PM Yingluck is this year’s chief guest at India's Republic Day celebrations
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Summary
Controversy continues to reign throughout politics, with conflict over Thaksin’s overlying power at the helm. Rifts between the various opinion leaders continue to widen, specifically over the appointment of Nalinee Taveesin as a PM’s Office Minister. Water management experts are alerting the authorities that La Nina will continue flooding damage and bilateral relations between Thailand and India and Thailand and Palestine make the headlines. Strife is also arising from the new public debt policy, as analysts believe the estimated borrowed amount will overwhelm the Thai economy. Government plans to sell its majority shares in PTT and Thai Airways add to the rising doubt of sound economic practices. The policy rate was reduced another quarter of a point and both political and economic sectors continue to evaluate the Dawei economic zone project. Major security news includes a follow up on the arrest of Atris Hussein for possessing bomb making materials in Bangkok and human security issues concerning migration and Thailand’s health care system.
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Politics
A multitude of issues kept Thai politics interesting this week, with the appointment of Nalinee Taveesin as a PM’s Office Minister, gaining the most attention due to Ms. Nalinee being black listed in the United States for doing unethical business deals in Zimbabwe. Prime Minister Yingluck Shinawatra continues to defend the appointment, stating “We have to check the facts about the list…. but at this stage her qualification is constitutional.” In addition to the PM’s backing, Ms. Nalinee also got support from the Thai honorary consul in Zimbabwe, Kriangsak Charoenwongsak, a former Democrat MP, who attested she had all the necessary qualifications for a ministerial post. Apart from being a major shareholder in 25 companies in several business sectors, and serving as a director in eight of them, Ms. Nalinee is knowledgeable in the mining industry and well connected to several African leaders. Ms. Nalinee stunned the international media by claiming her relationship with the Zimbabwean Dictator and his wife was based on friendship and not on business relations. Her statement came after Democrat Party spokesman Chavanond Intarakomalyasut raised the question if Ms. Nalinee’s appointment might be connected with Thaksin’s mining businesses in different African countries. As The Nation points out, honorary consul Kriangsak is the majority shareholder in many of the businesses.
Critics fear that Nalinee in her meetings with foreign leaders will continue to focus on the businesses she is involved in, and the opposition Democrat Party has called for her resignation. Sources close to the Pheu Thai Party on the other hand acknowledged that the appointment has also caused a rift inside the party. Thitinan Pongsudhirak, political scientist of Chulalongkorn University, sees this appointment as well as the whole reshuffle as Thaksin’s salute to the red shirt movement for their help in getting his sister elected, arguing “This is a game of musical chairs that Thaksin is conducting … [which] allows Thaksin to pay back the Red Shirts by appointing Nalinee and their most fiery orator [Nattawut Saikua] to cabinet positions.” (The Guardian) (Bangkok Post) (The Nation)(Mcot)
Only a couple of weeks ago, Bangkok and central Thailand were still suffering from the worst flooding in over 50 years. This week, water management experts heightened alarms, claiming flooding would be worse this year if the government wouldn’t act quickly. The La Nina phenomenon will lead to more storms and earlier rainfall, expected to start between March and Mai, claims Seree Supharatid, director of Rangsit University’s Centre on Climate Change and Disaster. Major dams such as Bhumibol and Sirikit were holding more water than at the same time last year and should therefore release water now. Commenting on the figures that both dams held water at 87% and 86% of their capacity thus substantially more than usual (Bhumibol: 11.8 billion cu/m compared to 7.8 billion cu/m last year; Sirikit: 8.2 billion cu/m compared to 6.9 billion cu/m last year) Sombat Yumuang, director of Geo-Informatics Centre for Thailand (GISThai), Chulalongkorn University, backed a suggestion from the Japan International Cooperation Agency (JICA) to release water from the dams at twice the volume of last year to ensure a repeat of last year’s floods could be averted. (The Nation) (Bangkok Post)
Tight security characterized India’s Republic Day celebrations on January 26 both on ground and in-air. PM Yingluck, who arrived in New Delhi on January 24 for a three day visit, is this year’s chief guest at the celebrations. Yingluck is expected to push ahead with the bilateral Free Trade Agreement, which is expected to be finalized mid-year. Business interests clearly top the agenda of the official meeting with India also curious to join the development in Dawei. “There are a range of clusters that are going to be developed in Dawei and India has its strength in the steel, petrochemical and other sectors. Even the government of Myanmar has asked us to join this project and therefore we can do it jointly [with Thai interests]. If we can match our strengths then we would be a formidable competitor to anyone,” Indian Ambassador to Thailand Anil Wadhwa commented. (Indiatoday) (Bangkok Post)
After Iceland became the 5th European state to formally recognize the Palestinian state at the end of 2011, Thailand followed, recognizing the Palestinian state officially on Thursday January 19. Both academics as well as the Muslim community welcomed the decision, stating this would make Thailand “a friend” to the Muslim World. Foreign Ministry spokesman Thani Thongphakdi clarified that although Thailand recognizes the State of Palestine, Thailand wants the Peace process to continue and adheres to the two-state solution. The Anti-Defamation League (ADL) on the other hand expressed its disappointment, calling the recognition “counterproductive to peace.” Abraham H. Foxman, ADL’s National Director stated that this would send the wrong signal to Palestinians, such as recognizing and acknowledging the Israeli state wouldn’t be necessary for Peace. (Bangkok Post)(European Jewish Press)
Economics
At the end of last week, the baht advanced 0.8 percent and foreign investors bought Thai shares worth a net 997.55 million baht ($32 million). At the start of this week, trading was slow as several Asian financial markets were closed for the Lunar New Year but reduced oil prices generated extra sales in the energy market. As the week progressed, Thai stocks rose with the rebound of foreign investment. “Foreign investors are expected to continue to buy Thai shares as we can see signs that investment funds are moving into Asian bourses,” said Globlex Securities analyst Chakkrit Charoenmetachai. According to the Thai Bond Market Association, Government bonds gained for a third week after global funds bought $170 million more local notes than they sold in the first four days of this week. Despite these positive increases, A Nida poll asked Thai citizens to gauge their opinions on ”Today’s Thai Economy”, including 1,274 respondents. The results showed that 46.15% of the people surveyed said they were satisfied with their standard of living, but one in four (25.43%) were not content. On the economic side, more than half of the respondents (56.51%) claimed they had confidence in commercial banks and other financial institutions but believed the current state of the Thai economy as ”fair”.
The Bank of Thailand reduced its key policy rate, for a second consecutive rate-setting session, by a quarter of a percentage point to 3%. The central bank said that the monetary policy committee (MPC) voted unanimously to reduce the policy rate and the rate cut was predicted by all 15 economists in a Bloomberg News survey. The bank is hoping to spur economic growth, effected by widespread flooding and the overall slowdown in global demand. Though inflationary pressures have declined, there are still many long term recovery goals being formed to encourage domestic demand. Reduced commodity prices will hopefully support economic activity including reconstruction spending and various government stimulus measures. The MPC noted that could without the rate cut, stimulus measures could exert some upward pressure on inflation. (Reuters) (Business Week) (Nasdaq) (Bangkok Post)
Significant concern about the public debt policy was heavily discussed throughout the government and media this week. Controversy began after Thirachai Phuvanatnaranubala, the previous Finance Minister before being dropped from his position last week, accused the government of political motivations and unsound economics. Thirachai also revealed that the finance ministry wants to use an investment fund (the Vayupak Fund) under its control to buy shares in PTT and Thai Airways in order to conceal the real extent of public debt. In addition to concealing debt, the government is hesitant to raise taxes in future to pay for government stimulus measures, so it is trying to understate the overall owed amount. Thirachai announced on his facebook page: “Fiscal discipline should be determined by economic principles, not political convenience. We will all wrongly view ourselves as rich and forget the need to pare down debts”. If the government is no longer the predominant share holder in PTT and Thai airways, the government will lack the authority to control the local markets. This is especially a concern for energy security as PTT will no longer receive benefits such as government-to-government deals. PTT’s competitors are multinational companies that could buy out the Thai firm which may significant affect consumer prices. This may also include suspending the sales of petroleum products to Thailand during a crisis. Critics are calling on the government to strongly consider the law, benefits and national energy security before committing to the sale. Apsorn Krissanasmit, president of the State Enterprise Employees Union has stated that the Vayupak Fund belongs to the Finance Ministry so after the purchase by the fund, PTT will remain state-owned, however, after the fund comes to an end in 2013, possible PTT future changes remain unknown. (Forbes) (The Nation)
The public debt discussion has raised numerous questions for those re-examining the Pheu Thai Party’s previous stance against debt. One of the party’s’ original campaign platforms was that if elected to office, it would pay off the country’s debt so the present generation would not be burdened. Five months ago when Yingluck Shinawatra took office, public debt was about 4.2 trillion baht, or at 40% of the country’s gross domestic product (GDP). The new fiscal framework will consist of a public debt should not exceed 60% of GDP. It also sets a ceiling for debt servicing at 15% of the annual budget of which the government has stated 11% of the budget may be used to pay the interest burden on the debt. Economists have claimed that the country’s GDP is about 10 trillion baht, which means the government can borrow another 2 trillion baht before the limit is reached. However, the government will take the deficit from 350 billion baht to 400 billion baht. Infrastructure building plans are estimated to 2.27 trillion baht, supported by the private sector which will contribute 1 trillion baht, leaving 1.27 trillion baht to be borrowed. Post Today, a Thai newspaper, has claimed that after evaluating the government’s spending and borrowing plans, public debt may very well exceed the 6 trillion baht, or 60% of GDP, in addition to exceeding the 15% debt servicing ceiling; therefore explaining the government’s actions, in the form of an emergency decree, to transfer the Financial Institutions Development Fund’s (FIDF) debt of 1.14 trillion baht to the Bank of Thailand which is expected to ease the government’s debt by 65 billion baht a year.
Bank of America Merrill Lynch (BAML) has announced that it believes Thai currency and capital controls is a risky investment if the Bank of Thailand is assigned to take total responsibility for the Bt1.14-trillion legacy of debts incurred during bank bail-outs in 1997. If the FIDF is saddled with the burden to pay the principal and roll over the debt that is due this year, that will hurt the currency. BAML believes the baht will weaken to 32-32.50 baht per US dollar by the end of March and to 30.8 baht by year-end. (Bangkok Post)(Asia One)
Despite Naypyidaw’s recent cancellation of a 4,000MW coal-fired power station and the Karen National Union (KNU) stalling a linking highway, the Thai government and the Italian-Thai Development Plc have announced they will continue to back the Dawei (Tavoy) harbor and economic zone project. At a Thailand Board of Investment (BOI) forum in Bangkok, Kittirat Na Ranong, Thailand’s deputy prime minister and newly appointed finance minister, said that he remained hopeful that the US $58 billion project will proceed. TD, Thailand’s largest market value construction company, needs up to US$8 billion (252 billion baht) over the next three years to develop infrastructure such as roads, railways, a port, a telecom network and utilities in Dawei which will be raised in forms of equity, loans and strategic partners. Aside from investors, analysts are still claiming the project is not yet planned out effectively and is packed with risks including country instability and an unpredictable business climate. The halt is predicted to make securing strategic partners even more difficult. (Bangkok Post) (Irrawaddy)
Security
Following up on last week’s terror threat, the arrested suspected Atris Hussein reported to a Swedish newspaper Aftonbladet he’s innocent and is blaming Israel’s Mossad spy agency for his arrest. Hussein told the newspaper that “much of the material the police found in my warehouse had been placed there, probably by the Israeli security service Mossad.” Hussein believes he was interrogated by three men “who obviously were from Mossad” and claimed because he is a Shia Muslim, from an area in Lebanon with strong Hezbollah influence and a supporter of left-leaning Social Democrats in Sweden, it would make him a prime target. He also maintained that he exports a variety of goods from Thailand to other countries, including frozen gel packs used for pain relief which contain ammonium. However, he otherwise contends that the chemicals and fertilizers must have been placed there by someone else. As of January 21st, China was the only country to reduce its travel warning to Thailand, excluded the 19 other countries which also issued warnings. As of January 26th, Israel also lowered their threat alert. Thailand is waiting for the other warnings to come down. (Bangkok Post) (ABC News) (The Jerusalem Post)
Human security issues stemming from the floods are still continuing to unravel. Despite promises made by the governments, migrants are continuing to suffer as a result of escaping flooded areas. Those with passports who “legally” returned home are facing inflexible and the costly Immigration Bureau demands for those with overstayed and expired visas. For those with registration sheets to work in a certain area or those without any documents have been extorted by opportunistic “brokers” and officials, as Thai law stipulates that those migrants are not allowed to be anywhere other than those flooded provinces and in registered workplaces. There have been reports of workers being deported simply for being flood victims, with up to 150 people horded into rented six-wheeler trucks travelling to borders at night with a charge of 2,500 to 4,000 baht a person. For those who did not want to be deported, migrants were placed in unhygienic apartment blocks with little access to aid deliveries. Some migrants without papers were refused entry to flood shelters and some who wanted to leave were confined to buildings with bolted doors. The Labour Ministry maintains that it responded adequately to the migrants’ predicament by setting up shelter housing at all and that government aid was not available so it relied on donations. The Myanmar embassy issued a few hundred documents, but without an official policy, these documents were not recognized by Thai officials. Experts are calling this a perfect example of embedded corruption and abuse of power. With ASEAN approaching, a holistic regional solution to migration challenges is strongly needed.
The World Health Organisation (WHO) has announced it will be encouraging a similar worldwide model to Thailand’s successful universal healthcare scheme. The WHO representative to Thailand, Dr Maureen E Birmingham, claims the WHO will be working with its allies in government, civic and academic sectors to push for the launch of universal healthcare scheme in various different countries. Only a decade old, the BRAC University’s School of Public Health scheme covered up to 75% of Thai population and the bankruptcy rate relating to medical bills has dropped from 6.8% in 1995 to just 2.8% in 2008. Dr Timothy G Evans from the BRAC University has pointed out that when the scheme was launched, the national income is US$1,900 (60,000 baht) per person, highlighting that that a country does not need to be rich in order to provide healthcare coverage for its people. Evans commented there is still room for improvement such as focusing the prevention of disease and the promotion of good health, providing opportunities for the elderly and coverage to migrant workers as well. Thailand and Vietnam have also signed an agreement to cooperate on health security programs before Vietnam implements a law for health security in the next two years. Both countries will focus on research and monitoring for new diseases. (Bernama) (The Nation)
India and Thailand are working to increase their bilateral ties and have signed six agreements including an expanded version of the two countries’ free trade agreement (FTA). The current FTA covers only 84 items but the new one will include more than 30,000 items. There is an estimated $4 billion dollar growth in the next year and hope for trade to double to $14 billion by 2014 from its 2010 level. The two countries also signed pacts in areas of defense and security and decided to step up their cooperation in combating terrorism and piracy. Manmohan Singh, Prime Minister of India, claimed to have emphasized the need to put in place a bilateral legal framework to deal with non-state actors and subversive elements that pose a common threat to both societies such as terrorists, criminals, arms and drug traffickers. The agreements included a crucial treaty on transfer of sentenced persons and a memorandum of understanding on defense cooperation. Other pacts included people-to-people contacts and innovation partnerships, cooperation in Science & Technology, and a cultural exchange programme. (VOA) (The Nation) (AFP).
In the next six months, Thailand will be asking all passengers at major Thai airports to pay an additional security charge of 90 baht to cover the cost of examining and screening personal information. An advanced passenger information system (APPS) will be put in place at all airports with international flights. Airports of Thailand Plc (AoT) will be able to send out passenger identification details from passports and flight information to all airport authorities to confirm whether passengers should be allowed to leave or enter the country. The system can also check if passengers should be allowed to check-in for flights before departure. (Bangkok Post)
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