Thailand 2019 – political outlook
– Cr. Chayanid (Mint) Kovavisarach
kovmint@gmail.com
Just over 6 months have passed since Thailand’s first election in almost a decade and the country has seen little movement in any direction, politically or economically. Since 2014, Thailand was under military rule following a coup led by General Prayut Chan-o-cha until the elections that were held in March. Holding a razor-thin majority in the lower house, Palang Pracharat Party (PPRP), the military party led by General Prayut, faces significant political hurdles in the face of strong opposition as well as economic barriers in the face of the US-China trade war and the administration of his own economic reform policies. In spite of the many challenges, there are opportunities for Thailand to improve foreign relations to economic powerhouses as well as in its own backyard in the upcoming 35th ASEAN Summit to be hosted in Bangkok.
The New Administration - Are we over with NCPO?
The ousted government in 2014, led by Pheu Thai Party, was affiliated with former Prime Minister and ousted populist politician, Thaksin Shinawatra. Since then, the military government had been hard at work to institute changes to the constitution and election laws to prevent such a comeback by Thaksin loyalists. One such change made to the electoral process is the creation of a party list formula that computes organic votes into seats in the House of Representatives that is targeted towards amplifying voices of smaller parties. In doing so, the military government allegedly aims to reduce the influence anti-military parties have over the lower house.
An addition to the constitution is the ability of the military to appoint all 250 Senate seats, a key change that allegedly not only reduces Pheu Thai’s influence but bolsters the military stronghold on parliamentary politics after elections. Leading up to the election in March earlier this year, a new set of rules emerged: a party needs 376 votes, which is a majority in both houses, to form a government. With the changes to the constitution, PPRP only needs to win 126 House seats to win a majority.
Yet, the recent elections did little to stabilize the political landscape and the new civilian government will be unstable and, arguably, unsustainable. The national divide between voters who support General Prayut and those who oppose military rule was reflected in the contentious allocation of parliament seats. While PPRP won the largest number of seats, Pheu Thai Party came a close second. However, controversy and confusion clouded the counting process and its outcome: the lack of transparency to how the allocation of 150 party-list seats would be calculated contributed to the contestation of election outcomes, vote counting irregularities that disqualified millions of votes as ‘bad ballots’ were criticized, and the gerrymandering of constituencies saw the reduction from 400 to 350 constituents.
A new player emerged in the game, Future Forward Party (FFP), which took up the third largest number of seats, by appealing to younger voters with socially progressive and anti-military policy proposals. Though PPRP controls the Senate, Prayut has a much-needed slim majority in the Lower House to pass legislation, which was only made possible through an unwieldy coalition of 19 parties. Indicative of the unwieldiness, in August, a small party exited the ruling coalition, reducing the Prime Minister’s majority to 3 seats.
Unlike the previous half decade of military dictatorship, the Prime Minister now faces a unified opposition in parliament that scrutinizes all of his actions. To maintain his hold onto power, he must manage internal dissent, backlash from the opposition and difficulties in passing key legislation – all owing to the fractionalization of parliamentary seats. It will be interesting to see how the array of parties align on different policy issues, providing multiple avenues for policy suggestions.
The government coalition has managed to pass the first reading of the 3.2 trillion-baht budget for the 2020 fiscal year by a slim majority of 7 votes on October 19, with the most contested item being the central budget that is at the disposal of the Prime Minister. This central budget accounts for 16.2%, the largest share, of the government budget, surpassing the Ministry of Education that has dominated the budget share for the past decade. A committee has been set up, consisting of 15 Cabinet members, 24 coalition members, and 24 opposition members, to scrutinize budget details before the second and third readings, which are not expected until early January. In the case that the budget fails to pass in its third reading, according to tradition, the budget is scrapped and the government is dissolved.
Economic Landscape after the 2019 Election
In the economic scene, Thailand’s economy has slumped as a result of the struggling farming sector and mounting trade tensions between the US and China. In 2018, the Thai baht has been one of Asia’s strongest performing currencies, appreciating 4% against the dollar, which has hurt its competitiveness of exports and its tourism center. Domestically, while the government retained key members from the previous administration, the Prime Minister and his economic team, which bides well for the continuity of economic policies in an attempt to revive growth, the outlook does not look encouraging. In addition to international factors, internal policy reforms to eliminate Pheu Thai’s lasting populist policies contributes to the agricultural sector faring poorly. In line with policy reforms, the government ignited changes to the Labour Protection Act, effective this past May that included changes in rates of severance pay, employer relocation requirements, and maternity leave, which failure to comply can result in civil and criminal liabilities being imposed upon firms.
Despite a gloomy outlook, the flagship project of the military, both under the authoritarian system and the new civilian government, is the Eastern Economic Corridor which provides significant opportunities to overhaul and modernize existing infrastructure. The project is included in the regime’s 20-year master plan for the economy with the goal of attracting investments in advanced technologies in new S-curve industries to make Thailand a regional hub for logistics and innovative industries. Recently, a Senior Chinese envoy met with the PM to discuss developments for the EEC project in Thailand and the Greater Bay Area development in China, demonstrating closer relations with Asia’s economic powerhouse. With the interconnectivity that is hoped to be achieved with the EEC, Thailand aims to bolster not only ease of trade between countries and investment opportunities for businesses but also to support social and economic developmental projects that increased activity will bring about in the region.
A cautionary note, however, is that the EEC has been criticized for its potential to worsen deep wealth inequalities within the country, its focus on infrastructure instead of skills base, and its increasing dependency on Chinese investment.
With the upcoming 35th ASEAN Summit taking place in Bangkok, the government has significant opportunities to strengthen foreign relations and push forward the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). With the US President Trump visiting Bangkok for the summit, ASEAN members, and Thailand in particular, as the host, have opportunities to strengthen ASEAN-US ties. Following the announcement of US suspension on GSP, strengthening the ASEAN bloc and trade relations becomes an imperative to diversify shipments to other markets. Despite talks between Thai labour officials with US Trade Representatives, any progress made would not impact the upcoming fiscal year. In the midst of lower competitiveness resulting from the strengthening Baht, lack of progress in EU trade talks, and the worse-than-expected global economy from the US-China trade war, Thailand and its new, yet all-too-familiar administration again need to stand proof for its competitiveness and resilience in the upcoming years.