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| Thaksin: Uneventful comebackThaksin | |
In Thailand, it is an accepted notion that the voters in the impoverished rural north/northeast of the country determine the next government. And it is the voters in the urban district of Bangkok that decide when to oust that government. So the elections held in December 2007, in which the People Power Party – well known to be aligned with Thaksin Shinawatra, the deposed former prime minister – won, begins that new cycle. With Thaksin’s uneventful return to Bangkok on February 28, Thailand is where it was 19 months ago when a military coup removed him.
To be sure, the early months when General Sonthi Boonyaratkalin took the reins of the government, investors were cautiously optimistic that the new regime would usher in change. And change did come, but in a form that shook the market with the capital control measures introduced by the Bank of Thailand at the end of 2006, which spooked especially the foreign investor community already worried about the extra-constitutional means employed by the military in once again taking power.
As the grassroots cheered the return of Thaksin – and the former prime minister played to the crowd displaying utmost humility by kneeling and touching his head to the ground in the face of the throngs of adoring supporters and the media – Bangkokians could only heave a sigh of frustration, viewing his return with mixed feelings. Thaksin, after all, did stay away from Thailand for a good 17 months, opening up a golden opportunity for the opposition forces to implement wide-ranging changes as they saw fit. But in the rough-and-tumble world of Thai politics and the uneasy relationship with the powerful military, little headway was gained, especially on the economic front.
The irony is that the Democrats Party, the largest opposition party that has unsuccessfully challenged Thaksin’s style of governance – a mixture of authoritarian and populist dictates – has probably captured the best talents as exemplified by its leader, Abhisit Vejjajiva, an Eton-schooled and Oxford-educated economist, who also has the looks to go with his privileged upbringing. Abhisit ran on a platform of good governance and ethics. Alas, it was not enough. The Democrats Party was sidelined in the election of December 2007. In the selection for prime minister a month later, Abhisit lost by a large margin to Samak Sundaravej, a right-wing, old-school politician who was until then also a well-known television chef hosting his own cooking show.
The economic stimulus recipe
Samak has his work cut out for him especially in the kitchen of Thai families, with rising food and oil prices that are starting to hit the poor and the middle class. Inflation has jumped from just 2.1% year-on-year in September last year to 5.3% in March 2008. Thailand has also posted a growth rate of 4.8% last year, one of the slowest in Southeast Asia. Samak has promised to focus on restoring confidence in the Thai market and attracting investments to boost economic activity.
In the meantime, the government has introduced a 40 billion baht (US$1.3 billion) stimulus package that provides tax breaks for individuals and companies, including encouraging listing on the Thai exchange by offering preferential income tax rates for a period of three years. Samak has also announced a second stimulus package, mainly directed at the party’s rural constituents including credit support and debt moratorium to the tune of 72.9 billion baht for 2008 and concessional loans to the small-and-medium enterprises and export sectors totaling 94.9 billion baht.
If these economic stimulus measures look and smell familiar, it may be because it is the same kitchen (and same pots and pans) that Thaksin used when he was the head chef. Now with Samak stirring the pot and making sure of getting just the right consistency, investors cannot be faulted for expecting more of the same fare as when it was served 19 months ago. But as Thailand, like the rest of the region, enters a much less benign global environment – with the raging credit crisis in America and Europe – what may be interesting to find out in the months to come is whether Samak is able to mix his own blend in the face of the new challenges ahead.
