Thailand: Thaksin and Thailand, Inc

2004

Steven Bodley

Thaksin Shinawatra was elected Prime Minister almost four years ago with the promise of a pragmatic, fiscally sound government, pledging to ‘run the country like a corporation’ – in contrast to the ‘honest but slow’ Chuan Leekphai. While he seems to have fulfilled his promise, some of his domestic policies have left a disappointed electorate.

Against expectations, on 31 July 2003 Thailand completed repayment of its US$17.2 billion IMF bailout loan package (against which it had drawn US$14.2 billion) provided during the 1997 financial crisis. The economy is now growing almost at pre-crisis levels. Grand infrastructure schemes are being re-born, like the plan to build deep-water oil terminals and a pipeline across the southern isthmus, cutting the cost of East Asian oil by US$2 per barrel. A recent free-trade agreement with China has won potential Chinese investment in the project (see Far Eastern Economic Review, February 19, 2004). Another free-trade agreement is to be signed with Australia in coming months. In acknowledgement of his contributions, Thaksin has been attributed the coveted Asian catch-phrase ‘visionary’.

These impressive economic and diplomatic achievements internationally have not been won without cost. One domestic disappointment was the failure of his ‘30 baht for all medical costs’ social security scheme, where doctors refused to treat poor patients for 30 baht while the wealthy paid more for preferential treatment. While once local entrepreneurs revelled in the ‘million-baht per local government loan scheme’, they are now feeling the pinch as loans have to be repaid. International investors complain about the inadequacy of the education system to produce qualified workers. Thaksin’s response to this charge is to build his own private ‘University of Dreams’.

With rumours beginning that he will not run for a third term if he wins the next elections, Thaksin has pledged to ‘eliminate poverty within the next three years’. As a powerful businessman, however, Thaksin’s dual role of political leader and one of the wealthiest men in the country sits uneasily in a society that has traditionally maintained multiple centres of power as a stabilising balance. Although he has served the interests of business well, some experienced business people fear a return to the bubble economy; and while Thais are proud of their new global outlook, it is domestic performance that wins elections and can give Thaksin the chance to fulfil his latest promise.

WATCHPOINT: It will be interesting to know how Thaksin intends to fulfil his election promise of no poverty in three years; and by how much he will win if election predictions prove correct. More realistic economic analyses should also be forthcoming – is there another bubble waiting to burst?

 

About our company:

AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.

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