Amnesty bill, political instability continue to dampen CEOs' spirits

In the latest survey of 429 chief executive officers from October 28 to November 5, business leaders were asked about their views on the Thai economic outlook and business performance, as well as important factors affecting their business in September and October.

Based on the findings, the October sentiment index dropped to minus-16, a nine-point fall from the previous month. The index is expected to remain negative in November, with the value being minus-15.

The fall in the index has been driven by the prospect of political instability caused by the amnesty bill, the weakening Thai economy, and declining purchasing power due to the rising cost of living and slower global economic growth.

Four business-performance sentiment indices – revenue, cost, liquidity and employment – all point to a more pessimistic time ahead.

October’s revenue index was minus-17, with a further drop to negative-20 expected for this month.

The cost index fell to plus-43 in October, but is expected to come in at 35 in November. While the fall represents an improvement, the fact that the cost index remained positive implies that costs will continue to rise, albeit at a slower pace than in September. The pessimistic outlooks for revenue and cost caused the liquidity index to fall further to minus-10 in October, with a further decline to negative-14 expected for this month. The fall in the liquidity index for six consecutive months means businesses are more vulnerable to an unexpected shock.

Meanwhile, the employment index remained at minus-3, similar in value to September’s index.

The five most important factors affecting business performance in October-November are: political instability overall (4.7 points on a scale of 5); condition of the Thai economy (4.5 points); reduced demand (4.2 points); cost of raw materials (4.0 points); and exchange-rate volatility (4 points).

Concerns about the impact of the amnesty bill aggravated CEOs’ trepidation about the prospects for the Thai economy.

In the survey – conducted before the Senate’s vote against the bill and the ruling coalition’s pledge to withdraw it from Parliament – CEOs said that if the government decided to use force to deal with the protesters, there would be major political repercussions.

If, however, the bill were to pass through the parliamentary process, it would send a signal to international clients, investors and tourists about the country lacking the rule of law. Either way, the country would lose out, they said.

When also taking into account the continued decline in economic performance, the prospects for the last quarter of the year remained gloomy, said the chief executives.