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Political instability expected to  trouble economic policymaking

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Political instability expected to  trouble economic policymaking

By   PHUWIT LIMVIPHUWAT 
THE NATION

 

f38af060417bd354387a1d0a6220d41a.jpeg

File photo : Kriengkrai Thiennukul, vice chairman of the Federation of Thai Industries (FTI)

 

THE new government is expected to face issues caused by political instability and will struggle to pursue its economic agenda. 

 

“No matter which party manages to form the new government for the next four years, it will face a problem of political instability as there will be a strong opposition that will challenge its agenda,” Kriengkrai Thiennukul, vice chairman of the Federation of Thai Industries (FTI), said in an interview with The Nation.

 

Kriengkrai predicted that if Phalang Pracharat Party managed to form a government, its current projects might be pushed at a slower pace. 

 

It is still unclear which party will be able to form a government, as Sunday’s poll threw up a fractured mandate with no party winning a clear majority.

 

However, Phalang Pracharat, which has the highest number of votes nationwide, is likely to be able to form a government, despite having fewer constituency seats than its rival Pheu Thai Party, he noted. 

 

In the past four years, the junta-led government has operated with little to no opposition regarding its economic agenda. 

 

This means that key infrastructure projects and special economic zone developments were pushed fairly quickly, the FTI vice chairman said. 

 

“But now that there is strong opposition to the Phalang Pracharat in Parliament, the road map and timeline of the key government projects may need to be adjusted,” he forecast.

 

“Furthermore, another key instrument, which the pre-election government used to push new policies and laws was Article 44, which allowed the government to override regulatory obstacles and act more swiftly,” Kriengkrai continued. “This instrument will no longer be available for the new government, meaning regulatory challenges may also slow down progress on new economic policies.”

 

Kriengkrai stated that the issue of political instability is worrying for both local businesses and foreign investors. 

 

In a separate interview, Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organisations (Fetco), agreed with Kriengkrai, stating the closeness of the contest between Phalang Pracharat and Pheu Thai will likely lead to political instability for the incoming government. 

 

SET down 

 

Thai stocks closed 1,625.91 yesterday, down 20.38 points from Friday with trade valued at Bt47.06 billion.

 

Paiboon explained that the stock market dip was more likely a result of foreign factors, as the Dow Jones index had also fallen, adding the SET was still performing better than its neighbours. 

 

Regarding the prospects of foreign capital inflow to the stock market, he said political instability poses the biggest challenge. 

 

Kalin Sarasin, chairman of the Thai Chamber of Commerce, commented that the private sector wanted the new government to move forward swiftly with its economic policies so that foreign investors were confident in the economic and political stability of the Kingdom.

 

Kalin offered a different analysis, stating that even with strong opposition in Parliament, the new government should still be able to pursue key economic policies. This is because the political parties have proposed similar policies regarding the country’s key issues such as educational inequality and increasing competitiveness of the private sector, he said. 

 

Thanawat Phonvichai, director of the Centre for Economic and Business Forecasting at the University, of the Thai Chamber of Commerce concurred with Kalin: “I believe the new government will be able to push out new economic policies, as there is little policy difference between the key rival parties, such as to reduce income inequality and increase government welfare.” 

 

However, a similar policy outlook between parties does not mean the new government’s policy agenda will be implemented without any opposition, cautioned Piyanat Soikham, a lecturer in politics and international relations at Ubon Ratchathani University.

 

“Due to the lack of a clear majority, political instability will present a key challenge for the next government,” he continued. “Even if Phalang Pracharat and Pheu Thai have proposed similar policies, it is unlikely that Thai politics will witness bipartisanship.”

 

This is because the opposition party will want to obstruct the new government and prevent it from scoring a political victory by being able to push out new policies smoothly, he stated. 

 

For example, both Phalang Pracharat and Pheu Thai have proposed to hike the minimum wage. However, when the policy is proposed in Parliament, the opposition party may vote against the move as it would not want the new government to take credit for hiking the minimum wage, he explained. 

 

“Hence, progress on new policies in Thailand’s post-election political landscape will likely be slow,” he claimed. 

 

Source: http://www.nationmultimedia.com/detail/breakingnews/30366526

 

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-- © Copyright The Nation 2019-03-26

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3 hours ago, webfact said:

THE new government is expected to face issues caused by political instability and will struggle to pursue its economic agenda. 

Right - let's force all foreigners to keep 800,000 in our banks for five months in every year.

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Posted (edited)
6 hours ago, webfact said:

“Even if Phalang Pracharat and Pheu Thai have proposed similar policies, it is unlikely that Thai politics will witness bipartisanship.”

And the reason

6 hours ago, webfact said:

the opposition party may vote against the move as it would not want the new government to take credit for hiking the minimum wage, he explained. 

I disagree.

The flaw with such rationale is that in a coalition government the once "opposition" party Phalang Pracharat is LIKELY to share government ministries with the PTP, ie., PPP gets the ministries of Agriculture and Education, maybe Permanent Minister-Secretaries as well. A coalition doesn't come free or with promises. The predominant PTP can't simply dictate terms of the coalition.

Edited by Srikcir
delete portions

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We haven't seen any concern from the FX markets as yet, the market will judge the new coalition in due course. I selfishly hope the baht will weaken.

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27 minutes ago, Srikcir said:

And the reason

I disagree.

The flaw with such rationale is that in a coalition government the once "opposition" party Phalang Pracharat is LIKELY to share government ministries with the PTP, ie., PPP gets the ministries of Agriculture and Education, maybe Permanent Minister-Secretaries as well. A coalition doesn't come free or with promises. The predominant PTP can't simply dictate terms of the coalition.

Indeed the PTP is weakend a lot so it cannot dictate, one could even argue it needs to make big concessions to those joining the coalition. Combine that with a powerful opposition this will see to it that no crazy things are being done like bringing Thaksin home or a new rice program similar to the old. No longer can Thaksin tell what has to be done. His power is broken because he needs help. 

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Being a selfish S.O.B. I hope that the upcoming political instability will continue throughout the next four years with the result being economic stagnation and the Baht taking it right up the old Hershey highway. Let's get it back to where it should be and that is 34-35 to the U.S. Dollar. Enough of this manipulation. Why even now the so called Economic pundits in the country are warning of a economic slowdown should there be conflict between the Junta and Thaksins followers in forming a working and effective government. Good luck getting those two groups to work together. The only thing they will agree on is their hated for each other.

Sent from my CMR-AL19 using Thailand Forum - Thaivisa mobile app

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My own selfish agenda is getting a sensible reopening of the gold mine at Phichit so that my Kingsgate shares might be worth something instead of the current limbo where they are taking the Thai government to the Trade Court, a case the Government may lose. The company has international litigation financiers funding their claim

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