A Year After Thai Coup, Stability Trumps Growth for Business

By Amy Sawitta Lefevre & Panarat Thepgumpanat 22 May 2015

BANGKOK — When Thailand’s army seized power in a bloodless coup, much of the business establishment quietly cheered them on. A year on, the captains of Thai industry remain firmly behind the junta, despite a lackluster economy and a delayed return to democracy.

For businesses, calm on the streets of a city that was engulfed in chaos for months leading up to a putsch is more important than finding a cure for the malaise in Southeast Asia’s second-largest economy.

“I’m satisfied. At the very least it has made the country peaceful and it has brought order,” Poj Aramwattanont, president of the Thai Frozen Foods Association (TFFA), told Reuters.

In the early months of 2014, Thailand’s government was paralyzed, parts of Bangkok were clouded by tear gas and state buildings fortified to look like army barracks.

Conditions for growth are better now, reckons Poj.

“There is an attempt to reform according to the junta’s road map,” he said. “Thailand was on pause for a long time because of political problems so … the economy has a chance to rebound.”

A year ago, pro-government protesters camped on the outskirts of the Thai capital swore they would spring into action if the army intervened to remove the elected government.

In the city’s heart, anti-government protesters, mostly southern Thais and middle-class Bangkok residents aligned with the royalist-military establishment, were equally determined to get rid of Prime Minister Yingluck Shinawatra.

On May 22 the military took control, detaining hundreds of politicians and activists on both sides of the divide and dissolving the protests. Investors welcomed the calm imposed on Thailand’s febrile politics, and the stock market rallied.

Heavy-handed tactics by the military and police since the coup have ensured that the junta, or National Council for Peace and Order, has ruled largely unchallenged.

Ronnachit Mahattanapreut, senior vice president for finance at hotel and food group Central Plaza Hotel PCL, said what the private sector wanted most was security.

“We want political stability so that businessmen can project long-term investment plans,” he said. “Countries like China, Vietnam and Myanmar, their governments can implement key economic policies to keep investments going.”

Coup leader and Prime Minister Gen. Prayuth Chan-ocha has talked much about healing Thailand’s deep political divisions. Reconciliation is a mantra in his weekly televised Friday evening address “Returning Happiness to the People.”

When asked to comment on the military’s year in power this week, he said: “I am satisfied but I am not proud.”

Critics say politics are simply on hold under a regime that bans political gatherings, and that divisions remain as sharp as ever. They say the blueprint for Thailand in a new draft constitution is an attempt by Prayuth and the powers that back him to prevent a comeback by ousted former Prime Minister Thaksin Shinawatra and his allies.

Thaksin this week broke his silence on the junta that removed the remnants of his sister Yingluck’s government from office. Its first year in power was “not so impressive,” he said, but he had no plans to mobilize his “Red Shirt” supporters.

The junta on Tuesday delayed a planned election by at least six months to August 2016, to allow a referendum on the new charter.

Executives appear unperturbed by the delay.

“We don’t need elections quickly,” said Poj. “If the roadmap is prolonged because of the referendum then so be it.”

Human Rights Watch in a statement on Friday said the junta had systematically repressed human rights throughout the country by banning political activity, censoring the media and trying dissidents in military tribunals.

“One year since the military coup, Thailand is a political dictatorship with all power in the hands of one man,” said Brad Adams, Asia director at Human Rights Watch. “The date for elections continues to slide, with no certainty when they will happen.”

Pornsil Patchrintanakul, president of the Thai Feed Mill Association and an adviser to the Thai Chamber of Commerce, scored the junta highly for political governance, but less well on the economy.

“I would give political management a 10 out of 10. We have to compare this to before … things were not peaceful,” said Pornsil, but added that “investment and stimulating the economy have been slow.”

Despite hopes that the generals would unleash a splurge of infrastructure spending, state investment has failed to keep pace even with the levels the paralyzed government of a year ago managed, partly because bureaucrats fear an anti-graft drive by the junta.

Domestic consumption is hobbled as Thai households are saddled with record-high debt and the export-driven economy is suffering as its biggest trade partner, China, grows at its slowest pace in 25 years.

Thailand downgraded its growth forecasts on Monday by 0.5 percentage points to 3.0 to 4.0 percent for the year, but the country’s central bank governor said last week that even 3 percent expansion in 2015 would be “a challenge.”

For some analysts, the junta has missed the opportunity to use its almost untrammeled power to drive through investment and economic reforms.

“Expectations were high when the military took over that they could kick-start spending quickly, but this has been difficult with the government’s focus [rightly or wrongly] on constitutional reform,” said Bill Diviney, an economist at Barclays in Singapore.

“In hindsight, perhaps it was unrealistic to expect so much of a government that, for all intents and purposes, is a caretaker until democracy is restored.”