Summary
The political sector is consumed by the extensive damage being done by flooding, as government representatives attempt to understand the best possible solutions to alleviate suffering and destruction of infrastructure. The lese majeste law is being cited internationally as a damper on freedom of expression and several international bodies are asking Thailand to take a comprehensive review of its laws. Economic forecasts are extremely contrasting this week, with reports of both positive and negative influences. Despite the turmoil caused by flooding, the baht remains strong. Due to flooding, both agriculture and industry sectors are significantly harmed but financial institutions are stepping in to provide funding. The future of the Asian markets remains unknown. International relations with China, Vietnam and Pakistan are supported but the death of several Chinese sailors at the hands of Golden Triangle drug lords raises significant questions.
Politics
Flooding remained the overshadowing topic in all news reports this week. According to the Disaster Prevention and Mitigation Department, 289 people have died thus far from flooding related incidents located in the 26 provinces affected. The House of Representatives cancelled their meetings on Wednesday and Thursday so that MPs and senators were able to help flood victims in their respective constituencies while the Prime Minister’s Office considered making the whole week a national holiday. Ayutthaya province has been one of the hardest hit locations after flood barriers collapsed, inundating the whole province. Hospitals had to evacuate their patients while thousands had to leave their homes, many of which lost all of their belongings. HRH Princess Maha Chakri Sirindhorn visited Ayutthaya and handed out relief packages. As the water level at Chao Phraya River rose to a new record height of 2.13m, 20 of 50 Bangkok districts were flooded over the weekend with water levels between 30 cm and 70 cm. The Royal Thai Navy in cooperation with the private sector will use 1000 boats to speed up the flow of water in the Chao Phraya River on Sunday, October 16.
According to reports, Yingluck’s adminstration will try to find 80 billion baht to support post-flood rehabilitation, which amounts to 10% of total fiscal expenditure. Opposition Democrat leader Abhisit Vejjajiva urged the government to scrap some of its programs to free up money, for example the first-time car buying scheme, and use it for flood rehabilitation programs. Former PM Thaksin Shinawatra meanwhile wants the government to invest in a 400 billion baht in an integrated water management system which might potentially solve inundation and drought problems permanently. The system would retain water in the rainy season and release it during the dry season. As the economic costs of this year’s flooding might be well over 100 billion baht, Thaksin argues that this would be a wise investment. Thaksin also suggested China as a possible partner for the project.
The lese majeste law is being discussed at length again by the international community. A U.N. expert on freedom of speech, Frank La Rue, asked for Thailand to reduce its laws that prohibit “slandering” the royal family, stating the law may even violate the International Covenant on Civil and Political Rights treaty due to its vagueness and overly harsh threat of punishment. The ICCPR treaty calls for imposing very clear and limited exceptions to imposing on free speech; exclusions include protecting individuals and preserving national security. La Rue announced that the lese majeste law, including the private and closed trails for those who face charges, encourage self-censorship and suppresses important debates that affect public interest. (Boston.com) “I urge Thailand to hold broad-based public consultations to amend section 112 of the penal code and the 2007 Computer Crimes Act so that they are in conformity with the country’s international human rights obligations,” La Rue said, adding, “The recent spike in lese-majeste cases pursued by the police and the courts shows the urgency to amend them.”) Representatives from the United Kingdom, France, Slovenia, Switzerland, Brazil, Spain, Sweden and New Zealand shared the view that the lese majeste law affected freedom of speech and advised Thailand to reflect upon these rights. Hungary and Finland recommended Thailand to invite the UN special rapporteur on freedom of expression to visit Thailand. Norway, which also has a royal family, suggested that a charge can only be implemented with the approval of the king in order to “avoid abuses”. (The Nation) (Asian Correspondent) (Bangkok Post)
Economics
Flooding is the main discussion throughout Thailand, as it digs into the somewhat stable economy. Estimates of the damage vary from 90 billion baht ($2.9 billion) from the National Economic and Social Development Board to 60 billion baht ($1.9 billion) from The Bank of Thailand which makes up 0.6-0.9 per cent of Thailand’s GDP, according to Finance Minister Teerachai Puwanartnaranubala. . The Finance Ministry estimates the damage to agriculture, animal husbandry and transport will reach 20-40 billion baht, or 0.2-0.3% of GDP. These impacts have decreased farmer’s livelihood and income, which in turn has affected domestic demand. PM Yingluck Shinawatra’s administration has been counting on domestic demand resulting from the pro-growth policies to replace financial export losses resulting from the global economic decline. Also at stake is the industrial sector, as it is estimated that 1,215 factories are under 2-meter high water, leaving around 41,000 workers jobless. Losses to manufacturers are reaching $1.05 billion from one industrial estate in Ayutthaya province and northern Bangkok alone. Nationwide losses may reach $1.6 billion. Inflation continues to be high at 4.07% which is driven by rising food prices brought on by destroyed crops and food shortages. The Bank of Thailand’s policy rate of 3.5% may not be able to contain inflation being caused by the damage. (Bangkok Post) (The Nation) (Bloomberg)
The economy will also be affected by the delay in approving the 2012 budget of 2.33 trillion baht which was scheduled to be reviewed by Parliament before October 1st. The budget remains unconsidered, making it impossible for the government to spend any money on promised investment projects. Financial institutions are being asked to help individuals and business flood victims with a two steps program, the first step is restructuring businesses debts and the second step is to lower the minimum-debt repayment amount for flood victims. There is also a SML (Small, Medium and Large Village) scheme in place for investment in flood management. Small, medium-sized and large villages will get between Bt200 million (S$8.3 million) and 300 million baht each, according to their size. Money from the 80 billion baht revolving village fund will be allocated after the flooding reduces. Under the scheme, the government will provide cash for microcredit loans within villages (Bangkok Post) (PressTV)(AsiaOne)
Despite the colossal damages by flooding, the baht has managed to strengthen this week, leading to the reversal of some earlier losses. Government bonds also climbed after global funds added holdings of the nation’s assets. However, before the increase, currency declined after the finance ministry reduced the growth forecast once again to 3.7% as result of the floods. The forecast was previously 3.8% to 4.3% last month. A positive factor about fund outflow is the baht weakening against the US dollar, which has helped the export sector. International investors purchased $42 million more Thai equities and $173 million more government debt than sold in the beginning of the week. The baht rose 0.4% to 30.85 per dollar after falling 0.3% earlier, according Bloomberg. The currency may trade between 30.80 and 31.20 this week. (Business Week) (RTT News) (Bloomberg)
Regardless of the increases, the global forecast for Asian markets in general is mixed with a downward perspective. Some sources state that it is expected that Asian markets will continue to follow Europe and the United States lead- which means financials will drop, along with technology, gold and property stocks. The impact on the Chinese and Japanese economy could potentially impair Thai exports. The Monetary Policy Committee (MPC) is due to hold its last meeting of the year on October 19th. Most analysts expect interest rates will remain unchanged given the weakness in the global economy and the ongoing debt crisis. Thai finance experts have voiced contrasting statements claiming that although the US and European markets are on the downturn, the Thai economy has continued to grow naturally and therefore are not in need of the support of Yingluck’s populist policies. Dr. Pisit Leeahtam, a macroeconomics and finance lecturer at Chiang Mai University, has told the press that boosting the economy could have negative effect. Pisit’s line of thought supports that the government should reconsider its plans because if too much rapid growth were to take place, it would increase risk of amplifying inflation and distort domestic demand, which will be hard to remedy in the long term. Pisit also mentioned that Thailand has debt hidden in many places and that continuing to spend and over borrow will be extremely harmful, predicting that Thailand will face a similar situation to Greece. (Bangkok Post)
Solutions are being discussed to support the long term outlook. According to the energy minister, Pichai Naripthaphan, Thailand will be working towards becoming an oil trading and biofuel hub in Southeast Asia. Total crude palm oil (CPO) stocks reached 281,000 tonnes in August versus a typical stock of 150,000 tonnes. The net oil importer plans to boost its crude reserves to 29 days from the current 18 days. There have been plans for 20 years to build a 180 kilometer trans-peninsula rail, road and pipeline link between the Gulf of Thailand and the Andaman Sea to transport of crude oil from the Middle East for refining. B5 biodiesel will be available at gas pumps nationwide in place of B4 from October 21 until December. After December, CPO stocks will be cut to 200,000 tonnes in order to determine if B5 should be promoted. The government is encouraging state-controlled PTT and its group to invest overseas and is negotiating with Myanmar and Cambodia for new petroleum fields. Thailand will also continue to promote “green” gasohol and encouraged ethanol makers to meet rising demand for more energy. (Bangkok Post) (Newswire)
Security
International security takes precedence this week, with numerous bilateral dealings. Yingluck Shinawatra is interrupting the traditional prime ministerial introductory tour of ASEAN by visiting China next week. Sources claim Yingluck has highlighted the Thai-China relationship as a staple in Thailand’s all-inclusive engagement with Southeast Asia. In 2007, China replaced the US as Thailand’s largest single-country export market and The Ministry of Commerce’s estimate last years total two-way trade between Thailand and China at US$45.7 billion (1.4 trillion baht). Through September this year, China invested nearly $1 billion, up 25% from last year. Although originally planned as visit to emphasize the two nations combined potential, the news of thirteen Chinese sailors being killed in the Mekong River near Thailand might seriously impact the two nation’s current working relationship. Most of the victims, believed to be the crew members of two Chinese cargo ships that were hijacked, were found blindfolded, bound at the hands and had been killed by gunshot wounds. Thai army officials believed the ships’ crews refused to pay protection money to a local drug lord who then killed them. “We urge the countries concerned to quickly establish the truth about the incident, capture the criminals, and protect the safety of the Mekong River,” stated Chinese foreign ministry spokesman Liu Weimin. China has criticized Thai authorities for being slow to act including monitoring the situation and rescuing the bodies. Chinese shipping is halted on the Mekong until trade route security improves. Thai experts have stated that the suspension will not have a large macroeconomic effect but it will impact local traders and shippers. (Radio Australia) (LA Times) (The Nation)
The legislative bodies of Vietnam and Thailand are working together to develop their cooperation including the exchange of delegations, experience and joint supervision of governmental agreements. National Assembly Chairman Nguyen Sinh Hung and President of the Thai National Assembly and Speaker of the Thai House of Representatives Somsak Kiatsuranont met this week to set specific goals for their joint programs in order to work towards building a strong ASEAN Community by 2015. Major topics discussed were food security (rice production, processing and export) and efficient and sustainable usage of the Mekong River water. PM Yingluck will visit Vietnam next week to discuss more specific cooperation efforts in trade and investment. (Vietnam News)
Prime Minister Syed Yusuf Raza Gilani and Foreign Minister Hina Rabbani Khar of Pakistan have reached out to Thailand to continue to strengthen their relationship on their 60th diplomatic anniversary. “Pakistan and Thailand have developed bilateral relations on the basis of cordiality, mutual trust, understanding and close cooperation” stated Prime Minister Syed. The Pakistani PM also called for an intensified mutual collaboration to increase the two countries already established security, education, science & technology liaison as well as regional connectivity and trans-regional development cooperation. Syed claimed that by focusing on Pakistan’s Vision East Asia policy and Thailand’s similar Look West policy, forming a better cooperation should be “win-win”. (Associated Press of Pakistan Corporation)
Six Malaysians in Thailand were arrested for an being a part of an international spoofing organization, which acts to falsify data online or “fool” hardware and software in order to gain illegitimate power. A raid in Bangkok proved the six Malaysians were using devices to replicate phone numbers of the police and using bank documents to claim victims were being investigated for money laundering. “The modus operandi was to tell victims that they were being investigated by foreign authorities for money-laundering activities and other illegal activities. They then tell the victims that they must transfer all their savings into an account, which is provided by the syndicate in order to verify that the funds are not linked to any cases” stated head of Cyber and Multimedia Investigation Division ACP Mohd Kamaruddin Md Din. (Techzone 360)
Although not creating as much impact in the news this week, violence in the South continues. A female deputy director of a school in Narathiwat has been shot dead and her husband wounded in a drive-by shooting. A policeman was killed in a drive-by shooting and a man and a woman were shot to death while traveling to the market. A rubber tapper was seriously injured in a drive-by shooting in Yala. (Bangkok Post)
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