Nothing abstract about this crisis of confidence

“Business confidence” has always been a phrase used abstractly. It is often associated with how stable a government is, or how well a nation’s currency is performing on the world stage, or whether a country’s political leader is healthy or ill. Rarely has it been related to what really matters. But things have changed.

Thailand is now facing a crisis of business confidence. The flood of the century has swept away most, if not all, of the “pretentious” criteria people like to link “confidence” with. If you want to invest in Thailand, the questions now are very simple: Will floods hit again? And if they do, will they hit my factories? 

The Yingluck government has tried to address these questions, although the appointment of economic guru Virabongsa Ramakula to lead long-term planning for post-flood recovery can be seen in two ways. Optimists will regard the government's embrace of a respected outsider as being open-minded and a good sign for transparency. Pessimists, on the other hand, will consider it as a tacit admission of failure.

Virabongsa will lead a high-ranking post-flood reconstruction committee. The panel includes the most senior economic figures of the Yingluck Cabinet as well as the who's who in Thailand's water management circles. They all will have to work under Virabongsa, who over the years has consistently been a top candidate for government economic jobs.

 

What observers feel

 

Observers say Virabongsa's appointment will help usher him into the Cabinet in the next reshuffle. Some believe his prominence was badly needed to rally flood recovery efforts and rebuild the confidence of investors. Others rule it out as a familiar diversionary card of Thaksin Shinawatra at a time when the government led by his sister is facing bitter criticism from left and right.

Virabongsa has hit the road quickly, meeting with business and diplomatic representatives and giving no-nonsense interviews. On Thursday, he was clear-cut in his warning that foreigners' confidence has been badly battered by the flooding. He said the future of foreign investment here would hinge heavily on the country’s ability to prevent a disaster of this scale from happening again.

Virabongsa gave special mention to Japan, which is the top investor in this land. He warned that Japanese investors could look elsewhere if Thailand fails to guarantee them that massive flooding won't return in the next five years.

He obviously understands the situation acutely. Whether that will lead to a cohesive recovery plan of course will not be up to him alone. The “setting” seems to be all right, given the structure of his high-profile committee and the fact that everyone seems to be appreciative of the need for the government to embark on a phenomenal spending spree. Success, however, will depend on strong political leadership, effective implementation, honesty and transparency.

 

Political moves not always effective

 

The reconstruction of Thailand will require massive expenditures. Concern over future corruption has already been voiced even though projects are yet to be planned and laid down on the table. Having Virabongsa as chairman of the elite panel to explore quick and effective routes to recovery may more or less help pacify doubters, but no single hero can lead Thailand out of this mega crisis.

The flood crisis has proved that political moves that work in normal times are not necessarily effective when the government faces battles on all fronts. The bad news for Thailand, which must be closely monitored by the international community at the moment, is that old-style politics is trying to reassert itself. 

And politics is not the only problem that the Yingluck government will face as it tries to bring the country back on its feet. The government also faces the tough task of balancing priorities. Staggering business losses and the untold suffering of ordinary citizens are ensuing side by side.

Reconstruction is often used in political rhetoric, but this time the country needs it for real. Which, of course, leaves us the resounding question of whether our politicians are capable of delivering the goods.