The Vongthip Letter Aug 09
Keep on going: In 7/09, PM Abhisit continued to work hard and to reach out to as many people as possible at seminar events and ground visits (Buriram and Songkla). He needed to communicate and explain his government policies, solicit cooperation for their successful implementation as well as to listen to the people’s wish lists. In spite of daily criticism in the press, PM Abhisit was well received wherever he went. His speeches were considered to be sincere, brief, factual and easily understood albeit without the dramatic effects that Thai voters have got used to.
Many have come to believe that to be successful, a Thai prime minister needed to have at least one if not all of the three most vital elements i.e. money, power and “baramee” (trust, respect and influence). PM Abhisit did not have money or power, and he would need more than seven months to prove his worth and to build up his “baramee”, all the more so since he came to the office after six years of Thaksin’s high-profiled “extravaganza” and while the country was going through the worst ever political crisis too!
Working constraints: Unlike in 4/09, the Abhisit government was able to host a series of high-power international meetings with great success (and security) i.e. the Asean Ministerial Meeting from 20-23/7/09 in Phuket, during which Mrs. Hilary Clinton made her first official visit to Thailand before joining the ARF Meeting, and, the Asean Inter-Parliamentary Assembly on 4/8/09 in Pattaya. According to the polls, however, PM Abhisit’s popularity at home seemed to be heading south in 7/09. Making matters worse, were the unexpected spread of the H1N1 ’09 flu and the more intensified onslaught of Thaksin’s expensive and expansive anti-government campaigns.
By Vongthip Chumpani*
Some of PM Abhisit’s “friends” too appeared to be turning against him while his “partners” were intent on pursuing their own rather than the government’s agenda. As the result, the beleaguered PM was taken to task by both his supporters (for being too soft with his partners) and his opponents (for being ineffective and under-achiever). In spite of the constraints and the criticism, PM Abhisit promised to work even harder to ease the people’s economic pains and to clear the political conflicts, when he and his cabinet presented their 6-month report card to the public on 6/8/09.
New challenges
With the fast approaching fiscal year-end and the mandatory retirement for government officials (30/9/09), a new time-bomb seemed to be ticking away. First on the table was the police reshuffle, under the new structure scheduled to become effective on 16/8/09. PM Abhisit was walking on very thin ice as he maneuvered his way through another power struggle among the Yellow, the Red and the Blue Shirts. The long delay in police investigation of the attempted killing of PAD’s leader, Sondhi Limthongkul, seemed to have given the PM Abhisit no choice but to tackle this new can of worms head-on.
According to market rumors, corruption was rearing its ugly again. Although most voters have come to appreciate PM Abhisit’s personal integrity, they simply did not trust some of his colleagues and partners who seemed to be “raking in” for the next election. Large and small government projects were questioned and/or delayed when PM Abhisit tried (in vain?!) to ensure transparency and good governance.
Takki’s offensives
In 7/09, the Red Shirts could again capture the headlines for days on end with news of their Dear Leader’s 60th birthday bash, in absentia among his ardent admirers. The much awaited surprise was his phon-in crooning of “I shall return” and his promise to donate one billion Baht for 6,000 scholarships, 3 cable TV channels, Facebook and Twitter as well as a new magazine for his fans. To show their gratitude, some 5 million Phuea Thai voters were reported to have signed the petition for a royal pardon for Thaksin.
The Abhisit government, along with academia, legal experts and royalists came out to voice strong opposition against such unprecedented petition, cautioning that it was not in accordance with the law or the tradition. Most viewed the exercise as another ploy to win voters’ sympathy and deepen the “great political divide” that the Abhisit government has bent over backward, trying in vain to heal. The public had another reason to remain jittery about continued political conflicts.
Deadly flu
As of 2/8/09, Thailand ranked 5th among 25 countries with H1N1 2009 flu casualties, with 67 deaths and 8,877 affected, behind Brazil and ahead of Australia. Throughout 7/09, the death toll continued to climb as medical experts and politicians tried to come up with the most effective prevention and cure measures. Apparently the flu has proved to be most fatal to pregnant women and those with chronic diseases including obesity. Fortunately, the pandemic seemed to have peaked during the last week of 7/09 when oseltamivir anti-viral drug was made available to all hospitals and clinics. Experts warned that the second outbreak could return as early as the beginning of next year. Meanwhile, the Thais have at last become more accustomed to wearing medical masks and taking other necessary health precautions.
End of the tunnel?
The 6/09 economic figures have proved to be more encouraging. Overall economy continued to contract at a slower pace. Domestic consumption rose 2.6% from previous month and 1% from 1Q09. Manufacturing production increased slightly while private investment showed small improvement for the first time in the last nine months. Business sentiment improved with increased orders. Although export of electronics was up, total export was USD 12.16 billion, down 16.4% yoy. Import was USD 11.22 billion, down 26.3% yoy.
Trade balance, current account balance and balance of payments all remained positive at USD 939 million, USD 477 million and USD 27 million respectively. International reserves went slight down to USD 120.8 billion. The Baht ended the month at THB 34.14 to USD, far too strong for the liking of the exporters but still very much in line with the weaker greenback and the appreciation of other regional currencies. The SET ended on a strong note at 624 as oil prices surged over USD70, due to the anticipated global recovery.
As good as it gets
Like elsewhere in the world, the Thai economy seemed to have hit the bottom. The recovery, however, would be long drawn out due to continued weak global demand, the flu pandemic and the on-going domestic political problems. Business people were advised to stop hoping in vain for a U shape economic turnaround that the country has previously been enjoying. Many have come to realize that the global scenario has changed and that they would have to change to survive and prosper.
According to business gurus, world trade would contract and stagnate for another 2-3 years. Thailand would have to switch from being too dependent on export (now 65% of GDP) and to focus instead on domestic market, especially agriculture and service sectors. Exporters would have to upgrade products for higher value-added, improve on technologies and R&D to lower energy and other operating costs as well as to diversify markets and supply chains to reduce high and wasteful logistic costs.
Financial tools
Unlike many countries, the Thai financial sector has remained comparatively healthy, albeit less robust to cater to the needs of the real sector, due to the increased risks. Being mindful of the plights of business operators especially the SME’s, the Abhisit government has been quietly introducing a number of easing measures. Following the successful launching of the highly popular THB 80 billion government bonds in 7/09, the Ministry of Finance has injected additional capital into the six state-owned banks to enable them grow their loans by THB 350 billion. Oil excise tax was also reduced (to 60% from 80%) and there were serious talks about new capital market development, tax incentives for national pension funds and income tax reduction, not to mention new property taxes to ensure maximum land utilization.
Back to square one?
Throughout 7/09, the general mood of ordinary Thai citizens was quite depressing. Although the economic situation seemed to be improving slowly, the political restlessness was intensifying and spreading like the new flu. Many people continued to fear the possibility of renewed political nightmares. They were saddened also by the blatant show-casing of egos and self-interests by the “old power” and by the more subtle threats but scathing criticism from the “new power”. People had to listen very hard to hear anyone talking seriously and sincerely about national unity and common well-being of the country as a whole.
* 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.