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Political instability expected to  trouble economic policymaking

Mar 25. 2019
File photo : Kriengkrai Thiennukul, vice chairman of the Federation of Thai Industries (FTI)
File photo : Kriengkrai Thiennukul, vice chairman of the Federation of Thai Industries (FTI)
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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. 


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