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  • Junta failing in economic rescue mission

    Thailand post-coup

    Junta failing in economic rescue mission

    YOJI KOTANI
    April 12, 2015

    BANGKOK -- Thailand's military government is fighting an uphill battle to save the nation's battered economy.


    Thailand's Prime Minister Prayuth Chan-ocha has lifted martial law but a military junta remains in power.

    The government, led by Prayuth Chan-ocha, recently lifted martial law 10 months after a coup that deposed an elected government, but the move is no sign of progress toward a return to the normal state.

    The junta has actually replaced martial law with a constitutional provision to give the country's coup-installed leader sweeping powers, provoking a wave of criticism among Western democracies.

    Even though the Thai stock market has bounced back due to buying by domestic investors after nearly two months of falling, the prospects for the country's economic recovery remain murky as the junta is still unwilling to return power to a civilian government.

    On April 8, the Nation, a local English-language newspaper, carried an article on the sweeping new security measure headlined, "Article 44 'inspired' by France."

    The article reported on Deputy Prime Minister Wissanu Krea-Ngam's remarks made on the previous day to foreign diplomats. Wissanu tried to defend the step by saying Article 44 of the junta-drafted interim constitution is modeled on Article 16 of the French constitution of 1958.

    Article 44 allows Prime Minister Prayuth, who also serves as head of the so-called National Council for Peace and Order, to issue any order when he thinks national security is jeopardized.

    Under the newly claimed authority, the military's public security officers are allowed to make arrests without warrant and detain people for up to seven days without charges.

    Even if the two constitutional provisions look similar in appearance, the measure taken by the military leader who came to power in a coup is completely different in nature from the French article designed to give the democratically elected president powers to deal with emergencies.

    The military government's attempt to make the new provision look better with this unconvincing argument clearly reflects growing pessimism among policymakers.

    Western industrial countries and domestic media have blasted the move because they suspect the junta is trying to suppress criticism against it.

    To be fair, the military rulers succeeded in restoring law and order in the country, which fell into stormy political turmoil last year, by imposing martial law.

    But the junta has been struggling to remedy the economy, which has been hit hard by the coup. Recent indicators signal continued weakness for the economy. Private consumption, for instance, fell 2.6% in February from January for the third consecutive month of decline, according to the central bank.

    The main factor behind the drop was sinking international natural rubber and rice prices, which have delivered a heavy blow to the country's related industries.

    The country's swelling household debt, which exceeded 80% of gross domestic product at of the end of September last year, is also cramping consumer spending growth.

    With the private sector in bad shape, the government needs to pump up public investment to prop up the economy. But fiscal expansion has been thwarted by the junta's unclear standards for public works contracts and failure by the government organization in charge to function properly.

    Only 30% of planned public investment was actually implemented in the first half of fiscal 2015, which runs through September.

    GDP posted a weak on-year growth of 2.3% in the October-December quarter of 2014. To shore up the enfeebled economy, the central bank lowered its policy interest rate to 1.75% from 2% per annum.

    Takashi Kawabata, a senior economist at SMBC Nikko Securities, says if GDP growth in the first three months of this year turns out to be less than 3%, calls for further monetary easing may grow louder.

    The end of martial law on April 1 has raised expectations of recovery for the nation's tourism industry, which accounts for 10% of GDP.

    That prompted investors to buy stocks in companies in the tourism sector, such as hotel chains, boosting the Stock Exchange of Thailand Composite Index for about a week.

    However, foreign investors have been turned off by the new security powers acquired by the military government and remain cautious about buying Thai stocks.

    The stock market is unlikely to keep rising if foreign investors continue staying away. Not surprisingly, the benchmark index lost its upward momentum quickly and stopped climbing on April 8.

    Prayuth has tried to reassure foreign businesses and investors by pledging to exercise the security powers in a constructive manner.

    But the fate of the Thai economy depends on whether the military government can come up with some specific and convincing plans to tackle the economic policy challenges confronting the nation and turn over power to a civilian government swiftly.

    asia.nikkei.com
    http://thailandchatter.com/showthrea...ll=1#post45112

  • #2
    No doubt there is a silver lining to every cloud ...............

    Suspect the dismal state of the economy will be the catalyst for an election as the Dictator and his junta scramble to wash their hands of the mess
    http://thailandchatter.com/showthrea...ll=1#post45112

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