BANGKOK – General Prayut Chan-o-cha’s ruling military junta is proving to be as clueless about economic policy as it is disdainful for the rights of civil society.
The ruling junta have shown themselves to be completely outmatched by the challenge to reverse Thailand’s economic decline. Instead, Thailand’s economic situation has suffered further declines, a nosedive similar to the battering administered to civil liberties at the hands of the military government.
Since taking power in May 2014, both rural incomes and exports have fallen sharply, and Prayut’s junta has consistently delayed a necessary devaluation of the Thai baht in order to counterbalance the yuan’s slide.
The country lost in 2014 between US$8.5 billion and $12.8 billion in missed GDP growth, FDI flows tumbled by 38.7% in the first 6 months of 2015, exports contracted by almost 5% while household debt reached a ten-year high. And since the politics of fear are timeless, Prayut has been looking for scapegoats to distract Thais from the worsening reality of their daily lives.
According to Anthony Kleven an economic risk consultant based in Singapore, Prayut’s solution to the economic malaise allegedly caused by Yingluck appears to be a mere carbon-copy of the former government’s own polices, with a healthy dose of while elephant infrastructure projects and stimulus packages added into the mix. The charade of change is underlined by Prayut’s decision to appoint Somkid Jatusripitak, former deputy prime minister and commerce minister under the deposed government of Thaksin Shinawatra, to take charge of the government’s economic policies.
Somkid is already reverting to what he knows best: so-called “Thaksinomics,” an economic program named after former Prime Minister Thaksin Shinawatra and condemned by Prayut and other members of the junta. In essence, Thaksinomics is a progressive policy used to win over the rural population of Thailand by pumping money into rural development and giving handouts.
But by all accounts, Thailand’s economy growth is a function of a weak baht to power exports and the disposable income of the rural population to drive consumption up – a fact well understood by Thaksin. Prayut, on the other hand, in a bid to weaken the traditional power base of the Shinawatras has left the farmers living in the country’s south out to dry.
Borrowing a page from Beijing, the junta launched upon ‘taking’ office in 2014 a $75 billion program of building road and railway projects. Despite looking impressive on paper, does not address the key problems of the Thai economy. Somkid immediately reversed course and launched two stimulus programs, one providing low interest financing to SMEs (worth some $5.8 billion), on top of a $4 billion one targeting low income individuals by offering interest-free loans, investing in public facilities and subsidizing rural projects.
Despite the junta’s widespread demonetization of the Shinawatras, Thailand’s economic realities and Prayut’s lack of fresh ideas – other than excoriating his predecessors – have sent the country’s GDP tumbling down. It is laughable that the same individuals he discredited are now put in charge of reversing the economic uncertainties caused, in good part, by the coup.
Prayut’s government seems heedless to the dangers of economic populism and civil authoritarianism. Until Prayut accepts a democratic transition, Thailand’s economy will continue to falter, driving away much-needed tourism and foreign investment, and the junta will fast run out of enemies to blame for their own failings. It’s high time for Prayut and his clique to confess they know nothing about government or economics and to assent to the long-awaited and much-delayed democratic transition.
By Anthony Kleven an economic risk consultant based in Singapore, the views expressed here are his own.
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