FTI sweats over conflict ‘escalating’
Foreign investors may be put off
The Federation of Thai Industries (FTI) is worried about a further economic blow if the latest political conflict escalates, warning Thailand cannot absorb more risk during the pandemic downturn.
The warning was issued yesterday as anti-government protesters staged a rally on Ratchadamnoen Avenue, the same venue where pro-monarchy, yellow-clad supporters gathered to receive His Majesty the King’s motorcade.
While demanding Prime Minister Prayut Chan-o-cha, accused of prolonging military power after the 2014 coup, step down, some protesters are also staunchly anti-monarchy.
FTI said the confrontation is “unpredictable”, but is certain it will affect the economy unless it ends soon.
If demonstrators do not prolong the rallies, Thailand will only experience a short-term impact. If the protest turns violent, it will be a nightmare trying to restore the economy, said Kriangkrai Tiannukul, FTI’s vice-chairman, yesterday.
“Thailand has faced political
instability several times, but managed to get through it partly because of no external factors. Today we are being afflicted by the pandemic, which has spread worldwide,” he said.
The pandemic means the country is unable to take on additional risks, especially those from street rallies, because this will dampen confidence among foreign investors, both those planning new
investment and others operating their businesses here, said Mr Kriangkrai.
“Foreign investors are always worried about political conflicts, no matter what groups are involved — the yellow or red shirts,” he said.
Yesterday’s demonstration has Thailand under the focus of local and foreign media.
A burst of violence will only deal a blow to the country, said Mr Kriangkrai.
“That could mean the economy will continue to slow down over the long term,” he said.
The FTI understands the nature of Thai politics, which has been plagued with conflicts among politicians and protests against frequent military interference, but Thailand should only be fighting the pandemic during this time, said Mr Kriangkrai.
The economy is recovering at a slower pace than its Asean neighbours and “this political rally will only complicate the problem,” said Tanit Sorat, vice-chairman of the Employers’ Confederation of Thai Trade and Industry.
Yesterday the FTI proposed the government introduce various measures to help address small and medium-sized enterprise (SMEs) liquidity and debts.
“Debt restructuring alone may not be sufficient to help debt-ridden SMEs survive the virus crisis,” said FTI chairman Supant Mongkolsuthree at a joint meeting to tackle SME debt held with the National Economic and Social Development Council (NESDC).
Earlier last month, Deputy Prime Minister Supattanapong Punmeechaow urged commercial banks and specialised financial institutions to accelerate implementing debt restructuring programmes for clients to help curb rising unemployment.
If this effort is adopted, the government has no need to introduce additional measures, Mr Supattanapong said.
He said earlier this month the government does not have a policy to establish a specific fund to support SMEs, citing there is sufficient liquidity in place in the market.
Mr Supattanapong prefers SMEs conduct debt restructuring, which is considered a more appropriate solution to address debts.
Mr Supant said state help f or SMEs should be tailored and based on categories.
He proposed a special interest rate cut be offered to a group of debtors who have the potential to continue operations and capability to repay debts and principal, while debt holidays for another two years be given to debtors who can repay only 10% of the interest on their debts.
For SMEs unable to repay debts but in need of debt restructuring, mostly in the tourism industry, the government may need to implement other measures to help them to survive, said Mr Supant.
He insisted an SME fund remains essential to help SMEs, with funds raised from issuing 100-200 billion baht in bonds guaranteed by the Finance Ministry.