Summary
Flood reports continued to dominate the national news with debates about the government’s performance and response as well as how Bangkok will be affected. The 2007 natural disaster law has been invoked and more industries and provinces continue to be destroyed. Thaksin Shinawatra pending status is discussed in addition to the harm being done by the lese majeste law. Economic reports mirror last weeks as well, reviewing the grave destruction being done by the flooding. The government is scrambling to resolve the damage being done to the industry sector in order to save Thailand from grave GDP impacts and cushioning the drop in consumer / investor confidence. The interest rate was voted to remain at 3.5, the first time in six sessions borrowing costs were not increased. Concern remains about Thailand’s future economic policies, especially now that floods have dramatically increased the stakes of a potential decline. Due to most attention focused on the flooding, security reports are limited this week. Further investigations are being conducted in the Golden Triangle to understand the death of 12 Chinese sailors and Burmese migrants’ access to legal rights are being reviewed by the Thai and Burmese government. The effectiveness of the Internal Security Operations Command is also being evaluated.
Politics
Flooding remains the main topic at hand, specifically regarding confusion surrounding flooding in Bangkok. Flood prevention agencies announced the danger of water draining into Bangkok from the North had already passed while Bangkok’s Governor Sukhumbhand Paribatra (Democrat Party) simultaneously declared that Bangkok was not yet safe. Sukhumbhand originally hesitated to open the sluice gates but did so reluctantly on October 20th to accommodate the governments’ flood management plans. On October 21st, both Army chief General Chan-ocha as well as the Northern Rangsit Irrigation Office announced that floodwalls would not be able to save Bangkok from the amount of Water flowing downstream from the North. So far, 315 people died in this year’s flood. (Bangkok Post) (The Nation) (Sydney Morning Herald) (The Wall Street Journal)
To bypass future conflicts and to ensure a more effective response, Yingluck Shinawatra has invoked the 2007 natural disaster law giving her full and nationwide authority over officials across the country. Refusing to follow her orders can now lead to prosecution for negligence. Abhisit Vejjajiva, Democrat leader, proposed Thailand invoke an emergency decree, however the Pheu Thai government refused; PM Yingluck stated, “I don’t see the need to declare a state of emergency at this time as I don’t want it to affect the confidence of investors.” Additionally, Pheu Thai members are still wary of handing over too much power to the army, as an emergency decree would lead to all troops being deployed. Fears remain that inducing military power could create an opportunity for another coup.
Following the Industrial Estate in Ayutthaya, the Nava Nakorn Industrial Estate in Pathum Thani was severely flooded after dykes could not hold back the water masses anymore. The government and the National Flood Relief Centre issued evacuation alerts for workers and nearby residents, totaling over 200,000 people. PM Yingluck apologized for not being able to protect the industrial estate. The crisis continued mid week with the inundation of all six districts of Nonthaburi, just north of Bangkok. Meanwhile, social unrest arises as unhappy civilians rise up against irrigation and government officials and/or the army due to flood management, which is reported to be prioritizing Bangkok over surrounding communities and other provinces such as Ayutthaya. More and more residents have started to tear down flood protection walls believed to be protecting Bangkok, as residents claim that Bangkok should have to share the burden. At a press conference, Yingluck pleaded for unity and setting politics aside, commenting, “We’ve been doing everything we can, but this is a big national crisis. On our own, we can’t get it done.”
The Thai Chamber of Commerce (TCC) has set up a special committee to assess the flood and identify solutions to reduce the hardship facing factories affected. Information and proposed solutions will be presented at the Joint Public and Private Sector Committee chaired by PM Yingluck. Sub-panels of the committee are responsible for (1) economic reconciliation post flooding, (2) assessing ongoing affects of the global crisis, (3) ensuring the productivity of the rice growth scheme and eliminating risks and corruption, (4) implementing the 300 baht daily minimum wage policy. Also included will be assistance to flood victims, long term flood prevention plans, setting up an information exchange between the public and private sectors and lastly, a flood war room as a center for providing relevant flood information to manufacturers. Industry Minister Wannarat Channukul has stated that plants which survived flooding may be asked to hire laborers of flooded factories or workers may be offered training to improve their skills while unemployed. Investment privileges may also be offered to damaged plants to reduce their tax responsibility. The U.S. has also flown a humanitarian assistance survey team and is providing three million baht (US$97,529) to the Thai Red Cross Society. (Epoch Times) (Bangkok Post) (MCOT).
In an interview with the Bangkok Post this week, Thaksin Shinawatra declared that he will not return to politics and that previous reports by foreign news services misquoted him when stating that he would like to return to lead the country. He was unmistakably clear in his wish to come back to Thailand though, stating “I will go back to where I belong, although I don’t know when or how. It’s my country. My family, my people and my home are there, and I miss them a lot.” Regarding a Pheu Thai push for a royal pardon, Thaksin opted not to comment as “a royal pardon is his majesty the king’s prerogative”. Asked if he feared that his sister’s government might be overthrown by the army as his own was in 2006, Thaksin replied that he thinks a coup will not occur as the international community will not accept it. Additionally, he commented that he believes that in order to prevent coups in the future, Democracy must be strengthened. (Bangkok Post) (Sydney Morning Herald)
As reported in the HDFF Weekly Review last week, the lese majeste law came under scrutiny from The United Nations Special Rapporteur Frank La Rue on the revising the right to freedom of opinion and expression. This week Daranee Charncherngsilapakul, a woman sentenced to 18 years in jail for lese majeste, used this opportunity to voice her opinion arguing for the unconstitutionality of secret trials, as hers was closed to both the public and the press. In addition, she stated that the Criminal Court may unfairly delay its final verdict to the 15th of December thus robbing her of the chance for a Royal Pardon as His Majesty the King hands out amnesties on the 5th of December as part of his Birthday celebrations. Ms. Daranee stated that she hopes the Yingluck government would help her since she has only fought for democracy. (Bangkok Post)
Economics
As floods continue to tear down Thai industry and the global economy remains in disarray, experts are compelled to reduce growth forecasts lower and lower. The floods may lead to 1.7% decrease in economic growth this year after agriculture is destroyed, 1,000 factories are impaired and corporations such as Toyota Motor Corp. and Nikon Corp are forced to slow production. From July 25th to October 12th, economic damages were estimated at 150 billion baht, or 1.3% to 1.5% of GDP. Damages to the agricultural sector were estimated at 68 billion baht, industry 50 billion, tourism 8.2 billion, trade 12.38 billion, people’s houses 3.4 billion, public facilities 11 billion and miscellaneous 2.5 billion. Thailand’s emergency chief has met with the ministers of finance, industry, agriculture and cooperatives, senior officials from the Bank of Thailand and the Office of the National Economic and Social Development Board (NESDB) to discuss assistance measures for businesses affected by flood. The government plans to redistribute budgets to help clean up and rebuild after the floods, however, if the damage becomes more severe, authorities have announced considering easing the monetary and fiscal policies to control the impairments. “We will probably see the aid and economic stimulus come mainly through the fiscal channels,” stated economist Somprawin Manprasert from TISCO Securities. “Although the flood has worsened the economic outlook, the effect could be only temporary, and at this stage I don’t think the situation warrants a sudden reversal of interest rates.” Government officials maintained that the treasury is flexible to support a supplementary budget, allowing the deficit to extend past the targeted 350 billion baht ($11.34 billion), or 3.2% of gross domestic product. Economists have a positive outlook on inflation, which previously peaked at 4.29%. Although reduced last month, risk of inflation remains high and there is strong need for monitoring by the central bank. (Business Week) (Wall Street Journal) (MCOT) (Bangkok Post)
The BoT governor voiced apprehension that foreign investors might lose confidence and deviate investments to other nations. It is predicated that China and Malaysia are the most susceptible to supply chain disruptions as a result of the floods impacting industries such as office machinery and hard-disk drives. A total of 419 Japanese companies have shut down operations in the six worst-affected industrial estates. The Thai Consumer Confidence Index has dropped to 81.8 points in September from 83.4 in August as consumers lost job opportunities and future income due to the floods. Concerns also included the rising cost of living as well as the impact of the unstable global economy. The BoT has encouraged the government to resolve occurring problems as soon and as effectively as possible, so that there may be an easier journey to regenerate economy and business confidence after the water levels are reduced. Investors are waiting to see how the government handles itself and presents the information at hand. The BoT has noted that only 17% of total industrial factories were flooded, leaving 83% untouched, and hoping the government informs investors that they may easily expand production bases to floodless regions, keeping the BoT growth projection for 2012 at 4.2%. It is expected to take about 3-6 months for rehabilitation work. The Office of the Insurance Commission (OIC) has also noted that seven industrial estates that may be affected by the flooding have insurance worth a total of 410.17 billion baht, including 2.66% of the country’s property insurance market. (Bangkok Post) (MCOT) (Bloomberg)
On a positive note, Thailand’s tourism industry has mostly been secured away from the worst of the floods and may help support the economy while the government works to improve the manufacturing and agricultural sectors. Areas such as Phuket, Krabi, Pattaya and Koh Samui were left untouched and efforts are being taken to keep flooding out of Bangkok as much as possible to help avoid further widespread damage. The tourist industry is hoping for relief before the start of next month at the peak of tourist season, including reducing the impact on the target to attract 19 million tourists this year. (Bloomberg)
As predicted by analysts, the Bank of Thailand (BoT) maintained the same interest rates for the first time this year at 3.5, bringing an end to a series of increases since 2006. The central bank has increased borrowing costs more than any other major Asian economy, a total nine times since July 2010. In the beginning of the week, the baht rose, approaching a three-week high, after international investors increased holdings of local assets. Government bonds also advanced after the central bank kept the 3.5 interest rate benchmark. Global funds bought $83 million more Thai shares than they sold in the first two days of this week. However, the growth pales in comparison to the damage done by flooding. In the second half of the week, the baht touched the weakest level since October 12th. Governor Prasarn Trairatvorakul predicted that the GDP may shrink this quarter and the Bank of Thailand might reduce its 2011 growth estimate to below 3% from the current 4.1% prediction. (Reuters) (Business Week) (Bangkok Post)
International economic impacts are also being discussed. Opinion leaders have noted concern over the slowdown in the Chinese economy after decades of steadfast expansion. Reportedly, the Chinese Purchasing Managers Index (PMI) has been reduced, along with the housing market and trade surplus. Thailand is predicted to become one of the primary countries to be affected should the Chinese hit an economic decline. Analysts have re-stressed the importance of relying on the domestic economy and encouraging competitiveness between regional peers while focusing on physical and human capital productivity. In addition to the minimum wage policy, long term solutions are needed to keep up with domestic demand including encouraging education and skills, finding a balance between public consumption and investment and political stability. The Thai government is planning to continue implementing the rise in the minimum wage despite pleas from industries in order to help them cope with flood losses. However, the start date has been pushed back from January 1st to April 1st. The hope is that the policy will spread resources throughout the country and will enhance productivity to rebalance society. (The Nation)
Security
Following up on the death of the 12 Chinese sailors in the Mekong’s Golden Triangle, a team including foreign affairs, public security and transport officials were sent by the Chinese government, accompanied by senior Thai police officers, to inspect the Mekong River area near Chiang Sean in order to better understand the sailors’ deaths. A joint investigation with the Thai police is being carried out. The United Wa State Army, whom have a strong presence in the area and are infamous for conducting drug trade, have reportedly issued a statement in China denying its involvement in the killings and have claimed that the attacked occurred outside its control area. Lao and Burmese authorities have also held a local border meeting in Tachilek in Shan State, where security issues along the Mekong were discussed. (China Daily) (Bangkok Post)
Thailand’s labor minister, Phadoemchai Sasomsap has held three rounds of talks with a delegation of Burmese officials, lead by Burmese Deputy Labour Minister Myint Thein, to increase assistance to migrants working in Thailand. Healthcare and legal assistance rights were discussed for the three million Burmese migrants living in Thailand, mainly focusing on migrants’ national identification problems such as visa fees, job finding and issuing temporary passports. Solutions included the addition of a labor attaché at the Burmese embassy in Bangkok and creating regional centers where the migrants could complete the registration process. The Thai government released a statement claiming that five teams would install an online shared data system between Burma and Thailand in order to reduce time and energy put into forming working procedures. The Thai government also agreed to help Burmese migrants affected by the flooding. The Burmese have requested that family members are able to join their relatives working in Thailand and that Social Security be available for nationality verified and legally employed Myanmar workers. Many migrants remain skeptical, feeling that the previous government’s embassy did not care to implement these policies in the past. (Democratic Voice of Burma)
The Thai government has announced that Internal Security Operations Command Region 4 (ISOC), mandated with resolving the Southern insurgency, is lacking in unity due to its current structure which encompass various working groups which do not work interchangeably to solidify their efforts or goals. Comprised of members of the military, police and other state agencies, the staff only answers to their respective agencies and not to the Isoc. General Prayuth has spoken against withdrawing more military troops to be replaced by reconciliatory efforts claiming “If the Deep South is secure enough, the military would be ready to withdraw its troops from the region. But who would be able to guarantee the violence does not return?” This week, three police officers in Pattani were involved in a shooting attacking, resulting in the death of Police Lieutenant Wit Sitthitrakul. The car driven by the attackers is believed to be linked to the death of a previous shooting, which killed a former president of Lubo Yirai tambon administration organization. (Bangkok Post)
Thai custom officials attended their first two-day workshop, The Pilot Weapons of Mass Destruction Commodity Identification Training workshop, on recognizing smuggled WMD materials and equipment. The U.S. nuclear agency (NNSA) and the Royal Thai Government have been working since 2009 to create programs sustaining nonproliferation activities by Thai customs personnel. The United States has announced its dedication to investing in programs like NNSA’s Commodity Identification Training to improve nuclear security safety and as a tool in prevention to keep proliferators from acquiring the needed material, equipment, and technology to create weapons of mass destruction. (Global Security Newswire)
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