Thailand: Now What?


Cavan Hogue

Thaksin Shinawatr’s sweeping victory in the Thai elections came as no surprise. He went close enough to an absolute majority but has taken two other parties into the coalition, partly for safety and partly because of personal political debts to former Prime Ministers Banhaan and Chavalit.

The pending court decision on whether or not Thaksin should be suspended for five years for political corruption will obviously affect Thaksin’s future but will also be seen by many as a litmus test for the reform process.

There has been considerable criticism of his appointment of failed Prime Minister Chavalit as Defence Minister because of his past corruption and incompetence. Those committed to reform of the Armed Forces fear he will try to turn the clock back.

Reactions from the Thai business community have been essentially to wait and see. But some foreigners have been concerned that foreign investment may be discouraged. Thaksin’s nationalistic rhetoric may lead to a tougher policy towards foreign investments that do not contribute useful new skills and capital. But it is hard to imagine that this pragmatist will move against foreign investments that made a real contribution to the Thai economy.

Thailand’s heavy reliance on the rural sector was an election winner for Thaksin who promised Thailand’s 70,000 villages 1 million baht (US $23,000) and a three-year debt relief program. But money alone may not be enough to increase rural productivity. The new Government’s economic policy statement listed nine policies for urgent implementation. They contained nothing new and lacked detail or costings for the many proposals put forward although by mid-March Cabinet was working on implementation of the farm debt relief scheme. They included Thaksin’s campaign promises on suspension of debt for small farmers and other measures to help poor rural people as well as improved health care, more drug rehabilitation centres and public participation in the prevention of corruption. The Prime Minister said that fiscal policy would aim to stimulate the economy through deficit spending, reduction of imports and adjustments to the tax system. Free international trade will be supported.

This document plus other statements by Foreign Minister Surakiart suggest that, while major changes are not planned, there will be less emphasis on human rights and a more pragmatic foreign policy. Good relations with the USA will remain important and more stress will be put on relations with the neighbourhood.

The Electoral Commission’s suspension of ten senators in March for suspected electoral corruption shows the anti-corruption campaign still has teeth. But its big decision will be on Prime Minister Thaksin. If he is suspended for five years, the country will have a new prime minister and all kinds of political complications. If he is not found guilty, there will be accusations that the anti-corruption campaign has been subverted.

WATCHPOINT: Thaksin’s ambitious plans may produce a smarter, more market orientated economy that could contain opportunities for Australian business: but additional funding may not solve all Thailand’s problems.


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