Google
 

Monday, December 31, 2007

Asia Sentinel: Thailand's Economy After the Election

Thai Economy Ready for Liftoff


Daniel Ten Kate

I think this an excellent analysis concerning Thailand's post-election economy.

Excerpt:

For starters, all the parties campaigned on policies that mirrored Thaksin’s populism, so these programs, which were watered down or eliminated after the coup, should be resumed fairly quickly. More village loans and agricultural price supports should boost domestic demand and increase confidence among local investors.

Although the junta spent lots of energy demonizing these programs as fiscally unsustainable, Kongkiat downplayed those concerns. “After the financial crisis we spent more than one trillion baht bailing out companies that defaulted on loans,” he said. “The village fund program cost may be 70 billion baht, and the default rate is very low. There is no comparison. Any government that comes in will have to lift the GDP per capita of low-income earners as they comprise 80% of the population.”


Secondly, firms are just waiting to invest. Industrial capacity utilization is now averaging about 80%, according to statistics from Thailand’s central bank. This is the highest level since just prior to the 1997 economic crash, when firms over-expanded. Now the private sector needs to invest to grow, but businesses are waiting for political stability before spending.


Thirdly, plans for massive public infrastructure projects initiated during Thaksin’s government have already been drawn up and are just waiting to be implemented. The military government has already secured financing for at a new subway line, and more are planned for the future. Moreover, large investments in power plants, highways, logistics services and a new industrial estate along the country’s southern seaboard have already been planned and just need approval.


The increased public investment should boost imports and ease Thailand’s ballooning current account surplus, which will take some pressure off of the baht. The elected government will likely do away with capital controls, as they have had only a marginal affect on the currency caught between China’s pegged yuan and the falling US dollar.


Despite all the positive signs, investors are likely to tread cautiously for a few months. If the PPP manages to form a government as expected, rumblings from the military or other parts of the pro-coup political establishment could again keep the economy from firing on all cylinders.


“People in the urban areas, especially the middle class in Bangkok, will feel very untrusting of a new PPP-led coalition government,” said Sompob Manarangsan, an economist at Chulalongkorn University. “It’s not only economic policy itself that’s a factor but political problems are also a prominent obstacle for the Thai economy.”


This is where the outspoken Samak could be a problem as prime minister. A PPP government that focuses on economic issues could do away with the military government’s murky economic policies and establish clear-cut laws and regulations, restoring the confidence of investors and reinvigorating the economy. But if Samak pushes too strongly for Thaksin’s return and the dissolution of the junta-led investigation into his financial dealings, then the coup-makers might get antsy.


If PPP has a stable coalition and focuses on economic policy rather than Thaksin, I think Thailand will have a strong recovery.

However, this is Thailand after all, so logic and good sense go out the window when it comes to politics.

Quite frankly, I think the media, PAD, and the military will cause a lot of problems with their Thaksin obsession, do everything in their power to sabotage PPP, and the military appointed Senate will put up barriers to any kind of economic and political reform that might benefit the economy at the expense of their power and money.

In other words, political squabbles, vendettas and protection of personal agendas and greed will supersede good policy.

Also, I think Samak's incompetence and big mouth will definitely be a factor in destroying investor confidence in the economy.

1 comment:

tutekx said...

Easy Get Money
1. go to the following link; http://www.AWSurveys.com/HomeMain.cfm?RefID=tutekx Join this site. It is also free. You get paid for completing surveys over there 6$ to 4$ dollars per survey and 1.25$ per referral . have a 1 year premium account and now i am collecting some exta cash .
2. Then create a paypal PREMIUM Account at this address. It is free; http://www.paypal.com When asked for credit card details simply say cancel. You do not need to fill it . Another thing you can also use paypal money to buy stuff on ebay and other shopping sites.
3. Thats is it. So Simple and I swear it works.
4. I learnt this from another friend and i thought it will be good for my friends here. So I thought of helping
5. Try Now Klik Here

1. go to the following link; http://www.AWSurveys.com/HomeMain.cfm?RefID=tutekx Join this site. It is also free. You get paid for completing surveys over there 6$ to 4$ dollars per survey and 1.25$ per referral . have a 1 year premium account and now i am collecting some exta cash .
2. Then create a paypal PREMIUM Account at this address. It is free; http://www.paypal.com When asked for credit card details simply say cancel. You do not need to fill it . Another thing you can also use paypal money to buy stuff on ebay and other shopping sites.
3. Thats is it. So Simple and I swear it works.
4. I learnt this from another friend and i thought it will be good for my friends here. So I thought of helping
6. Try Now Klik Here