The Vongthip Letter Feb ‘10

Holding on: Following the burst of corruption scandals and in anticipation of the impending no-confidence debate, PM Abhisit had to replace/reshuffle five cabinet members in 1/10. Since the new year, PM Abhisit seemed to have become remarkably bolder in his move against corruption and arm-twisting demands from his coalition partners. He has also become more willing to risk his neck politically in order to deliver what he believed to be the best for the country.

His popularity soared when he insisted that all cabinet members abide by his “9 codes of conduct” and that they take responsibility by resigning when involved in a corruption scandal. Through out 1/10, PM Abhisit continued to deliver e.g. launching the THB 10 billion second Village Fund, publicizing fresh government direction and support for education on Teachers Day and Children Day, visiting the deep south to ensure effective and transparent utilization of additional development fund, opening new medical center for pollution-affected patients in the Map Ta Phut area.

Fragile situation: Notwithstanding the highly distracting political incidents and a cabinet reshuffle, PM Abhisit was able to address, with different degrees of success, those difficult-to-resolve domestic problems e.g. the Map Ta Phut environmental dispute, the corruption plagued Thai Khem Kaeng projects, the ineffective GT200 bomb detectors and airship, the forest land encroachment scandals, the 4-month delay in police chief appointment, the teething problems of Asean FTAs that became effective on 1/1/10, the negative report on Thailand by Human Rights Watch.

By Vongthip Chumpani*

To help the earthquake victims in Haiti, USD 100,000 cash and 20,000 tons of rice were donated by the Thai government, with some THB 40 millions more being raised by government-private sector joint initiatives. During the last weekend of 1/10, PM Abhisit was able to get away to attend the 40th WEF meeting in Davos, Switzerland. His presentation on food safety has certainly lifted Thailand’s image and role as one of the world’s five net food exporting countries. Elsewhere, Finance Minister Korn and Minister of Foreign Affairs Kasit represented Thailand in international forum, where world’s political and financial leaders continued to coordinate and collaborate to balance their exit strategies with the still-fragile global recovery.

Thaksin’s last battle

As expected, Thaksin & Co. continued their all-out multi-pronged fight to topple the Abhisit government and “Amataya,” before the verdict was passed (26/2/10) on his THB 76 billion frozen assets. Verbal ultimatum and threats of a country-wide violent uprising (to coincide with Thaksin’s invasion from Cambodia?!) were matched by unruly parliamentary debates, abusive protests and aggressive demonstrations by the red shirts against members of HM’s privy council, army chiefs, senior judges, cabinet members, government MPs and key yellow shirt leaders and supporters.

A M79 grenade was hurled into the army chief’s office. Bags of increment were thrown into PM Abhisit’s house compound. Day and night, the red shirts were announcing their fighting schedules and tactics, as well as their anti-government and anti-coup propaganda, on their TV and community radio network. Joining the media war to win the hearts and minds of the grassroots voters, the blue shirts have started to match the red Shirts with their own TV and community radio network! The people in Thailand did not lose their cool as they tried hard not to feel threatened or intimidated by the prospect of a “civil war”!

Let justice be done though heavens fall

With deteriorating law and order prevailing now in the country, HM the King has called upon the judges, at both the Criminal Court and the Administrative Court, to perform their duty with bravery and justice now and through out their lives. They should be guided at all times by “dharma” when making their legal deliberations and passing their judgments. In respond, the senior judges, who would be risking their lives to sit in judgment of the Thaksin case, have declined special state protection, notwithstanding the nerve wrecking intimidation and death threats coming from the red shirts. Of all the law enforcement institutions, the judiciary branch of the country has emerged as the country’s only hope for true justice in the hour of need.

Keeping our fingers crossed

Meanwhile the five banned coalition party bosses were quick to take advantage of the volatile political situation. They teamed up to call for an immediate amendment of Article 94 and 190 of the 2550 Constitution in the parliament (in order to make it easier for them to “win” votes in the next election and to free some of their party bosses from legal implications in the ‘08 MoU with Cambodia on land around the Phreah Vihear temple?). Mindful of the public negative sentiment on this issue, the Democrat Party took a gamble and voted against supporting their coalition partners’ amendment motion.

Although it was unlikely that the coalition parties would break up with the Democrats (and risk losing their grip on the mid year budget allocation?!), it could not be altogether ruled out that, under the right circumstances, a faction of Puea Thai MP’s could cross the line to vote with the coalition parties and join hands with them to form a “national government,” without the Democrats! PM Abhisit would have to make sure that he could dissolve the parliament and call for a snap election, before he was voted out as prime minister in the parliament. It would, of course, be another story altogether if a coup were to then materialize!

Coup? What coup?

In spite of the most trying circumstances, the Abhisit government and the military have managed to keep their cool. Every possible precaution, however, has been taken to beef up security measures against the red shirts’ possible attack on the Government House, town halls and important buildings. Personal safety of the PM, key cabinet members, military chiefs, government officials and judges were given priority as rumors of a coup were flying thick and fast. The red shirts intensified their daily protests (as rehearsal for their impending all-out battle?). Their targets were PM Abhisit, senior members of the privy council, the army chief and his would-be successor (in 9/10) who were accused of plotting a new coup to reinstate military dictatorship.

In a rare show of force and unity, military regimens all over the country flexed their muscles as they trooped up to pledge their allegiance to “king and country” and give moral support to their chief. Again and again, military brass came out to assure the public that there would be no coup. By now, most citizens have become quite confused and concerned about the threats of violence and disruption. Others, however, could only smile hopelessly and pathetically at the increasingly ridiculous situation the country has got itself into!

Out of the tunnel

In 12/09 the country’s economic recovery became more pronounced, led by stronger export, improved employment, healthier domestic consumption, higher revenues for farmers and tourist operators. Electricity consumption jumped 21%. Manufacturing production index shot up 35.7%. Industrial capacity utilization was running at 70%. Export went down 26% yoy to USD 14,528 million. Import down 33% yoy to USD 14, 650 million. Trade balance was USD 122 million in the red. Current account and balance of payments remained positive at USD 758 million and USD 2,500 million respectively. International reserves came down slightly to USD 138.4 billion.

Monthly inflation climbed 0.6% in 1/10, with food and beverage prices rising by 3.2% yoy and non-food up 4.7%. Core inflation rose 0.6%. For 2010, inflation was expected to surge 3% – 3.5% and interest rates were poised to increase during the second half of this year. To ease THB’s strength against the USD, the Bank of Thailand had announced a series of measures to ease outbound foreign investments (FDI and portfolio). Importers and exporters were allowed to freely hedge their forex exposures. The THB ended the month on a strong note at THB 33.17 to USD. In line with the Region, the SET fluctuated without clear direction to end the month at 696.

Better days ahead

According to the consensus, the Thai economy has indeed turned the corner and the country would be trending up this year. The IMF’s forecasted Thailand’s GDP to increase by 4.7% and export by 14% in 2010. In spite of the on-going Mabthaput environmental problems (expected to be solved within the next 6 months) and the continued drastic reduction of FDI worldwide, Thailand’s Board of Investment reported a healthy increase in BOI applications, totaling 1,573 projects worth THB 723 billion or 80% over targets in 08-09. So far, only two big projects have been withdrawn on account of Map Ta Phut.

With ample liquidity still in the market and a comparatively healthy financial sector, major Thai banks have started to jointly provide large project finance to MNCs for the expansion of their production plants in Thailand. Meanwhile, international rating agencies have begun to upgrade Thai banks, with the usual note of caution against negative political development. Everyone seemed to agree that local politics would be the only major draw-back to Thailand’s economic recovery and development this year.

* 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.





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Related posts on absolutelyBangkok.com:

  1. The Vongthip Letter Sep 09
  2. The Vongthip Letter Oct 09
  3. The Vongthip Letter Jun 09
  4. The Vongthip Letter Jan ‘10
  5. The Vongthip Letter Apr 09
  6. The Vongthip Letter May 09
  7. The Vongthip Letter Mar ‘10

February 5, 2010 | Filed Under Business & Economics, Politics, Property & Investment, The Vongthip Letters 

Comments

4 Responses to “The Vongthip Letter Feb ‘10”

  1. Anonymous2 on February 6th, 2010 5.54 pm

    Anyone for more drivel?

  2. Andy on February 10th, 2010 12.15 am

    Thanks K’Vongthip for your time and your informative summary as usual …

  3. Andre on February 10th, 2010 10.45 pm

    Excuse me, madam, have you packed your bags in anticipation of the 26th of February?

  4. Chunkton on February 11th, 2010 7.31 pm

    I am somewhat confused. Is this uploaded to satiate the mentally challenged and monosyllabic fixated who actually read tripe like The Nation, or is a satirical send up of an pitiful ignoramus?

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