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Summary
Prime Minister Yingluck Shinawatra made an important visit to Japan this week to rejuvenate investor confidence in Thailand after last year’s catastrophic flood which resulted in heavy losses and disruption for the business community. The Thai government announced several water management plans in seeking to assure investors such disasters would not occur again. On the economic side, Thailand’s growth outlook is optimistic with the International Monetary Fund (IMF) forecasting between 5.5 to 6.5 percent growth in gross domestic product this year. In security, the South continues to experience more violence as two more bomb attacks occurred in Narathiwat province, prompting the Thai government to seek an extension of the emergency decree. In the meanwhile, Thai authorities intervened on a large drug smuggling operation in the North, arresting two suspects and seizing over four million methamphetamine pills.
Politics
Prime Minister Yingluck Shinawatra visited Japan this week to restore investor confidence after last year’s flood and assure the Japanese business community that there would be no repeat of such disasters in the future. With 49% of foreign direct investment to Thailand coming from Japan, exports to Japan up 8.3% and tourists from Japan rising by 13% last year, Japan is playing a crucial role in Thailand’s economic plans. Prime Minister Yingluck therefore not only affirmed that floods will never be a problem again but also offered financial incentives for returning investors. As a visible short-term measure, around 90 miles of flood walls are currently being built around the six low-lying industrial estates north of Bangkok. While this should please business and industrial lobbyists, local villagers fear that their homes and farms will be inundated as a consequence. In cooperation with the Stop Global Warming Association, locals are planning to seek a suspension of the flood wall construction through the Central Administrative Court. Prime Minister Yingluck pleaded for understanding, stating “The barrier policy does not mean that the government wants to save the estates without caring for the residents. But it’s important that if foreign business owners are not made confident about the flood prevention plan, and relocate from Thailand as a result, local residents will not be hired.” (The Nation) (Bangkok Post)
Apart from flood walls, reforestation, as proposed by His Majesty the King, artificially lowering water levels in several dams, elevation of roads to prevent supply chain disruption and setting up of water retention areas, the government’s plan is centered around a centralized command. But critics argue that different departments and local administrations still have overarching powers. Above all though, critics maintain that the plan lacks an essential measure in not addressing a further floodway to transport water towards the Gulf of Thailand, as the Chao Phraya River simply does not have enough flood absorption capacity. (Eco-Business) (New York Times)
Japan’s Economy, Trade, and Industry Minister Yukio Edano assured visiting Prime Minister Yingluck that he continues to see Thailand as Japan’s investment and manufacturing base in the ASEAN region, and he therefore supports further investment and economic cooperation. In a joint statement, Prime Minister Yoshihiko Noda and Prime Minister Yingluck further stressed the importance of cooperation among other areas than the economy, highlighting disaster management as well as security and regional affairs. (The Nation) (The Japan Times)
Meanwhile, exiled former Prime Minister Thaksin Shinawatra was in South Korea, commenting on the Thai government’s flood prevention measures and acknowledged the fact that Bangkok is sinking while seawater levels are rising. Therefore, he said, it will be necessary to protect Bangkok from rising sea levels by building a dyke, which could be completed in 2015. In addition, he said, this plan would include setting up an irrigation system which will boost the country’s agricultural output. (The Bangkok Post)
Prior to Prime Minister Yingluck’s four-day visit to Japan, the government announced that it will offer 250,000 dollars in compensation to the family of Hiroyuki Muramoto, a Reuters cameraman killed during the crackdown on the red shirt demonstrations in 2010, arguing that evidence pointed towards Thai soldiers being responsible for Muramoto’s death. The Yingluck government approved a 2 billion baht budget last month to pay compensation to family members of victims of violence and political protests since 2005. (AFP) (The Japan Times)
Thaksin was back in the headlines after claiming in an interview with The Bangkok Post that the envisioned charter changes will not favor him: “I have my own way of getting back home without having to rewrite the charter to favor me.” As his sister, Prime Minister Yingluck, has already stated numerous times, Thaksin also stressed that the section on the monarchy will stay untouched amid the proposed changes to the constitution. In a video-linked message at a recent red shirt gathering, Thaksin addressed this issue saying, ”Today’s constitution is undemocratic. It does not respect the rights and freedom of the people. It downgrades the power of the people. The person who is the prime minister and who came from the people throughout the country has to operate under the discretion of a handful of people who do not have to be responsible to the people.” Analysts opine that constitutional changes would not stir public uprisings because most affected issues are too far removed from daily life – with the exception of a return of Thaksin as a free man. As scholar Chris Baker put it, “A Thaksin government without Thaksin is absolutely perfect at the moment,” adding, “We are back on the path before the coup. The one thing that can throw this is if Thaksin tries to return.” (AFP) (The Bangkok Post) (Bloomberg)
Economics
The Stock Exchange of Thailand’s main index finished sharply higher on Thursday, March 8, recovering further from the sell-off on Tuesday. The index soared 15.15 points or 1.31 percent to finish at 1,168.31 with the volume of 4.503 billion shares worth 35.757 billion baht resulting heavily from large gains in the financial shares and the energy producers. The global forecast for the Asian markets suggests limited upside from the success of Greece to close its bond swap offer for private creditors with the participation rate in the country’s debt swap high enough to avoid a default. Adding to the market upside, U.S. payroll processor ADP reported stronger than expected private sector job growth in February. European and U.S. markets finished firmly higher, and the Asian bourses are expected to follow that lead. (Nasdaq) (Reuters)
Thailand’s Board of Investment (BOI), supported by the Ministry of Industry, has launched a new roadshow campaign, starting in Japan to regain foreign investors’ confidence along with promoting the country’s tourism image. The BOI’s main argument under the theme “Unbeatable Thailand, Unparalleled Opportunities” is the country’s ability to recover and overcome any challenge and comeback stronger when facing economic obstacles. The BOI also pointed out the Thai Fighting Spirit by saying it is “embedded in the DNA of all Thai people”. Prime Minister Yingluck Shinawatra and her entourage made an official visit to Japan on Tuesday March 6, 2012, and used the occasion of the 125th anniversary of the establishment of diplomatic relations between Thailand and Japan to enhance bilateral relations between the two countries and to rebuild confidence among Japanese investors after last year’s flood crisis. (ThailandBusinessNews)
To calm investors’ worries about future flood-related disasters, Prime Minister Yingluck said the Thai government had allocated 350 billion baht to implement an effective plan for sustainable water management, with both urgent and longer term measures. The plan has already initiated and is progressing with the current urgent measures expected to be completed by the end of this month. Furthermore, the Thai and Japanese prime ministers agreed to expand and target the value of the countries’ bilateral trade to reach 100 billion US dollars by 2017. After the roadshow in Japan, the Thai government will try to take the campaign to other countries, starting with China and South Korea, in order to provide good opportunities for Thailand to garner investment in varied industries and types of services and become a production hub to welcome the ASEAN Community in 2015. (ThailandBusinessNews)
The Thai baht advanced by the most in two weeks with 0.6 percent appreciation on Tuesday, March 6, after foreign investors raised holdings of the nation’s shares on the optimistic expectation that the country’s economic growth will improve this year. According to Prime Minister Yingluck Shinawatra’s speech in Tokyo, Thailand’s GDP this year may rise between 5.5 to 6.5 percent. Meanwhile, The International Monetary Fund (IMF) forecasted positive economic growth in Thailand to be 5.5 percent this year and 7.5 percent in 2013. The IMF’s mission chief in Thailand agreed with the need for Thai government to allocate budget for water management projects. However, there are some concerns such as the flood prevention implementation, which might be slower than anticipated. Any renewed domestic uncertainty could put pressure on still-fragile investment sentiment, and the government’s populist policies could worsen its budget deficit. (Nasdaq) (Bangkok Post)
Don Mueang Airport, which is used by budget airlines, private planes, and freight carriers in Bangkok, reopened on Tuesday, March 6, after being closed down since last October by Thailand’s devastating flood. All airlines will return to Don Mueang, except for Orient Thai Airlines, which will remain at Suvarnabhumi Airport. Orient Thai Airlines CEO said the airline did not want to keep moving back and forth while the state policy on airports was inconsistent, and it is also more convenient for international flight operations to be at Suvarnabhumi. Airports of Thailand claimed that it will build a flood protection barrier, 6 km. long, around the airport by this September. Nevertheless, not much is being done to build protective barriers on the river banks, just west of the airport. To restore Don Mueang Airport, the Thai government spent 392 million baht (12.8 million US dollars) and Thailand’s tourism authority contributed 1.2 billion baht (39.3 million US dollars). (Reuters) (TTR weekly)
Security
A roadside bomb killed four soldiers in Narathiwat. The bomb, estimated between 10-20 kilograms, ripped the soldiers’ jeep in half and left a meter-wide crate in the ground. Prior to the explosion, the soldiers had been providing security for a ceremony marking Macha Bucha, a day on which many Thai Buddhists perform merit-making, at Ratsamoson temple. The attack occurred as the soldiers were returning to their barracks in Rueso district, and it is thought to be the handiwork of insurgents who target government personnel. Following the attack, Deputy Prime Minister Yuthasak Sasiprapha said Thailand’s government is likely to extend the emergency decree in the deep South for another three months. (Telegraph) (Bahrain News Agency) (Stars and Stripes)
Another attack occurred in Narathiwat’s Takbai district, where suspected insurgents set off a bomb hidden in a pot at a riverside market. The explosion injured four soldiers and four civilians. All were sent to a local hospital where one of the civilians, a 37-year-old boat driver, later died. (The Washington Post)
In the wake of these attacks and the recent failed bomb plot in Bangkok on February 14th, Surin Pitsuwan, the secretary-general of the Association of Southeast Asian Nations (ASEAN ), speaking to the Defense Technology Institute at the Army Club in Bangkok, warned that Thailand must improve its intelligence operations and the capacity of security forces to keep up with terrorist movements and changing situations. “The armed forces must adjust their missions appropriately, understand new situations and factors, and consider not only national security but also human security,” Mr Surin said. In a similar vein, Privy Councilor Surayud Chulanont opined to the audience that the armed forces need to develop its personnel and their English capabilities. Both men’s comments were given in the context of preparing the military establishment for the integration of the ASEAN Economic Community in 2015. (Bangkok Post)
This week Thailand held its annual Defense and Security exhibition, a four-day event in Bangkok organized under the aegis of the Thai government and the Ministry of Defense. Over 250 companies from 30 countries took part to show off the latest in weapons and equipment for land forces, optical and electrical equipment, and special operations hardware. The event, which was attended by defense and security officials and contractors, provided Thailand with opportunities for increased cooperation with other countries in defense and security issues. (Voice of Russia) (Kyiv Post) (Associated Press of Pakistan)
A hotel fire broke out in Bangkok’s tourist district, killing two foreigners and injuring 21 tourists and two Thai nationals. It occurred at the Grand Park Avenue Hotel in Sukhumvhit 22. Rescue teams treated hotel guests with resuscitators and cranes were used to evacuate guests in the upper floors. It took fire crews around 30 minutes to bring the flames under control. Authorities say the fire started in an unused conference room on the hotel’s fourth floor around 10pm at night, leading to speculation that a short circuit was the cause. However, experts from the Office of Forensic Science are still investigating to determine the cause of the fire. (MCOT) (The Australian) (The Nation)
In Chiang Rai, authorities arrested two men in Mae Chan district connection with the discovery of four million methamphetamine pills in an abandoned pickup truck. Following a chase, which occurred after the pickup truck and two accompanying motorcycles failed to stop for a search, authorities found the vehicles –abandoned by their drivers – on a road with no sign. Inside, there were 60 bags containing the methamphetamine pills. In a similar development, police arrested three men in Mae Sai district in possession of 200,000 methamphetamine pills. These arrests came after authorities were tipped off that drug smugglers were planning to move large shipments from Myanmar into Thailand via Mae Fa Luang and Mae Chan districts. (UPI) (Thailand Business News)
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