BANGKOK—Three months ago, Prajin Juntong was figuring out what fighter jets to buy in his capacity as the chief of Thailand’s air force.
Now, as the country’s economics czar, he is tasked with trying to convince foreign investors to bankroll the country’s ambitious spending plans after the military seized power in May for the second time in less than a decade.
It is a tough sell. The previous coup deepened the long-running divisions between Thailand’s royalist-nationalists and supporters of a series of populist, left-leaning governments. But Air Chief Marshal Prajin says if Thailand’s new military leaders can turn around the ailing economy, which contracted 0.1% in the first half of 2014, then the often-bloody conflict will be soothed and the country will be on a more stable footing.
“This coup is different. It won’t be the same as last time,” Air Chief Marshal Prajin, 60 years old, said Friday in his first sit-down media interview since the May 22 takeover.
Later, he delivered a speech to a gathering of fund managers and other financial professionals at Bangkok’s riverside Oriental Hotel, outlining plans for a mixture of big-ticket infrastructure spending and back-to-basics initiatives on improving education and finding new markets for the country’s broad range of agricultural exports. The next day, Air Chief Marshal Prajin took the visitors to meet the junta’s boss, Gen. Prayuth Chan-ocha. Gen Prayuth was quizzed about martial law and the country’s political stability.
Air Chief Marshal Prajin frequently talks about restoring Thailand to its old position as a beacon in Southeast Asia. “Twenty years ago, Thailand was the leading country in this region in almost every area, in economics, in social matters, culture and education and also tourism,” he said. The Land of Smiles, as he calls it, also used to soak up the lion’s share of the region’s foreign investment.
It will take more than publicity tours and glad-handing to put Thailand back on track, though.
Thailand has recently lost ground to Indonesia and especially Vietnam, which has emerged as the go-to destination for South Korean tech companies, much as Japanese auto makers previously flocked to Thailand. The 2006 military coup solved little, and Thai military leaders pledged they would never stage a coup again.
Months of raucous street protests that started in late 2013 against a government led by Yingluck Shinawatra, sister of billionaire businessman and former Prime Minister Thaksin Shinawatra, scared off tourists and shattered local-business and consumer confidence.
There are signs of some improvement since the military took power. The country’s planning agency, the National Economic and Social Development Board, on Monday said the economy grew 0.9% in the second quarter compared with the previous three months, after contracting by a revised 1.9% in the first quarter. Thailand’s economy grew 0.4% in the second quarter from a year earlier, the board said.
Tourism and investment, though, are recovering more slowly than expected following the May coup. Independent economists say a pall of uncertainty still hangs over the country; martial law, for instance, is still in effect as the junta tries to chart a gradual return to civilian rule by the end of 2015. Key figures in the junta, including Gen. Prayuth and Air Chief Marshal Prajin, also face mandatory retirement at the end of September and it isn’t clear what kind of role they will play, if any, in the future.
It isn’t all about Thailand, either. Global export demand isn’t as strong as Thailand’s military leaders would like and growth is looking sluggish. The National Economic and Social Development Board cut its 2014 export-growth forecast to 2% from 3.7%.
Air Chief Marshal Prajin, dressed in a sharp business suit rather than his usual air force uniform, acknowledged on Friday that reviving Thailand is more than just a matter of restoring law and order on the streets. Household debt levels stand at more than 80% of gross domestic product, one of the highest rates in the region. Many factories are running below capacity while the number of fresh investment applications fell by a third in the first five months of the year.
He said his strategy will blend some of the big-spending infrastructure policies pioneered by the Shinawatras while borrowing from the more technocratic mind-set that steered previous military-led administrations during Thailand’s boom years in the 1980s and 1990s.
Already, the military government has paid out billions of dollars to farmers awaiting payment from a now-defunct program for rice subsidies that was launched by the previous administration. The centerpiece of a massive $75 billion infrastructure spending plan, meanwhile, is a revamped, dual-track rail network that is aimed at making it easier to shift freight around Thailand and ultimately connect with rail networks across the region. Potentially, it could link the Chinese city of Kunming with the heart of Southeast Asia.
This, Air Chief Marshal Prajin says, will open up northern and northeast Thailand to more trade, boosting provincial economies and slowing the pace of migration to Bangkok and other crowded cities.
“In the old days we used to fight with swords and lances on the back of elephants, or even on buffaloes,” he said. These days, Thailand needs to learn how to compete economically.
“We can’t do it all ourselves,” he said. “If we have investors, it will speed things up.”
By James Hookway at [email protected]