Photo: Reuters / Chaiwat Subprasom
Summary
In politics, Bangkok governor MR Sukhumbhand Paribatra announced that there are no signs of flood risk in Bangkok, while Deputy Prime Minister Plodprasop Suraswadi blamed the media for creating panic among the population, claiming that floodwater was only half of the 2011 level. In other news, the construction of the controversial Mae Wong dam has been abandoned for now but is still included in the 350 billion baht water management scheme. Prime Minister Yingluck Shinawatra was furthermore criticized by the opposition for a visa waiver agreement with Montenegro.
In economy, the US Federal Reserve has surprisingly maintained its quantitative easing scheme, stunting what was expected to be a rocky time of the Stock Exchange of Thailand as foreign assets decreased. In domestic news, the Parliament this week approved the mega-loan for infrastructure projects (2 trillion baht) proposed by the sitting government. The loan is to be repaid over 50 years and will, among other things, fund a high-speed railway network.
In security, Malaysia proposed the construction of a security fence along the Kolok River separating Malaysia’s Kelantan state and Thailand’s Narathiwat province. The Baranasi Revolusi Nasional (BRN) group’s demands are still under review and waiting for deliberation by the Council of State. A series of violent incidents have continue to cause injuries and deaths in the South over the past two weeks leading to a further extension of the emergency decree for another three months.
Politics
No worries, the situation is not nearly as worrying as two years ago, is the Bangkok Metropolitan Administration’s (BMA) message to the public as flooding hits 27 out of Thailand’s 77 provinces. Bangkok governor MR Sukhumbhand Paribatra announced that despite heavy rainfalls there are no signs of a flood crisis in Bangkok and the water level in the Chao Phraya River remains manageable. A spokesperson of the BMA further elaborated that since “Run-offs and rain will not coincide with high tides this year” city administrators are confident that Bangkok will stay dry. Prime Minister Yingluck Shinwatra has meanwhile ordered to set up a single command centre to analyze the flood situation and help victims. Deputy Prime Minister Plodprasop Suraswadi blamed the intense media coverage for causing panic among the population, stating that the floodwater was only half of that in 2011. While managers of industrial estates in Ayutthaya and Saraburi remain confident that the floodwalls built after the 2011 event will protect the estates this year, Prachin Buri’s 304 Industrial Park became the country’s first major manufacturing site to be hit by floods, inundated up to 40cm. Communities along the banks of Chao Phraya River in Ang Thong, Sing Buri, Ayutthaya, Nonthaburi, Pathum Thani and Bangkok were also experiencing flooding.
In related news, Deputy PM Plodprasop, in his function as chairman for the Water and Flood Management Commission (WFMC), decided to discard a proposal by the Royal Irrigation Department (RID) to build the controversial Mae Wong dam, for now. He stated that the WFMC has commissioned ITD Power China Joint Venture Co to design and construct the dam instead after a new study about the environmental impact of the dam is concluded. ITD Power China JV won five out of nine modules under the government’s 350-billion-baht flood and water management scheme. Sasin Chalermlarp, secretary-general of the Seub Nakasathien Foundation, who is a core leader of the protests against the dam’s construction, remained adamant though that his group will oppose the dam as long as it is planned to be built in Mae Wong National Park, regardless of any study results. Deputy PM Plodprasop was initially against the dam’s construction when he headed the Forestry Department from 1998-2002. He has since changed his stance, stating that the project’s flood prevention value outweighs its negative impacts on the forest and wildlife. Mae Wong Dam faces fierce criticism from environmentalists and is one of 28 dams under the 350-billion-baht flood and water management scheme. (Bangkok Post) (The Nation)
Rubber farm protesters have split into two groups after one of them accepted the government’s subsidy of 2,520 baht per rai, capped at 25 rai, while the remaining protesting farmers demanded a government guarantee of 120 baht per kg on raw rubber sheets. PM Yingluck asked the remaining protesters to stop their road blockades, as the majority of rubber farmers would have accepted the subsidy deal. On another front of this conflict, the Prime Minister has ordered investigations into rumors that rubber price speculators are sponsoring the protests in Nakhon Si Thammarat, hoping for a higher rubber price guarantee. (Bangkok Post)
PM Yingluck Shinawatra has been criticized by the opposition for the amount of official visits to foreign countries, amounting to 55 so far. Deputy Prime and Foreign Minister Surapong Tovichakchaikul rejected all criticism, announcing that her overseas trips will benefit Thailand as Thai investors accompanied her on all of her trips. During one of her recent trips she agreed to a visa waiver agreement and double taxation exemption deal with Montenegro. Naturally, the opposition claimed that former Prime Minister Thaksin Shinawatra was responsible for this agreement since he had previously been granted a Montenegrin passport. (Bangkok Post) (The Nation)
Economy
Quantitative easing (QE) has been a hot topic in developing nations in Asia over the past months as the US Federal Reserve was widely expected to stop or step down its asset purchases. QE is the practice of introducing new money to prevent the money supply from falling and has been a relatively common practice since the beginning of the financial crisis. As the US economy is now recovering, the chairman of the Fed Ben Bernanke announced in June this year that the QE would be scaled back, notably regarding bond purchases, if the economy continued to show positive figures. This statement caused some unrest on the Stock Exchange of Thailand (SET) but unexpectedly the Fed announced on September 18 that they would maintain monetary stimulus that allows capital inflows to emerging markets. Ben Bernanke said that more evidence of global recovery is necessary before funds are trimmed. The Bank of Thailand (BoT) meanwhile released a report aiming to calm investors by evaluating the possible impact the termination of the QE program. Thailand’s low unemployment rate (0.6 %) and inflation rate (0.75%) are used as arguments that the Thai economy can withstand a withdrawal of US stimulus measures. The main risk for the Thai economy is fluctuations in exchange rates and a sharp cut in foreign investment but the BoT report puts forward the beginning global economic recovery as a possible buffer for this. (Bloomberg.com, Bangkok Post, Pattaya Mail)
The ASEAN Economic integration under AEC 2015 is moving forward and Thailand is expected to benefit especially from the regionalization as it will be able to profit from its strong brands when exporting to other countries in the region while accessing cheaper funds as market connectivity increases. (Bangkok Post)
The major banks have revised their growth outlooks for the year, with Kasikorn Bank lowering it slightly to 3.7 (from a previous minimum of 3.8) and CIMB Thai Bank slashing it from 4 % to 2.8 % over the year. CIMB is presenting the most pessimistic growth projection for the remainder of the year while the BoT keeps it’s forecast above 4 % for the year (expected to cut it slightly to 4.2 %). Domestic consumption has been slow during the year and household debt remains high, leaving analysts more negative than at the beginning of the year.
The much-discussed 2 trillion baht infrastructure loan has been passed by the Parliament this week. The loan will fund water-management schemes and a high-speed train network that the current Government argues is essential for the future development of the country. The loan will be raised mainly by the issuing of bonds (ranging from 1 billion to 1.5 billion USD) and repaid over 50 years. Despite worries from the opposition about how the huge loan will affect the public debt – GDP ceiling (60%), the Finance Minister Kittirat Na Ranong has again assured critics that public debt would not exceed half of GDP. (Reuters, Business recorder)
Security
Thailand supports Malaysia’s proposal to build a security fence along the Kolok River that separates Kelantan (Malaysia) and Narathiwat (Thailand). Malaysia’s Home Ministry suggested to declare the 121-kilometer border as a security zone in order to prevent transnational crimes, such as drugs and firearms smuggling, as well as criminal fugitives crossing borders. An aerial survey is currently underway to assess the feasibility of building the fence on Thai territory. The idea had previously been aired in May this year by army chief Prayuth Chan-ocha who made a similar proposal of building a fence along the 640-kilometer Thai-Malaysian border. (Bangkok Post, New Straits Times)
The five demands issued by the Barisan Revolusi Nasional’s (BRN) are being questiond as to their constitutionality. The demands were issued in April through a video posted on YouTube and consist of the following requirements: 1) to recognize BRN as a liberation group and not a separatist movement, 2) to recognize Malaysia as the peace talks mediator instead of facilitator, 3) to allow ASEAN member states, the Organization of Islamic Cooperation and international non-government organizations to witness the talks, 4) to acknowledge the rights of the “Melayu Patani” people to the “Patani land”, and 5) to free all suspects in southern security cases. The academic and security sectors are working together in reviewing BRN’s demands before submitting their review to the Council of State for deliberation. The next round of talks with the BRN is scheduled on October 20.
A series of violent incidents continues in the South. In Yala, a rescue worker was killed in a drive-by shooting and two police officers providing security for teachers were slightly injured by a bomb explosion. In Pattani, the chairman of the Teachers Confederation of Three Southern Border Provinces and a former member of a Tambon Administration Organization (TAO) were seriously wounded in separate shooting incidents. In Narathiwat, a village security guard on duty at Rueso police station was killed in a drive-by shooting. Three civilians were also killed in two other separate drive-by shootings. (Bangkok Post)
An extension of the emergency decree has been approved for the 33rd time since its invocation in 2005, this time effective from September 20 to December 19. The extension covers all districts of Yala, Pattani and Narathiwat provinces, except Pattani’s Mae Laen district. The revocation of the decree will be piloted in Kabang district before the extension expires. Defense volunteers and police officers are getting ready for situations that may arise upon the decree’s termination.
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