreap and sent back to Thailand by the Cambodian government for masterminding the bombing of the Bhumjaithai Party headquarters In spite of private sector’s recommendation to the contrary, the Abhisit government decided to maintain the Emergency Decree in Bangkok and in 19 provinces in the Northeast and the North as a matter of precaution against threats of another major violent outburst.

All quiet before storm?

In 6/10 Thaksin has kept a low profile and did not call home as was the habit. Instead, his cause was aptly amplified by a team of international lobbyists, led by a Robert Amsterdam who made strategic and systematic attacks on the Abhisit government, accusing them of colluding with the Thai military to violently crack down on the red shirt movement and to permeate a non-democratic government. Throughout 6/10, there was a stream of negative foreign press and TV reports on Thailand. Thaksin’s “hired guns” took actions to discredit the Abhisit administration with the UN Human Rights Council, the US congress and the European parliament. Alas, the Abhisit government was able to contain the damages. UNHRC elected Thailand’s ambassador Sihasak, not only as a member but also as chairman of the council. The US Congress voted 441:4 in favour of PM Abhisit’s national reconciliation roadmap. A Bangkok by-election on 27/7/10 was expected to be a good indication of the snap election, to be called some time next year. It would go to show whether the Puea Thai Party candidate, a core red shirt leader arrested and jailed for terrorist activities, could win over a Democrat candidate, former deputy minister of foreign affairs responsible for “hunting down” Thaksin as he flew all over the world in his private jet.

A pleasant surprise

Notwithstanding the bloody political mess in 4-5/10, Thailand’s economic resilience has been substantiated once again by the better than expected 5/10 data. Public debt was down to 42% of GDP. And government budget deficit this year was expected to be only 3.5% of GDP. Investment has also picked up, mostly in machinery and equipment to support future export orders, with capacity utilization between 65-70%. Export of farm goods increased 42% yoy. Total export went up to USD 16.44 billion and import USD 14.14 billion. Trade balance was positive again at USD2.3 billion. Current account balance was USD 1.0 billion in the black. Balance of payment however recorded a deficit of USD 989 million. International reserves dipped slightly to USD 143.5 billion. As at end of 6/10, THB remained firm at THB 32.37 to USD, THB 36.23 to Yen, THB 39.71 to Euro and THB 48.67 to Sterling. In spite of net capital outflows from equities and bonds, the SET ended the month on a firm note at 797. Interest rates remained unchanged. The country’s 2010 GDP forecast was adjusted back to 5 - 6% and inflation to 3.5%. Export for 1-5/10 totaled USD 75 billion, up 34.5% from the same period of last year. The only bad news came from tourism, down by 20.2% in 4/10 and 12.9% in 5/10, with average hotel occupancy rate at only 30%. Arrivals from Asean and East Asia declined the most. Increased political stability was however expected to attract tourists from Europe and North America for the peak season starting in 10/10.

Businessmen’s pitch

To move the country forward, the Thai private sector has come up with their own 4 pronged economic development plan, to be undertaken jointly by regional chambers of commerce and provincial federations of industries. They would focus on increasing the farmer income, beefing up regional tourism, improving basic infrastructures through reduction of national logistics cost (from 19% to 14% of production cost), and increasing cross border trade, in preparation for Asean Community integration in 2015. The business community in Thailand has come to appreciate the necessity and the urgency of redressing the country’s huge wealth distribution gap. They have been pitching in with their own contributions in cash and in kinds. They would be coming up with new ideas and recommendations with regard to PM Abhisit’s latest challenge to substantially increase the minimum wages in exchange for tax incentives. While many believed higher minimum wages would give the poor a chance to upgrade their lives and thereby stimulate domestic spending, others cautioned that inflation could soon neutralize the benefits and make Thailand less competitive as an FDI destination. Ultimately mutually acceptable solutions would materialize as Thai society learnt how to constructively work out their differences and share the wealth of their nation more equitably.

 

Vongthip Chumpani
7/7/10