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Thai Junta Shuts Public’s Ears to Bad News
When the international edition of the New York Times was delivered in Thailand on Nov. 30, the front page of the paper featured a large white blank space. In other editions, the paper featured a detailed story by staff correspondent Thomas Fuller on the growing paralysis in the Thai economy.
That white space is emblematic of both the inability of the generals to run what had been Southeast Asia’s most vibrant economy, and their desire to keep it from a country that unfortunately knows pretty well what the state of the economy is. The junta has sought to shut down any and all critical reporting and internet blogs. Asia Sentinel is regularly blocked in Thailand.
As Fuller points out, and as many Thais and western businessmen have told Asia Sentinel, the country seems suspended in time, waiting for the generals to go – and Prime Minister Prayuth Chan-ocha now says that won’t be before 2017, if then – and more importantly, perhaps, waiting for King Bhumibol Adulyadej, now 88, to die and for his widely disliked son, Crown Prince Maha Vajiralongkorn, to take over. The king has only sporadically been seen in public. He seems to spend most of his time in Siriraj Hospital, appearing almost comatose when he does arrive in public.
But the junta has the political lid screwed down so tightly that almost any expression is verboten. Three members of the United Front for Democracy Against Dictatorship – the opposition Red Shirts – were arrested on Nov. 30 for attempting to make their way to Rajabhakti Park in Hua Hin south of Bangkok, where a scandal is said to be brewing over military construction of seven giant bronze statues of the Chakri kings that resulted in massive cost overruns and allegations that the money went into military pockets. The three were held temporarily before being told they were not to indulge in political activities.
It was expected when the generals took over Thailand in May of 2014 that they would have no idea how to run an economy. That has been proven right dramatically with the third-quarter gross domestic product results released last week. The finance ministry has cut its GDP forecast four times in 2015, blaming the global economy.
“The big risk for the military government is the weakening economy, which is indeed in a bad shape now,” a Thai banker told Asia Sentinel. The junta, he said, “has created super absolute power in one man. He is a good man fortunately but he is not that smart. The economy won’t be that bad, given Thailand’s natural attributes, but never will it be good under these kind of army - socialist policies anyway.”
Economic growth has fallen well below the 1994-2014 trend of 3.61 percent, falling to 2.9 percent annually in the third quarter. But that is relatively healthy compared with 2014, with a low of 0.9 percent for the year when political chaos brought the economy to a halt and the junta put an end to parliamentary democracy on May 22.
By all rights, Thailand should be leading the region. It sits at the hub of Southeast Asia, the country’s second-biggest population (61 million) after Indonesia and its automobile and electronics assembly industries lead the region.
But the National Council for Peace and Order, as the junta now calls itself, has not developed a coordinated economic program, instead busying itself with public order issues and seeking to manage the inevitable royal succession.
The economy needs dramatic fiscal help. But it is slow getting it. In August, Prime Minister Prayuth Chan-ocha shook up his cabinet, appointing a new economics advisor, Somkid Jatusripitak – who served as finance minister in the regime of the ousted Thaksin Shinawatra – and replacing the lackluster minister of finance with with Apisak Tantivorawong, former director of the Siam Commercial Bank and chairman of the Thai Bankers’ Association.
Infrastructure is creaking, and rebuilding it in a so-called Grand Plan to include four major arterial roads and railways connecting the country to Myanmar, Vietnam, China, Cambodia and Laos that was designed by the Pheu Thai government under Prime Minister Yingluck Shinawatra came to a dead stop when the military took over. Much of the plan has been in abeyance since the junta took control, although some have been restarted. China is expected to cooperate to build a railway to connect to connect through Laos to Kunming, but that has yet to get underway.
Although government expenditure rebounded in the first half of 2015, private consumption recorded feeble growth and private fixed investment was flat, according to the Asian Development Bank. Only 6,810 units were launched in 3Q 2015. This number is 40% lower than the newly launched units in 2Q 2015. Housing starts in Bangkok, the economic epicenter of the country, fell to only 6,810 units in the third quarter of this year, down 40 percent from the same period in 2014 with developers not confident of the market situation and postponing projects into next year.
The global economy hasn’t helped, with Thailand’s car assembly and electronics exports tanking. Agricultural income has fallen as well, as commodity prices including for rice – Thailand is the world’s biggest exporter – have fallen globally. With falling farm incomes and slowing growth in wages, household debt has increased. And on top of that, the country faces its severest drought in more than a decade, with farmers in rice-growing regions growing so desperate that they are fighting over water to irrigate their crops.
“Consumer confidence declined through July,” according to a report by the Asian Development Bank. “Private investment is subdued because of lackluster prospects for exports, soft consumption spending, and spare industrial capacity.”\’
While the country recorded a higher trade surplus in the first six months, which should ordinarily be encouraging, it stemmed from a sharper fall in merchandise imports (down by 8.7 percent in US dollar terms) than the fall in exports, by 4.9 percent. The trade surplus combined with stronger income from tourism to more than double the current account surplus for the same period in 2014.
According to the Asian Development bank, “fiscal measures, together with planned large infrastructure projects and improved prospects for exports to major industrial economies next year, are seen lifting GDP growth in 2016 by just over 1 percentage point from 2015. Nevertheless, growth in both years will undershoot earlier projections, and forecasts are revised down.
The one relatively bright spot is tourism, which has recovered relatively strongly from the fall in arrivals during the worst of the country’s political turmoil from 2010 through 2014. International tourist arrivals for the first 10 months of the year have reached 29.5 million, exceeding the target of 28.8 million set at the beginning of 2015. That is up sharply from the 24.7 million who visited the country in 2014. But too often it appears that it’s only the tourists who are happy in the Land of Smiles.