The HDRI team attended a public forum on, “The Macroeconomic Impact of Thailand’s Military Intervention,” presented by the Institute of Security and International Studies (ISIS) based at Chulalongkorn University in cooperation with Nikkei. The forum, which was held on Wednesday 23, 2014 in the Chumbhot-Pantip Conference Room on the Chulalongkorn University campus, began with opening remarks by Mr. Tetsuya Iguchi, Editor-in-Chief of the Editorial Headquarters for Asia of Nikkei Inc. Mr. Iguchi briefly described the growing trend of Japanese businesses preferring to operate and invest in ASEAN versus China, as the lower cost of labor, friendlier business environment, and the appreciation of the Yuan make ASEAN more attractive as a base of production.
Featured presenters at the ISIS Public Forum
Dr. Narongchai Akrasanee, Chairman of MFC Asset Management Plc, former Minister of Commerce and Senator of Thailand, outlined some of the primary economic issues facing the Kingdom including; labor shortages, energy shortages, a national deficit close to 50% of GDP, and some state-owned enterprises operating at a loss. Dr. Narongchai, who is currently advising the NCPO, stated the need for a digital revolution in the country, and noted Thailand’s failure to achieve a stable political system since the 1932 transition to a constitutional monarchy.
Mr. Hiroshi Yakame, Regional Head of the Greater Mekong Sub-Region of Sumitomo Mitsui Banking Corporation, discussed the investment history of Japanese companies in Thailand, dating back to the establishment of the Japanese Chamber of Commerce in Bangkok in 1954. He presented his analysis of recent Japanese investment trends, noting that overall, Japanese investment in Thailand has declined in recent years, which he largely attributed to political instability. It is his belief that the military intervention has actually increased investor confidence in the stability of Thailand. He predicted that Japanese investment may increase in the coming years, as basing operations in Thailand allows for excellent access to developing markets such as Cambodia and Myanmar.
HDRI Team Diana Richter, Sophie Mcleish, and Adam Martin
President of the Australian Thai Chamber of Commerce, Mr. Leigh Scott-Kemmis, presented the Australian investor’s perspective in regards to the recent military intervention. Mr. Scott-Kemmis expressed optimism that the military intervention provides the opportunity for major reforms of the Thai banking system, vocational education system, and various government bureaucracies, with which foreign businesses must deal when investing in the Kingdom. He felt that the deterioration of the rule of law over the past 10 years, a national banking system which has not be overhauled in almost 50 years, a fragmented bureaucracy, restrictive immigration laws, and corruption in customs enforcement were the greatest impediments to restoring Australian investor’s confidence in Thailand. He also echoed the concern of many foreign businesses that the military intervention could result in greater restrictions on foreigners and foreign businesses, as was the case after the 2006 military intervention.
While noting the need for self-censorship, the final presenter Dr. Supavud Saicheua, the Managing Director of Phatra Securities Plc, noted that the military intervention in Thailand was effective in preventing operational paralysis of the government and quelling political unrest, as well as improving public confidence in government institutions. However, Dr. Supavud did point out the influence that the NCPO now holds over the macroeconomic climate of the Kingdom, and questioned the clarity of some of its economic policies going forward. As an example, he stated that the NCPO’s decision to postpone auctions for the proposed 4G network in the country for an additional year, incidentally heightened uncertainty about future economic policies throughout the government’s upcoming transitional period. Dr. Supavud applauded the NCPO’s tough stance against corruption, while commenting on the inherent difficulty in finding an ideal balance between intensive scrutiny over government business dealings versus a quick and efficient implementation of new projects.
Attendees of the Public Forum
The forum moderator, Associate Professor Dr. Thitinan Pongsudhirak, of the faculty of Political Science at Chulalongkorn University and Director of ISIS Thailand, concluded the discussion with an open forum, giving the audience the opportunity to respond to the presenters.
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