Newsletter 18 February – 2 March, 2013

HDFF Bi-Weekly Thailand Review 18/2/2013-3/3/2013

(left) Pheu Thai Pongsaspat Pongcharoen and (right) Democrat Sukhumbhand Paribatra – Source: MCOT

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Summary

Bangkok is abuzz with the coming gubernatorial election, with the two main contenders being Democrat Sukhumbhand Paribatra and Pheu Thai Pongsaspat Pongcharoen, as candidates and their proxies make final bids to turn out supporters to the polls on Sunday, March 3. While Pheu Thai Pongsaspat Pongcharoen leads in the polls, Democrats are taking a doom-and-gloom message to voters about the consequences of a Phue Thai victory. Whether this campaign strategy will be successful will be determined on Sunday.

The SET reached its highest level in 19 years as the Monetary Policy Committee introduced new measures to cool down the speculation in stocks with elevated price-to-earnings ratios. The official GDP figures for the last quarter in 2012 were also published, surprising many by comfortably beating previous record for quarterly GDP growth. The strong development of Thailand’s economy and the relatively stable baht led the Bank of Thailand to keep the policy rate at 2.75 % instead of following the government’s wishes of a lower rate.

While violence continues to rage in Thailand’s South, hopeful steps are being taken towards reducing the violence. A Peace agreement between Thailand and the Barisan Revolusi Nasional (BRN) in Malaysia, as well as a pledge of increased cooperation between the governments of Thailand and Malaysia in healing the unrest in Thailand’s South, give cause for optimism.

Politics

Pheu Thai Party candidate Pongsaspat Pongcharoen maintained his lead in opinion polls in the upcoming Bangkok gubernatorial election, taking place this Sunday, March 3. Democrat candidate Sukhumbhand Paribatra remained positive and expected a close election result, stating that the winner will be whoever is actually able to motivate more of his supporters to cast their vote. Recent Bangkok elections suffered from a low voter turn-out of about 50% of eligible voters.

Resorting to a strategy many analysts claimed might backfire, Democrat heavyweight Korn Chatikavanij told Bangkokians to remember about “who set fire to the city in 2010” and warned that if they win the Bangkok election “they will take the capital hostage and turn it into a battlefield once again.” Democrat election director Ong-art Klampaiboon meanwhile hoped for a high voter turnout as a sign to the whole country that voters do not want the Kingdom being run by one family, and instead favor a decentralized system as opposed to the “seamless cooperation” Pheu Thai propagates as their election slogan. The Pheu Thai party on the other hand continued to follow the strategy that already worked in the general election of 2011: no confrontation, no counterattacks or rebuttals. As in the election of 2011 this seems to work well with a fresh face as candidate. Pheu Thai chairman Chaturon Chaisang criticized the Democrats’ “setting fire to the city” attack though stating that it would be a “national political issue that has nothing to do with the well-being of

Bangkok residents.” In case of losing the election Sukhumband has already announced that he will take a break from politics, while other leading Democrat politicians will be forced to take responsibility too. Korn Chatikavanij announced that he will quit his deputy leader’s post while Abhisit Vejjajiva could be challenged as party leader. (Bangkok Post) (The Nation) (Businessweek) (Reuters)

Energy Minister Pongsak Raktapongpaisarn warned that there might be a shortfall of electricity in April, explicitly mentioning April 5 (Friday afternoon). Due to maintenance work on the Myanmar gas pipeline Yanada by the French operator Total, the supply of natural gas to Thailand will have to be temporarily suspended. Former energy minister Piyasvasti Amranand criticized the Energy ministry for lack of action on the issue as the shutdown has already been known of since last December. Activists accuse the government of having a hidden agenda in creating the power crisis, namely to revive a plan to build a nuclear power plant, which faced massive opposition the last time it was suggested. The Consumer Protection Network and the Foundation of Consumers suggested Thailand’s leaders should look into alternative sources of energy such as solar cells or wind power. Former energy minister Piyasvasti supported this opinion by arguing that due to technology and high oil prices, the cost to generate solar power is now equal to that for diesel. (Bangkok Post) (The Nation)

The Department of Special Investigation (DSI) suddenly decided not to question Democrat party leader Abhisit Vejjajiva and his former deputy Suthep Thaugsuban for interrogation in connection with the alleged corruption in the construction of 396 police stations. DSI chief Tarit Pengdit apologized last week to Pol Gen Adul Saengsingkaew for his comment that he wanted to summon the police chief in regards to the scandal. DSI provided no further information on why the two Democrat leaders will not be questioned anymore. “Some people suspect that the investigation might have stumbled on more dirt that, if publicly exposed, would implicate more people in political and police circles, not just the two Democrats”, the Bangkok Post reports. (Bangkok Post)

The Thai fruit processor Natural Fruit Company Limited has filed a criminal lawsuit for broadcasting false statement against human rights defender Andy Hall. Mr. Hall, lead researcher for the report “Cheap has a high price: Responsibility problems relating to international private label products and food production in Thailand” published in January 2013 by the Finnish non-profit Finnwatch, stated in the report that the company would employ Burmese children as young as 14, fail to pay the Thai minimum wage, confiscate travel documents and force people to work 20-hour days. In a first response to the lawsuit Mr. Hall said: “There have been official attempts to silence me, and this court case is the last stage of harassment.” During research for the report the Natural Fruit Company did not agree to meet with the researchers while interviews with workers had to be carried out in secret. (Prachatai) (The Telegraph)

Economics

The second half of February started on a positive note when the official gross domestic product (GDP) figures were announced. Compared to 2011, the Thai economy expanded by 18.9 % in the fourth quarter of 2012. The growth rate is the highest in 20 year, when the National Social and Economic

Development Board (NESDB) started compiling quarterly GDP. However, this development must be seen in the light of 2011’s extremely weak performance due to the floods during the fourth quarter. The overall Thai GDP grew by 6.4 % in 2012, one of the best growth rates in Asia.

Consumption was one of the most important features of the Thai economy in 2012: household consumption expenditure grew by 6.6 % compared to 2011 as Thailand recovered from the destructive floods. In the fourth quarter the increase in household consumption was the highest ever as it rose by 12.2 % year-on-year. The strong development of the Thai economy in the last quarter allowed the Bank of Thailand (BOT) to maintain the policy rate at 2.75 %. There has been substantial government pressure to cut the rate in order to increase export competitiveness and help attract currency inflows to Thailand but the BOT argued that the rate has not caused the currency appreciation, (increase of the value of the baht), that was feared and that the robust fourth quarter figures are a strong enough basis to keep the policy rate as is. (The Nation, Bangkok Post, <http://www.tradingeconomics.com>)

The Monetary Policy Committee (MPC) has continued to discuss the possible overheating of the Stock Exchange of Thailand (SET) as speculation on stocks with a very high price-to-earnings (P/E) ratio continues. More than 7 out of 10 stocks on the SET100 are now trading with a P/E ratio above 70 times, meaning that it is being traded at over 70 times its actual earnings (or current value) in the hope that the future value will be more than 70 times higher than the current. Although the Securities and Exchange Commission (SEC) have just implemented a new measure that extends the cash-advance trading period for this type of stock by three weeks it does not rule out further measures if the development continues. On March 1 the SET reached its highest level in 19 years. (Bangkok Post, The Nation)

The police forces have started clamping down on fake products in the 15 areas identified as “red zones” for counterfeiting by the United States Trade Representative in the beginning of the year. On February 28, fake branded products worth an estimated five million baht were seized by police in two shopping malls in Pattaya. 22 store owners have been taken into custody. The red zones include famous shopping areas such as MBK Shopping Centre, Karon Beach and Pattaya. (Bangkok Post)

Security

In Malaysia, there were a number of potentially significant steps towards reducing the violence in Thailand’s south. Among these was the signing of a peace agreement between Thailand’s National Security Council (NSC) secretary-general Paradorn Pattanabutr and the chief of Barisan Revolusi Nasional (BRN) liaison office in Malaysia Hassan Taib. While such an agreement poses a test on how much control BRN has over its militant cells in Thailand’s South, it holds the potential for ushering in a new dialogue which could lessen the violence. At the governmental level, Prime Minister Yingluck Shinawatra and her Malaysian counterpart Najib Razak have announced plans for increased cooperation in weakening the insurgency through economic development, and Malaysia’s government has pledged to assist in facilitating bi-weekly meetings between Thai government representatives and BRN insurgent groups. (Bangkok Post/ The Nation)

These moves followed the National Security Council’s announcement that it intended to soften the severity of law enforcement in the South, by replacing the state of emergency decree with the Internal Security Act (ISA). The main reasons behind such a move were to reduce the provocation caused by security forces exercising extraordinary powers, such as the ability to detain a suspect without charge for up to 30 days, as well as to make it easier for militants to turn themselves in to authorities under the ISA’s section 21. This section gives power to authorities to decide if a warrant for an individual who has surrendered should be voided, provided that the wanted person enters an education program. Already, at the time of this writing, four wanted militants have surrendered to authorities in the South in two separate instances. Reporting that they are tired of living a life on the run, they decided to turn themselves in, believing they would get “fair treatment”. They also tell authorities that more wanted militants are hiding in Malaysia and would like to return home. (Bangkok Post)