BANGKOK – In the 1980s, Thailand’s military-backed government oversaw a growth miracle, spurred by the development of heavy industry and Japanese investment. The generals who seized power in a military coup in May are staking their legitimacy on a similar renaissance—but they face a more complex economic backdrop.
Since the coup, the junta has made economic matters its priority. It has paid almost $3 billion in delayed subsidies to farmers. The generals have cleared around a third of a $22 billion backlog in investment projects. And they have announced plans to spend $75 billion over eight years to improve transport infrastructure, linking Thailand with China.
Their goal is to arrest a slump that has made Thailand one of Asia’s worst-performing economies this year.
As a model, they are looking to the government of Prem Tinsulanonda, a former army commander who led Thailand as prime minister in the 1980s, backed by a cohort of technocrats. Gen. Prem, who at 93 years old still wields clout in the military, leveraged Japanese government loans to build roads, rail and industrial parks along Thailand’s eastern seaboard.
A petrochemical industry flourished and the economy was growing by double digits at the end of the decade. Foreign auto makers began to set up in Thailand, turning the nation into the “Detroit of the East.”
“The aim is to get back to the good old days of 1980 to 1988, when technocrats ran the country. There’s a belief, there’ll be government investment-led growth,” said Supavud Saicheua, an economist at Phatra Securities, a Thai stock brokerage.
But it was easier then. Thailand was an impoverished, rural economy, and the government made rapid gains through state spending that encouraged people to move from fields to factories. Southeast Asia was peaceful after years of conflict. Foreign investment poured into Thailand, especially from Japan, whose companies were looking for cheaper production bases.