Faded Smiles

The Financial Times has a backgrounder analysis on the recent political events leading up to the current Thai mess. Most quotes and paragraphs will catch your eye, such as “Some of the vestiges of latent feudal society will have to give way,” or ”Thai leaders have consistently paid lip service to the creation of a stable liberal democracy. Few have given much shrift to talk of Asian-style democracies proffered by the likes of Singapore, dominated by one political party since independence. Nor do many Thais, in spite of the hyperactive role the military has played in politics, countenance the idea of authoritarianism.”

Further along we read this classic: Much of the Thai elite is fearful of the aspirations stirred by Mr. Thaksin. Even Anand Panyarachun, a former prime minister associated with more inclusive social policies, insists Thailand should shun the blind pursuit of economic growth. “We have ambitions, but we don’t have exaggerated ambitions,” he says. Playing down social needs, he adds: “Here we are lucky in the sense that we have such a temperate climate, and you don’t need much shelter, and you don’t need much clothing and everywhere you go you can always get people to give you food.”

It’s a good, it’s an important piece. Not too surprising, but take your time for a careful read. The essence of the analysis though is summarized in the text box on the right: “Foreign investment – After the airports paralysis, ground is fast lost to regional rivals.” The very fact our dear leaders try and try to sugarcoat. The laws of physics though do also apply to the kingdom of Thailand. An ambiguous rule of law has consequences. What price is a nation willing to pay? The once proud regional show case has become a political laughing stock. The airport seizures in 2008 changed it all – still, the “liberators,” causing no little harm to people and nation, walk free.

From the FT:

Thailand’s political turmoil has come at a high price, with foreign direct investment tumbling in the short term. But given the worries for investors, FDI has been notably resilient over the longer term.

“It is still coming in,” says Tarisa Watanagase, governor of the Bank of Thailand, the country’s central bank. “We thought that last year, with the global situation and the political situation, FDI would dry up, but it still came in.”

The fall was steep, however. In the first 11 months of 2009, FDI disbursements were some Bt266bn ($7.7bn, €5.6, £5bn), down 43 per cent on the same 2008 period. The slide was much greater than Vietnam’s full-year fall of 13 per cent or Indonesia’s 28 per cent drop.

Analysts are reluctant to attribute the entire fall to political turmoil, pointing out that Vietnam has benefited from being a low-cost producer and Indonesia from its natural resources. Another factor in the mix was that Japan and Europe, Thailand’s main foreign investors, were themselves hit disproportionately hard, with Japanese FDI falling 75 per cent.

Long-term investors in Thailand are a hardy bunch, acclimatised to the unpredictable rise and fall of governments and the enthusiastic participation of the military in running the country. In the past, these upheavals had little practical effect on the business environment.

That changed in December 2008, when thousands of anti-government protesters took over Bangkok’s airports for a week, trapping tourists and businessmen and blocking air freight export routes. The Bank of Thailand estimated that the siege cost some $8.5bn.

Analysts say the problem is not so much that Thailand’s allure has declined in absolute terms, though it has, but that it has declined so much relative to rivals.




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January 14, 2010 | Filed Under Business & Economics, News & Media, Politics 

Comments

One Response to “Faded Smiles”

  1. Mr. V on January 14th, 2010 9.36 am

    Love the Anand quote. Shows why any move towards any sort of social help for the people is smacked down by the big guns. “Hey, guys, it is lovely weather here, beaches, and sorts. Go begging! Why you ask your government to help you! It is socialism, pure communism and heck populist too!” Hmm why all this sounds so U.S.A. and China to me hmmm. Oh well, I am a Northern European so I am pampered lazy person anyhow.

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