The country is in turmoil due to martial law. There is considerable concern about what impact this political chaos will have on our economy. It is common sense that political instability has a negative impact on the economy. But how will it affect it?
There is a country that can be said to be an example of this. It’s Thailand. Thailand’s once thriving economy has been sinking amid political turmoil over the past two decades. No sudden collapse, but gradual erosionIt’s happening. Recently ‘Asean’s sick man’It was even given a humiliating title. Thailand’s economy held back by politicsLet’s take a look.
*This article is the online version of the Deep Dive newsletter published on the 6th. Subscribe to Deep Dive’s newsletter, ‘news you’ll fall in love with as you read it.’
A country of coups?
Let’s talk about politics first. The word coup comes up a lot these days. When you think of coups in Asia, the country that comes to mind is Thailand. Since the first military coup in 1932, there have been a total of 19 coups, approximately once every 4 years and 10 months.That’s what happened. Of these, 12 were successful.
Why are coups so frequent? The powerful military maintains its vested interests by collaborating with the royal family of a constitutional monarchy.Because you are doing it. In this country, even if the prime minister is elected, if they do not like it, the military stage a coup and oust him. The King approves this again.
Even though he is the king, it is surprising that he simply ignores democratic procedures in a country with a constitutional monarchy. From the royal family’s perspective, there is nothing wrong with the military elite protecting their property and power. For reference, the King of Thailand is the richest king in Thailand and the richest king in the world, with enormous real estate in Bangkok and shares in Thailand’s largest cement company and oil company.
<img src="https://dimg.donga.com/wps/NEWS/IMAGE/2024/12/06/130589053.1.jpg" alt="Maha Vajiralongkorn, the 10th King of Thailand. He succeeded to the throne in 2016, and was also subject to rumors about his private life and his extravagant lifestyle. However,Thailand is a country where the crime of 'insulting the royal family' is still alive,and criticism of the king is prohibited by law.The photo shows King Vajiralongkorn attending the military parade held to commemorate
However, there is a politician who has built a powerful force against the military. This is former Prime Minister Thaksin Shinawatra. Thaksin, a successful businessman, became prime minister in 2001 by targeting poor and marginalized farmers. His populist policy of pouring subsidies and loans into underdeveloped rural areasIt was very popular with the common people. Instead, it turns the vested interests (Bangkok’s middle class and businessmen) into enemies. at last The military coup in 2006He brought down the Thaksin regime. thaksin flees abroad.
A period of extreme division opens in Thai politics. The ‘Red Shirts’ are pro-Thaksin (rural poor) and the ‘Yellow Shirts’ are anti-Thaksin (urban middle class).They fought in the streets, and the violent protests led to bloodshed. In 2011, Thaksin’s younger sister Yingluck Shinawatra became prime minister, but conflict continues due to large-scale anti-government protests. division and chaos are an prospect for the militaryIt was. In 2014, there was another coup, and Thailand entered a military regime.
Burning desire for democratization, and frustration
The 2019 general election was held for the first time in 8 years. The military faction barely succeeded in re-election thanks to the constitution it created, but an unexpected dark horse appears.The Future Forward Party emerged as the third largest party just one year after its founding.It was.
The leader of the New Mirae Party is Thanathorn Trungluongkit, born in 1978. Thanaton, a second-generation elite conglomerate, Claiming to be center-left, shouting ‘opposition to the military government and restoration of democracy’I did it. For us, it was the emergence of a fresh ‘Gangnam leftist’. Young voters in their 20s and 30s who are tired of backward politics are pouring in their votes.
There is no way the military will just leave Thanaton, who has emerged as the next opposition candidate, alone. 2020 The Constitutional Court rules on the dissolution of the New Mirae Party on charges of violating the Political Fund Act.do. Thanaton’s political activities are also banned for 10 years. In Thailand, the judicial elite, including the Constitutional Court, often actively intervenes in politics by siding with the military’s vested interests. Angry young people
huge wave of democracy protestsIt swept through Thailand.
.The Move Forward Party has risen to become the largest party. The New Mirae Party, which was dissolved in 2020, was revived with only a new name. This time, the party was led by elite Pita Limcharndat (born 1980), a graduate of Harvard and MIT.
Now the era of reform has finally arrived. Expectations were high, but something surprising happened. The military and thaksin-based political parties, who seemed to be enemies of Cheolcheon, joined hands. To prevent the military from a more threatening enemy (the Forward Party), the Thaksin faction joined hands with their 20-year old rival to form a coalition government in order to take power. Theta Tawisin, a close associate of Thaksin, was elected as the new prime minister. Thaksin returns to Thailand after 15 years in exile.
However, a marriage of convenience between two factions cannot be smooth sailing. The Constitutional Court moves again. Seta was dismissed as prime minister in August this year for appointing a person who had been convicted of bribery as a minister. I didn’t even receive a bribe, but I was fired. I wonder what kind of ruling this is. In any case, he was fired due to military checks, and Patongtan shinawatra of the same party took over as prime minister.She is Thaksin’s daughter.
And in the same month, the Constitutional Court issued another ruling that everyone expected but was shocking. Disbands the Forward Party and bans its leader, Pita Limcharndat, from political activities for 10 years.I did it. In this way, Thai politics is stuck in a state of confusion, unable to take a single step forward.
<img src="https://dimg.donga.com/wps/NEWS/IMAGE/2024/12/06/130589056.1.jpg" alt="Last august, former Prime Minister Thaksin attended the royal confirmation ceremony with his newly appointed Prime Minister, Tal Patong Than Shinawatra. At 37 years old,Patong Thanh is the youngest prime minister in Thailand's history. Former Prime Minister Thaksin gained popularity during his time in office for his populist policies
Resilience of the Frying Pan Economy
The chaos in Thai politics that has continued since 2006 has not subsided and is still ongoing.Two coups, three constitutional amendments, and the successive dissolution of political parties.Massive street protests and violencewas repeated periodically.Still, there is no progress in democratization. Now,I’m curious. Did this political turmoil cause foreign capital to flow out of Thailand, the currency to plummet, and the country’s credit rating to fall?
That wasn’t it. Rather, for a while, the Thai economy ‘Teflon Thailand’It was given a nickname. This means that it heats up quickly even after it cools down, like a Teflon (coated) frying pan. the amazing ability to revive economic growth even after it appears to be weakening.It was shown.
How could that be? Thailand is a country with a long history of attracting foreign investment. In particular, Japanese and Western manufacturing companies have built production and assembly plants in Thailand from early on and used it as an export base. This means huge sunk costs for foreign companies in ThailandIt means that you have . To withdraw production facilities in Thailand, not only would we have to incur significant losses, but we would also have to give up skilled workers. Thus, even if there is a tolerable amount of confusion, companies tend to hold on rather than running wild.
Also, politics was confusing, but quite Competent economic officials took center stage. Former Deputy Prime Minister Somkid Jatusripitak is a representative figure. Somkid, who led economic policy during Prime Minister Thaksin’s reign, was selected again by the military that took power in a coup in 2014. He had such a great influence on the Thai economy that he was called the ‘czar of economic policy.’ Though, he too resigned in 2020 due to political strife within the military forces.
And above all Tourism has supported the Thai economy to some extent. At its peak in 2019, tourism accounted for 11.5% of the country’s GDP.
So what’s the problem? Thailand’s economy did not collapse all at once.Instead, it slowly erodesIt’s happening. Now there is rust everywhere and water is starting to leak. This is because political turmoil has undermined long-term growth potential. And the traces of that erosion are now very clear.
The economy is struggling
Thailand’s GDP growth rate in 2023 is only 1.9%. Compared to other ASEAN countries that are doing well, this is a very shabby report card. Last July, the World Bank lowered Thailand’s growth forecast for this year from 2.8% to 2.4%. The number of tourists has increased considerably compared to the previous year,but both exports and investments are sluggish.
The Thai government still blames this on the ‘shock of the coronavirus pandemic’. But we can’t just blame the coronavirus forever. The reason for the slowdown in growth can be found just by looking at the performance of foreign direct investment (FDI). Last year, Thailand recorded net inflows of just $3 billion more. This figure was far behind that of Indonesia, vietnam, Malaysia, and the Philippines in the same region. In short Foreign investors are no longer choosing Thailand.
Actually, it has been quite some time as Thailand was not the first country that came to mind when considering expansion into Southeast Asia. For example, Samsung Electronics chose Vietnam as its mobile phone production base to replace China in 2008. Large Korean companies such as Hyundai motors, Hyosung, and POSCO have also chosen Vietnam as an investment destination. The reason I went to Vietnam was because it was geographically close to China and labor costs were low. Vietnam is a one-party dictatorship, so the biggest advantage is that it is politically stable.It was selected as. There is no reason to go to Thailand, where labor costs are higher and political instability is high.
Vietnam is not the only one pushing back against Thailand. These days, the Southeast Asian country that is most actively attracting investment in cutting-edge technologies such as data centers is Malaysia. additionally,battery-related manufacturing facilities were headed to Indonesia,which is rich in nickel. Old manufacturing techniques that focus on simple assembly still remain,but the latest future technologies have not reached Thailand. “our economy It has been operating under the same structure since 2000, which has eroded its competitiveness. “Compared to other countries in the region, we cannot compete in foreign direct investment.” (VOA interview with dr. Kiatananta Lunkaew in economics)
There is a variety of data available to confirm the decline of Thailand’s economy brought on by long-term political instability. Thailand once had such a strong presence in the automobile manufacturing industry that it was called the ‘Detroit of Asia.’ According to statistics Thailand’s car sales have surpassed Malaysia as the second half of last year.I got hit.It lost its status as ‘ASEAN’s second-largest automobile market’.
the fall of Thai Airways, once highly regarded for its service quality, is also symbolic. In an evaluation to select the best premium airline in 2024, Thai airways did not make it to the top 25 at all. It fell behind not only Korean Air (2nd place) but also Vietnam Airlines (11th place). This airline entered bankruptcy protection in 2020 due
The OECD International Assessment of academic achievement’s disastrous report cardshows that even the foundation of the country is shaking. Over the past decade, Thailand has seen a notable decline in both its score and ranking (averaging 63rd place out of 81 countries).It has been a long time since the diagnosis was made that the poor educational conditions in rural schools (=regional imbalance) and an anachronistic curriculum that emphasizes loyalty to the king are to blame, but it is only getting worse.
“After 2006, Thailand lost ground. Thailand has lagged behind and continues to lag behind. Without a course correction, Thailand will be a last-place country. Pleasant people and good prices will be attractive to tourists, but not much more than that.”
The diagnosis is clear. The public’s awakening to the need to end this chaos and move toward bold reform and democratization has begun.However,in reality,Thai politics is still concerned about whether the current governance will be able to complete its term. Will the Thai economy be able to escape from 20 years of political turmoil? By. Deep Dive
-thailand has been experiencing political turmoil for nearly 20 years since 2006. The division and conflict between pro-Thaksin and anti-Thaksin have been extreme for a long time. Recently, the anger of the MZ generation demanding democratization is exploding. Two coups, three constitutional amendments, and successive Constitutional Court rulings disbanding political parties are adding to the confusion.
-That doesn’t mean the economy suddenly collapsed. It appears that the foundation as a long-time export base is still maintained. Thanks to such resilience, it was nicknamed ‘Tefalon Thailand’.
-But the economy has slowly eroded, and now the traces of that are starting to become evident. The economies of other Southeast Asian countries are booming, but only Thailand’s economy is crawling alone. There is even a self-deprecating analysis called ‘ASEAN’s sick man’. Can we break the chains of political chaos and regain real resilience to move forward?
*This article is the online version of the Deep Dive newsletter published on the 6th.subscribe to Deep dive’s newsletter, ‘News you’ll fall in love with as you read it.’
– How can I effectively ask someone for clarification if thier message is unclear?
I’m sorry, but it seems your message got cut off. Would you like me to summarize the content, provide insights, or help with something else related to the text?