I’ve been sent this article too many times to count this past week, so here are my thoughts on it:
In a series of speeches, military leader-turned-Prime Minister Prayuth has claimed the country’s declining gross domestic product is the product of his valiant corruption crackdown (and partly weak exports, too). “It’s because some people spend money from illegal businesses and money from fraud,” he said June 5. “Now the government has come to set things right, causing that money to disappear.”
Well there are multiple reasons for it 1) Agricultural prices are down close to 50% 2) Exports are declining mainly because the THB was too strong versus the EUR and that Thailand isn’t the cheap manufacturing base that it used to be 3) Absolutely I agree that corruption is down and there is less dirty money flowing around the economy (land transactions have declined some 50% as well since the military took over)
Prayuth’s first step should be to accelerate the government’s $54 billion spending plans for roads, mass transit and other projects. Absent those improvements in infrastructure, Thailand won’t be able to keep foreign automobile manufacturers in the country, and thus retain its reputation as the “Detroit of Asia.” And with the Philippines already lobbying Toyota and other auto giants to relocate their Thai factories, Prayuth doesn’t have any time to lose.
1) Fully agree that they need to start spending, however I can see the issue with the civil servants asking themselves these questions – a) Why should they bother to approve anything as they won’t receive the %age’s they used to b) Why move quickly on a project and then potentially be in trouble, better wait for a full committee to approve to avoid being blamed in the future. c) The military should be gone within 1-2 years, fine I can wait. 2) Thailand will still for the next 5-10 years be the automotive hub for the region, the eco-system of parts is still unmatched compared to other neighbouring countries, however, if businesses/technology etc etc aren’t upgraded, then yes Vietnam/Indonesia post their own infrastructure spending will could comfortable take a decent chunk away from Thailand.
When you seize power, though, it’s best to have a plan. The chronic drift and uncertainty of the last 14 months is breeding a lack of trust from the trading floors of New York to the night markets of Bangkok. It’s undermining growth, deepening poverty and increasing the odds Thailand will experience a lost decade. And as the government’s economic argument loses force, the only authority it will have left is its force of arms.
Going through the history of coup’s I think this was one of the best executed coup’s in the history of Thailand. The removal of politicians, the implementation of new leadership, everything about the coup was handled with military precision. But they’ve been “unlucky” given how the soft commodities have collapsed and the agricultural workforce (~80% of the total workforce is in agriculture) are suffering and can only point their fingers @ the military for the moment. So here’s how I think they will try to get out of this…1) A massive increase in public spending 2) A debt forgiveness/additional loans/ to the agricultural workforce 3) Elections – I am now starting to doubt the possibility of elections in 2H16 and wouldn’t be surprised to see them postponed to 2H17. 4) They will hope (never a good thing) that the economy will improve, and that they can looked at and applauded for doing a wonderful job. 5) Will it turn out this way? Who knows..this country is called Amazing Thailand for a reason.