Thai Military Rulers Look to Past For Answers on Economy

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Thailand's stock market

Tailwind from end of martial law already dying
HIROSHI KOTANI
April 25, 2015

BANGKOK -- A run-up in Thai shares that began after martial law was lifted April 1 flagged this week, with investors apparently doubting junta leader Gen. Prayuth Chan-ocha's assurances that the economy is recovering.

The benchmark SET index lost 0.7% from Monday to Friday. Shares in Krung Thai Bank and other major lenders fared particularly badly as investors seem worried about their weak January-March quarter earnings growth and rising piles of nonperforming loans.

The Thai economy expanded at an inflation-adjusted pace of about 3% in the first quarter compared with a year earlier, according to the junta. That would mark an uptick from 2.3% in the preceding three months. But the closely watched quarter-on-quarter comparison of seasonally adjusted figures is likely to show a contraction. Consumption and exports are recovering at a sluggish pace. The junta expects exports to improve in the current quarter.

The military government still wields largely unchecked power even with martial law lifted, so at least the political situation remains stable. A draft constitution that would, among other changes, weaken party politics has not sparked widespread protests or other unrest. For their part, investors are likely to bide their time until the economy shows clear signs of a rebound.

asia.nikkei.com

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Thai Military Rulers Look to Past For Answers on Economy
Tom Wright And Warangkana Chomchuen
Aug. 12, 2014

Government-Led 1980s Boom Seen as a Model


An assembly line at a Ford and Mazda joint-venture plant in Rayong province, east of Bangkok. Foreign auto makers began setting up in Thailand in the 1980s, turning the country into the 'Detroit of the East.'
Reuters

BANGKOKDemonstrators protest against military rule in Bangkok in May. Political turmoil has been a drag on growth.
Reuters

The junta's supporters criticize former Prime Minister Thaksin Shinawatra, a telecommunications billionaire who ran Thailand for five years before the military deposed him in a 2006 coup, for wasting money on populist policies rather than infrastructure. His sister, Yingluck Shinawatra, served as premier until a court removed her from office in May for abuse of power, two weeks before the military coup.

Piyasvasti Amranand, who the army picked in June as chairman of state-owned oil-and-gas giant PTT PTT.TH +0.90% PLC, is urging the junta to cut back on energy subsidies that he says have cost $15 billion over the past three years, and to use the savings to fund its spending plans. "Right now we have higher need for rail systems and better transport links," Mr. Piyasvasti said in an interview.

Others doubt whether the junta can make progress within a year, after which the generals have intimated they will hold elections. Some parts of their plan have been on the drawing board for decades, including under Ms. Yingluck's government, but got held up by Thailand's frequent changes of administration.

"Until you see contracts awarded and projects break ground, I'm not banking on any of them," said Marc Spiegel, a Bangkok-based executive with Vinarco International, a technical consultancy.

Thailand's economy, meanwhile, contracted 0.6% on year in the first quarter and is forecast to have slowed further between April and June, which would mark a technical recession. (Official data is due Monday.) Foreign investment applications, by number of projects, slumped by around a third on year during the first five months, and 10% by value. Applications by Japanese companies, the largest investors in Thailand, fell the most.

A credit binge in the past several years has left Thai households with one of the largest debt burdens in the region, which is likely to constrain private spending. Amid weak demand, factories are running at only two-thirds of capacity, limiting fresh investment.

Optimists contend the second half of the year will be brighter. The coup has restored calm to the streets of Bangkok, the capital, after months of destabilizing political protests. An index of consumer confidence rose for a third straight month in July. Thailand's main stock index is 8% higher since the coup.

"We certainly see growth potential coming back," said Matt Bradley, president of Ford Motor Co.'s Southeast Asian operations.

online.wsj.com