The Vongthip Letter Jun 08

Within a matter of days we had witnessed Thailand’s sudden revival of the old political mess. A reanimated PAD was itself amazed by the spontaneous support. As Khun Vongthip Chumpani of Bangkok Bank writes in this month’s newsletter, “millions of baht were paid anonymously into PAD’s account to keep them going.”

The support though somewhat waned. For manifold reasons. Some call the PAD a simple traffic nuisance. Others a movement out of date. Others again have more urgent problems in paying their daily bills. Thaksin-who?

Making again sense of it all is Vongthip Chumpani in her retrospective as well as prospective newsletter for June ‘08. Learn about the waning influence of Thaksin, Kleptocracy vs. Democracy and the turbulences ahead. Not that you’ll be caught as off-guard by the sudden turn of political events as most observers and investors just were.

By Vongthip Chumpani*

Return of the Jedi: Although they have voluntarily disbanded since 20/9/06, the People’s Alliance for Democracy – PAD’s 5 core leaders have been coming out from time to time to inform the public about key political issues of concern. During 4/08, they exposed Minister Jakrapob’s shocking speeches at FTCC and at a political gathering in Los Angeles.

For weeks, they have been warning the Samak government against the rush to amend the 2550 Constitution in order to wipe the slate clean for Thaksin and former TRT executives. When PPP MP’s filed for constitution amendment in the parliament in mid 5/08, the PAD decided, against all odds, to call for a political rally on 25/5/08 at the Democracy Monument.

Thousands of protesters turned up, notwithstanding threats of violence from the pro-Thaksin DAAD group. When some 20 people were injured in the melee with DAAD hooligans during PAD’s march to the Government House, more people joined in the demonstration. Blocked by a hostile police anti-riot squad, PAD decided to camp out at the historical Makawan intersection where they remained ever since.

PAD Reality Show

Since 25/5/08, millions of ASTV viewers, in and outside of Thailand, have been watching Thailand’s latest political drama. They tuned in daily to track PAD’s activities, watching and listening live to the scathing speeches, political lectures, satirical poems and patriotic music that went on day and night. They were able to witness how the protesters refused to budge when rain storms came.

How they drilled to protect themselves from teargas and sudden physical raid by the formidable anti-riot police force. Things became quite tensed when hostile PM Samak announced on 31/5/08 that the protesters would be forcefully uprooted if necessary. For many viewers it was a two-week crash course on Thai politics. As more and more people became aware of what was going on, the number of protesters and speakers increased by the day.

Encouraged by fresh support from rural and urban citizens, PAD vowed to stay on until their goals were accomplished i.e. credible assurance that the 2550 constitution would not be amended (before the supreme court could rule on Thaksin’s cases?) and the resignation of PM Samak (to make way for a national government or a new coalition government to be formed, probably by the Democrat Party?).

A-hing-sa

Those who went to PAD rallies said they were amazed by the spontaneous comradeship of the participants who hailed from all walks of life. There were rightist and leftists, young and (mostly) old, rich and poor, coming together voluntarily for a marathon sit-in (on the hot and often wet concrete road), to defend their “king and country” as well as to preserve their precious “Thai way of life.”

Poor farmers and workers were sitting side by side with well-heeled professionals and entrepreneurs, sharing political gossips, peanuts and umbrellas. They listened, laughed, booed, clapped and shouted slogans like obedient school children. All the while large and small contributions, in cash and in kind, have been pouring in daily to support the demonstration. Millions of baht more were paid anonymously into PAD’s account to keep them going. No one however could answer the questions that were on everyone’s mind: How long could this last? What then?

No wine and roses

Throughout 5/08, Thaksin was flying in and out of Thailand, initially to bring his rich tycoon friends to co-invest in a number of mega projects e.g. an entertaining complex (with casinos) on Thai-Cambodian Koh Kong Island, an oil and gas exploration project in the Gulf, a land bridge linking Satun to Songkla etc.etc.etc. Thaksin’s most controversial project however was the commercial rice farming project in Suphanburi. Alas, the preoccupied Thai elites were more suspicious and scared, than impressed by his high flying projects.

When the Jakrapob’s lese majeste scandal broke and the constitution amendment was derailed, Thaksin was quick to (temporarily?) distance himself, not only from Jakrapob and the PPP’s hawkish faction, but also from his unpopular “Nominee PM.” Thaksin’s one-minute public-apology meeting with General Prem, at the funeral of the Army Chief, General Anupong’s mother, did not do the trick either. When political situation deteriorated further, Thaksin left quickly for China and his wife, for Singapore, during the last week of 5/08.

Kleptocracy – not democracy

On 24/5/08 158 PPP MP’s filed their resolution to replace 2550 Constitution with the 2540 version and met with a thunderous public outcry. PM Samak tried in vain to ease the tension by calling for an immediate national referendum – to decide whether or not to go ahead with the constitution amendment. As political pressure escalated, panic PPP-MP’s started to withdraw their signatures from the constitution amendment bill.

Meanwhile, the AEC was wrapping up their cases against Thaksin & Co. before their term expired on 30/6/08. When the AEC’s announced that they would confiscate Thaksin’s THB 73 billion frozen fund, the former PM went for immediate damage control. A series of offensive (and desperate?) actions, were taken, wherever and whenever possible, against his key legal opponents. Law suits were summarily filed against the 11 AEC committee members. The former DSI Director General was almost arrested (for slandering against Thaksin) when he landed at Suvarnabhumi airport from a trip abroad.

Although Thaksin seemed to have full control of the PPP Party, the cabinet, the police, and some key government, military and judicial officials, many political analysts have come to the conclusion that it was no longer possible for him to regain the power and glory of his past premiership. Political fundamentals in Thailand have changed drastically since 9/06. Millions of people have come to know and shun the evils of kleptocracy.

Samak’s countdown

Left to fight the political and economic battles on his own, PM Samak lost his cool. On 31/5/08, Thailand was back on the CNN screen. PM Samak went on television to announce that he would use police and military force to disperse the PAD demonstration before the day was out. That afternoon, tens of thousand of furious middle-class Bangkokians joined demonstrators from up-country to call for the immediate resignation of PM Samak.

His alarming threat of violence against the peaceful rally was clearly against human rights, as stipulated in the 2550 Constitution. Panicked government MP’s moved fast to restrain the maverick PM. Both the military and the police chiefs came out to assure defiant protesters that force would not be used against them. Since then, PM Samak has been heavily criticized by the mass media and the private sector for his uselessly provoking tactics and his failure to address and solve the country’s increasingly aggravating economic problems.

Turbulence ahead

Soaring oil price took its toll on the GDP. 2008 growth rate was revised down to 4.5-5.5% for 08. In April, trade deficit of USD 1.8 billion was the largest since 6/05. Imports went up 41.5% to USD 15.39 billion as oil import value soared 80%. Higher farm prices could not make up for the higher oil cost. Export increased by 27.7% to USD 13.63 billion. Current account deficit widened to USD 1.66 billion. International reserve went down to USD 109.8 billion.

Import of capital goods slowed. Business confidence weakened. Inflation rate in 5/08 shot up to 7.6% (10-year high). The Bank of Thailand adjusted headline inflation for 2008 to 5.3%-5.8%. Banks have started to move up both their deposit and lending interest rates. The Baht ended the month in THB 33-34 range.

Business profit margins were squeezed by climbing operational and administration costs as well as weak consumers’ purchasing power. The SET, jolted badly by negative political and economic news, plunged to end the month at around 800-820. International investment houses and rating agencies have started to down-grade country risk and under-weigh equity investment in Thailand.

Winner takes all

Since the February election, local and foreign investors have been quite pleased that Thailand was back on democratic track. Government and private business delegations have been organized to rekindle relationships with major trading and investment partners. A number of sizeable new investment projects were given the green light.

Alas, most local and foreign investors were caught off-guard by the sudden turn of political events. PPP’s mad rush to amend the constitution has brought back another unnecessary bout of internal political strife that could send investors running for safety again. The country has had enough problems, trying to cope with the current hostile economic environment and the gloomy world’s trade situation.

Many felt that Thaksin’s do-or-die bid to return to power has taken the country back to the brink once again. However, unlike in 9/06, this power struggle meant “all or nothing.” Loser would have to leave the scene once and for all!

* 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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June 6, 2008 | Filed Under Business & Economics, Politics, Property & Investment, The Vongthip Letters 

Comments

3 Responses to “The Vongthip Letter Jun 08”

  1. Marc on June 6th, 2008 7.39 pm

    Thaksin should not be in Thai politics anymore. Period.

    Thanks for the great updates each month. Great read! Chapeau Khun Vongthip.

  2. Vichien on June 7th, 2008 2.26 am

    After reading the news about Jakrapob and then Jonathan Head I had a look at the articles at BBC’s website and am now convinced that Thaksin has a media conspiracy to bring him back to power.

    Congratulations to Colonel Wattanasak for filing the charges against these rebels.

  3. BangkokDan on June 7th, 2008 9.32 am

    Am not sure if I can follow you Vichien.

    You don’t think Jonathan is drawn into something?

    Jonathan enjoys an outstanding reputation not only within his working community.

    BangkokDan

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