Thai Junta Names an Aging and Conservative Cabinet

Prayuth Chan-ocha, the army general who led the May 22 coup that put democracy out of business in Thailand, has given the impression that his regime is much more determined and radical than its military predecessors such as that led by Gen Sonthi Boonyaratglin, who overthrew Thaksin Shinawatra’s elected government in 2006.

But the cabinet announced by Prayuth, who is now prime minister, suggests that this is simply a deeply conservative cabinet which is unlikely to have any new ideas about anything.

The focus of media reporting of the cabinet has been on the large number of military men included, indicating that these are the men that Prayuth both trusts and needs to reward with political positions when there are simply not enough top military ones to go around. Eleven of the 32 cabinet names taking up 34 positions are military figures and include almost all the most important jobs such as Justice, Interior, Labor, Social Development, Commerce, Natural Resources. Even the foreign ministry has been taken, by General Tanasak Pratimapragorn, who is also a deputy prime minister along with the more prominent General Prawit Wongsuwon who is also Defense Minister.

But equally striking in the cabinet list is the prominence of senior bureaucrats, some of whom have now been recycled through various anti-Thaksin regimes. Indeed the cabinet can be seen as the triumph of bureaucrats who are taking revenge on a Shinawatra who always distrusted them for being overly cautious at best and who often acted as a direct impediment to Thaksin’s policies.

Most notable of the recycled bureaucrats is MR Pridyathorn Devakula, one of three non-military deputy prime ministers. Apart from being an aristocrat, Pridyathorn is a former Bank of Thailand governor and finance minister in the military-led government of General Surayud Chulanont directly after the 2006 coup, as well as occupying various lesser posts.

Until picked as economic adviser to the National Council for Peace and Order, Pridyathorn was chairman of Post Publishing, publisher of the Bangkok Post. Earlier he worked for Kasikorn Bank, controlled by the Lamsam family, which is known as particularly friendly to the coup-makers, and was spokesman for the government of Chatichai Choonhavan, whose elected government was notoriously pro-business, corrupt, and overthrown in a 1991 coup.

Pridyathorn, now 67, is expected to pursue sensible but cautious policies but after a possible initial bounce as a result of the ending of the disorder caused by the protests against Thaksin’s sister Yingluck, who led the Pheu Thai government until the coup, and the effective freezing of her administration by bureaucratic and judicial interference, sustained growth may be hard to achieve, and any reduction in high level corruption merely temporary.

Pridyathorn will be working with another returnee from the Surayud government, Sommai Phasee, now the Finance minister who was previously a senior bureaucrat including as director general of the Fiscal Policy Office. He is believed to favor raising taxes, particularly on land as a way of tackling inequality. However, there is sure to be resistance to any tax increases by this essentially very conservative regime.

Another retread for the generals’ economic team is Narongchai Akrasanee, 69, a member of innumerable governments in recent years. The generals will hope he has better luck as energy minister than as chief executive of General Finance and Securities, which went bankrupt in 1997. He has a relatively simple if unpopular target – the elimination of fuel subsidies.

Other top bureaucrats, past and present, trusted by the military to include as ministers or deputies include Chakramon Phasukvanich, 67, who takes the industry ministry, of which he was once secretary general, Weera Rojpotcha at culture and Pichet Durongkaveroj at Information and Communications Technology.

Former top diplomat and onetime ambassador in Washington, Don Pramudwinai, is deputy foreign minister and presumably the one to deal with US and other western criticism of the coup makers. (There is little likelihood that the US will cancel the so-called Cobra Gold annual US-Thai military exercises as these also involve other countries)

There is quite a lot of low-hanging fruit for the economic ministers to pick after a year of near standstill in government and of mistakes by Yingluck. Farmers are happy for now that they have been paid for their previous crop and some of the rice in the vast government stockpile has been sold. Some infrastructure projects should now get moving including rail double-tracking, and tourism should gradually recover from a 10 percent or more decline caused by the political situation.

Yingluck’s overly ambitious and environmentally damaging water control project is unlikely to be revived but the junta remains ambiguous towards the hugely expensive high-speed rail project being promoted by China. In practice policy control by elderly ex-bureaucrats suggests business-friendly policies but great caution in spending.

The bureaucrats know enough of economics to appreciate that low global rice prices – and indeed most other agricultural products – are likely to be around for quite a while. That means either a rapid rise in farmer discontent, or the subsidy support which made Thaksin popular, and which redistributed some wealth from the metropolitan region to the north and northeast. A decline in rural incomes would increase the flow of migrants into the informal sector in and around Bangkok.

Already the junta has had to back off selling from the rubber stockpile accumulated by Yingluck due to pressure from producers who reasonably fear that sales will further depress the global price.

For now the government may be able to project an image of competence and reduced corruption. But the test will come in 2015 as the reality of Thailand’s economic situation sinks in.

No crisis is on the horizon but the nation faces weak export markets, weak commodity prices, more competition from neighbors, a near static Thai population, and an inadequate supply of enough skilled labor to raise manpower productivity.

There are some bright spots. Tourism from China, India and the Middle East should prosper – provided the junta does not, as it promises, close down the prostitution industries in Bangkok, Pattaya, Phuket etc.

Medical tourism will continue to thrive and Bangkok remains a regional hub for companies operating in Vietnam and Myanmar. Japanese companies will likely continue to add to their existing manufacturing investments.

But foreign investors will need more attractions than either the domestic market, regional export prospects or labor skills offer if Thailand is to regain momentum at a time when Vietnam, Myanmar, Philippines and Indonesia all look brighter prospects than an aging Thailand whose political problems have been put on hold, not resolved.