The Vongthip Letter Apr 08

And you thought everything is going smoothly in the kingdom? With the new rulers in tempered control and the great puppet master quietly in the background?

You couldn’t have been more wrong. Khun Vongthip Chumpani of Bangkok Bank explains you why.

Welcome to another issue of Khun Vongthip’s monthly eye-openers. “Not so rosy a picture,” Khun Vongthip says, those “shameful behaviors of the newly powerful.”

By Vongthip Chumpani*

Happy days are here again? Now, with both the military and police seemingly subdued, the DSI in PPP’s full control, the court cases more or less stalled, the AEC isolated before their expiration in 6/08, and, most of the mass media (except perhaps some newspapers and a cable TV) toeing their line, the PPP Government has indeed managed to provide Thaksin with a perfect landing platform to return to power.

Much sooner than expected. Unlike former PM Surayud and CNS Chairman Sonthi, who have faded away as soon as their “leaderships” ended in 2/08, Thaksin was flying high both inside and outside the country, before and after his self-imposed exile.

Following his “low profiled” first visit home on 28/2/08, Thaksin has become bold enough to start holding court publicly during his second return on 30/3/08. DPM Chalerm and most of the PPP cabinet members were expected to join thousands of pro-Thaksinists to pay their “homage” and celebrate Songkran with their “Dear Leader” on his home turf in Chiang Mai.

Not so rosy a picture

After two months, the general public as well as the bureaucrats seemed to have been stunned, confused and frustrated by the Samak government, their ever changing policies, incredible announcements, unthinkable regulations, and arrogant orders from the “real” and the “nominee” PPP leaders, cabinet members and MPs. Then there were bizarre and often shameful behaviors of the “newly powerful” in the cabinet and the parliament. Through out 3/08, PM Samak was fighting tooth-and-nail to exert his leadership within the PPP while holding on to his premiership. Between his weekly TV talk-shows and squabbles with the mass media, he went to pay courtesy calls to our neighbors, accompanied always by the Army Chief, General Anupong, who was appointed Head of Internal Security Operations Command.

Things went from bad to worse when PPP’s spokesman mercilessly chided their party leader for idle chattering. After only two months, PM Samak seemed to have squandered most of his credibility with the public. The last straw was when he abruptly changed his stand. He announced his support for the immediate amendment of the 2550 Constitution (Articles 309) and vowed to return for a second term if it was necessary for him to dissolve the parliament!

Guilty as charged?

Throughout 3/08, the AEC was racing against time to finalize their cases against Thaksin. So far, the Attorney General has accepted only 3 cases i.e. Ratchada Land, SC Asset Share Concealment and Exim Bank’s Loan to Burma. The AEC themselves had to send the Lottery and the Rubber-shoots cases to the Supreme Court of Political Crimes. On 12/3/08 Thaksin appeared in court to hear the charges of the Ratchada Land case before leaving the country, with the court’s permission, to take care of his business abroad.

The hearing on SC Asset was postponed until 15/5/08. When the Supreme Court accepted the election fraud case against Yongyut Tiyapairat, he had to immediately relinquish his highly prestigious House Speaker’s post. Then the EC went public with their legal dilemma that would leave them no choice but to recommend to the Constitutional Court to dissolve the Chart Thai, Matchima, and, possibly the PPP Party, for their election frauds.

Their cup running over

Meanwhile, it has become crystal clear to most educated voters that Thaksin has indeed planned to return to power as soon as the 2550 Constitution was amended, his 111 lieutenants freed from political ban, and his THB 73 billion unfrozen and returned for “better uses” in the next election. On 28/3/08, the PAD organized their first meeting (since 19/9/07) at the Thammasat University. Thousands turned up for the political seminar.

Hundreds more, however, were barred from entering the auditorium by the police because of a belligerent and abusive mob of 100 or so that were shouting profanity and throwing bottles and bricks at the seminar participants. The PAD vowed to fight to the death to prevent the constitutional amendment without the necessary consent of the people, through proper public hearings, parliamentary debates and even a referendum – as called for by the 2550 Constitution.

The time of reconciliation has ended. Anti-Thaksinists were back to protest peacefully at their weekly “political concert”. PM Samak was not “crying wolf” when he claimed that another coup was in the making. This time, however, it would not be staged by the military but by some of the 12 million people who did not vote for PPP !

Back to the brink?

Joining the chorus against an immediate constitutional amendment for the benefit of a few rather for the good of the country, were the country’s wise-men, statesmen, senators, academics, former members of the Constitutional Drafting Committee and the general public. The PPP government was accused of trying to amend Articles 237 and 309 in order to escape party dissolution, and, to unchain in one simple stroke, Thaksin and his TRT 111 Executives from all their pending court cases of election frauds, corruption and conflict of interest.

Many warned of another political upheaval if the PPP Government were to go ahead with their amendment plan. A move has also begun – to get 20,000 people to sign up for the impeachment (under Art 122) of the MPs who voted for the constitutional amendment. The 5 coalition parties were reminded of their election promises and were told to withdraw from the PPP government rather than join in the amendment process.

The economy

In 2/08, the country’s current account surplus narrowed to $ 752 million as the result of $ 620 million trade deficit. Export went up 16.2% (+37% for export of fuel-efficient pick-up trucks) while import surged 32.5% ($ 13.51 billion from oil alone). Domestic private investment managed to inch up by 0.3% while manufacturing index increased by 14.7%.

The World Bank has revised their forecast of Thailand’s 08 GDP upward to 5%, based on improved domestic demand, largest tax incentive package in decade, and a string of more economic stimulus schemes e.g. reduction of property transfer taxes, 2 year extension of 7% VAT, THB 4 billion loan to farmers to promote biofuel-making crops etc. Government’s financial institutions were also pushed to ease their NPLs and expand credit more vigorously especially among PPP voter-groups.

The mega projects were being pursued quietly, without the usual fanfare. Samurai Bond of Yen 50 billion was also launched to finance infrastructure projects. The BOI granted tax incentives to 3 auto manufacturers (Toyota/Mitsubishi/Tata Motors) for their multi billion eco-car projects. There were talks of doing away with Annex 3 of the Foreign Business Law and a quick revival of all FTA negotiations.

Where has all the rice gone?

After the prices of oil and gold have eased somewhat in mid 3/08, commodity prices, particularly rice, have started to shoot up. Ruthless speculators moved in for another kill. According to the World Bank, 33 countries around the world face potential social unrest because of acute hike in food and energy prices. Rice prices worldwide went through the roof as Asian countries panicked and started to build up their strategic food supplies.

Due to bad weather and weak crops, India and Vietnam had no choice but to announce rice export ban. The Philippines and Indonesia were importing rice frantically to make up for the shortfalls. Thailand, as the world’s largest rice exporter, was caught more or less off guard.

Minister of Commerce, Mingkwan, fumbled badly with a series of wrong measures to make the most of this golden opportunity. Thai rice exported defaulted on their orders. Singapore had to switch to buying Burmese instead of Thai rice. Finally, Minister Mingkwan had to release 650,000 tons of government’s stockpile (2.13 million tons left, enough for 3 months) for local retail sale at below-market prices to stop speculation and panic hoardings.

Savers’ woes

With inflation shooting up to 5-6 % level, citizens have been finding it harder and harder to survive, let alone to maintain their lifestyle on 1%-2% negative interest rate income. The cost of food, which has never before been of concern, has been shooting up, as in the cases of rice and pork. For the coming Songkran Holiday (6 days for the public and 5 days for the financial sector), many have opted to stay home instead of traveling up-country because of the high oil prices (around $ 101-105), the fear of impending global recession (below 3.7% growth in 08) and the possibility of further increase in domestic inflation rates.

The SET, hovering at around 800-830, continued to be affected by both the negative global investment trend and the increasingly disturbing political development at home. The Baht fluctuated between THB 31-32. Gold peaked well above $1,000 before plunging to $ 887 and back up again to end the month at around $ 950.

* Vongthip Chumpani is an advisor to and former president of Bangkok Bank and a former advisor to the Senate Foreign Relations Committee. All views and opinions expressed herein are entirely from her own personal observations.