After Thailand votes, economic limbo beckons
AS the nation holds its breath for the outcome of the constitutional referendum, some of the government’s think tanks are already preparing for the possibility of a dramatic slowdown in economic activity after the vote.
If one looks at the current economic situation, such as the continuing strengthening of the baht coupled with slowing demand for goods all across the world and, to top this off, a sharp decline in foreign direct investment recently reported by the Bank of Thailand, the outlook for the economy looks a little bleak.
The World Bank earlier projected that Thailand’s economic growth this year will be the worst among the ASEAN countries, excluding Brunei and Singapore.
Consumption, another component of the economic growth story, has yet to see a total recovery and the only light at the end of the tunnel seems to be the continued infusion of funds by the government through its various mega-spending programs.
The government has been trying to push through many infrastructure projects and it is very likely the government will approve as many as four or five more rail lines as part of its mass-transit development initiatives during the course of this year. Just a few weeks ago, the cabinet approved two elevated rail lines to be constructed for Bangkok commuters, worth 44.2 billion baht (US$1.26 billion) in total.
In various discussions with very senior members of the government who have been working hard to push through the economic development of the country, the only fear they have is the “limbo” that Thailand usually gets into once there is a sign that the country is heading for an election.
Thailand over the past few decades has experienced this problem of everything going into “neutral gear” once the path toward an election is set. This means that civil servants end up in inactive mode as they wait for new directions from a new government. They wait and see whether the new government will continue or discontinue the previous administration’s projects.
With Prime Minister Prayut Chano-cha continuing to stress that the National Council for Peace and Order (NCPO) will stick to its roadmap no matter the outcome of the referendum, an election looks imminent in the second half of 2017.
This could then lead to the infamous state of bureaucrats of various administrative bodies using “neutral gear” during this gap period.
A move into “neutral gear” by government officials could be the straw that breaks the camel’s back. This is because all the other engines of the economy are still struggling and the only hope has been the infusion of government funding for megaprojects.
This is not to say that the infusion by the government has been extravagant. But the fact is that it is one of the few bright spots in investment that is so crucial to the growth of the economy.
The state of limbo our country is poised to enter would be difficult to get out of because either a “no” or “yes” vote would have the same implication, that is an election by the second half of 2017.
Government ministers have been scratching their heads on how best they are going to keep bureaucrats working after the crucial date of the referendum because they know our “dear leader” may not be in power for a long time.
If either approved or rejected in the vote, under the interim charter, Gen Prayut and the NCPO can cling on to power as long as a new elected government is not formed. Gen Prayut can continue to exercise his absolute authority under Section 44 of the interim constitution.
Political observers have pointed out that this section will remain the country’s supreme law in parallel with the new constitution for as long as 15 months.
The section will not be overridden by the new charter. In every sense, Gen Prayut could use Section 44 after the new constitution is in place to get things moving or even to suppress his opponents.
However, with the drastic decline in direct foreign investment that Thailand has suffered during the past 10 months, his use of this “magic power” does not seem like it will benefit the nation.
The likelihood of the economy stagnating could be a bad omen for the military government and its future plans because, as elections approach, economic problems could be the area that could make the party the military despises return to power.
This was one of the reasons the 2006 coup was unsuccessful and God forbid if history repeats itself.
– Umesh Pandey is the editor of Asia Focus for the