HDFF Weekly Thailand Review
18/7 – 24/7
Summary
Thailand resides in a time of transition and uncertainty. The Pheu Thai party is forming majority of the Parliament but the election committee has not fully endorsed all elected MPs. The elections were found to be free and fair and hope remains that Thailand will be able to establish a reconciled future. Experts continue to review the potential damage PTP economic policies could create including loss of investment, fiscal expenditures and public debt. The ICJ ruled that Thailand and Cambodia must retreat from the area but resistance is being reformed on both sides. The ASEAN Regional Forum will meet this week to discuss a variety of issues including Thai, regional and international conflicts.
Politics
Questions regarding “what will happen next?” remain the focus of Thai politics. Despite efforts by PAD-linked groups and a variety of lingering legal threats, Yingluck Shinawatra was approved and endorsed by the Election Committee (EC) to become the next prime minister. Yingluck remains under distinct pressures, including her position as an assumed proxy for Thaksin and the widespread doubt regarding the proposed populist policies. Sources state that the PTP will probably concentrate on moderate policies for now to avoid flaring opposition. (Reuters)
Outgoing Prime Minister Abhisit Vejjajivan was also endorsed by the EC as the acting Democrat Party leader along with the third round of 32 more Member of Parliaments (MP). Only 402 MPs have been endorsed so far including 285 constituency seats and 117 party-list MPs. 475 of the 500 MPs (95%) must be endorsed within 30 days of the election in order for the House to hold its first meeting. Red-shirt leaders have threatened to hold a rally against the EC if it does not endorse all Pheu Thai election winners. Both Prime Minister Abhisit and Yingluck have asked the red shirts to withhold pressuring the EC as MPs from both sides have pending endorsements. On the opposing side, a group of People’s Alliance for Democracy (PAD) supporters filed a petition to remove the 5 members of the EC claiming the election was conducted unfairly and 2 million people were unable to vote. The group will need 20,000 signatures and the Senate has given them until January 2012 to produce the petition.
Yingluck has re-stated her belief that Thais want to move forward with a fresh start. The PTP has insinuated interested in creating a charter amendment making it more democratic and easily applicable to facilitate national reconciliation. The PTP claims if there is resistance they will not go ahead with the concept.
International observers both from international bodies and foreign embassies have finished their study of the elections claiming both positive and negative attributes. On the praise side, the elections seemed to be fair and free overall. The EC appears to have appropriate role had succeeded managing its duties and the polls. Many more people participated in advance voting than in 2007. Reservations included disorganized education and preparation of advance voting lists, the long standing issue of vote buying, small cases of violence and some over whelmed polling stations. (Bangkok Post)
Economic
According to the Joint Standing Committee on Commerce, Industry and Banking, if the new government immediately raises the daily minimum wage, Thailand may lose Bt100 billion per year in foreign direct investment (FDI).With the minimum wage in Malaysia at 10% higher than the minimum wage in Thailand, and Indonesia at 10-20% lower, it will be more expensive than other production bases in Southeast Asia causing foreign investors choosing to relocate to other countries. Thailand attracts FDI of about Bt400 billion per year and raising minimum wages would likely cause FDI to drop 25%. (Nation)
The Bank of Thailand has stated that the government had been operating with budget constraints. Fiscal expenditures will increase substantially in the future if the new government’s spending plan is undertaken. The central bank governor advised that the new government should put less weight on fiscal policy in an attempt to reduce inflationary pressure. Exporters have diversified from the United States, Europe and Japan, leaving the former two with just 10% of the share, while ASEAN stands at 23% and China 11%. India, New Zealand, and Australia now play a larger role. Pheu Thai has said it plans to increase the fiscal deficit from 350 billion baht in 2012 as planned by the Democrats. This would further delay a plan to balance the budget, excluding debt service, by 2014.
Risk factors in the second half of this year are the inflation rate, likely to rise, and uncertainty over American and European economic recovery. It has been noted that policy promises regarding money spent on agricultural produce mortgage schemes, wage and salary hikes and the reduction of the cost of living will be watched closely. It has been stated that although the construction of public transportation systems will benefit the economy in the long-term, the government’s annual budget may increase the country’s public debt (Bangkok Post)
Security
The International Court of Justice has ordered Thailand and Cambodia to withdraw their troops from the border while the ICJ takes time to interpret its original ruling, a multifaceted and extensive process. 11 to 5, judges at the United Nations court ruled that both countries must withdraw and a demilitarized zone would be put in place, approximately 4.5 miles by 2.5 miles around the area. Both Cambodia and Thailand have stated they are unable to immediately withdraw. Mr. Abhisit announced that retreating now would not comply with Thai law as it cannot be verified that Thai territory will remain protected. Initially, Mr. Abhisit claimed the need for both countries to cooperate together to withdraw and institute a General Border Committee (GBC). Cambodia claimed they were prepared to comply when Indonesian third party observers arrived. Most recently, Thailand re-demanded that Cambodia withdraw its troops first. Efforts are being taken to prepare to deploy but negotiations are pending (MCOT) (Voice of America).
The yearly ASEAN Regional Forum is occurring in Indonesia this week and ASEAN members will soon be joined by the Asia-Pacific, Europe and the United States to discuss a variety of regional and international issues regarding peace keeping and security. Concerning Thailand specifically, an important issue is reviewing the Cambodia – Thai border dispute and it’s affect on ASEAN. Other major issues being discussed are claims over the South China Sea, democratic progress of Myanmar and its application to be the 2014 ASEAN Chair, tensions and proliferation in North and South Korea and Timor-Leste’s application for ASEAN membership (The Jakarta Post) (The Philippine Star).
In the Southern province of Yala, 9 soldiers and 7 civilians were injured from a bomb explosion hidden inside a motorcycle. In Pattani, two teacher protection volunteers were killed and two were injured from an explosion. Another two shooting attacks also occurred, both victims were injured. Security is going to be increased for the upcoming holy month of Ramadan. While visiting Pattani, Gen Prayuth Chan-ocha stated that while the numbers of attacks has decreased, targeting uninvolved civilians is more common and violent. Gen Prayuth has also stated his strong disbelief in Yingluck’s proposed special administrative zone policies for the South (Bangkok Post).
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