thegreglowe.com

By GREG LOWE
IN BANGKOK

THAILAND’S political deadlock, which has led to an eight-day blockade of Bangkok’s two airports by the anti-government People’s Alliance for Democracy (PAD), is unlikely to be resolved even if the Constitutional Court orders the ruling People Power Party (PPP) to be disbanded today, analysts say.

Parliament must appoint a new prime minister if the court breaks up the PPP, and two other coalition parties, for electoral fraud committed in last December’s general election.

If a large enough number of executives (from the dissolved parties) are banned, it will produce quite a tight situation in parliament,’ said Chris Baker, a leading political observer. ‘If the coalition parties defected, you could just about get a Democrat-led coalition.’

However, Mr Baker said that if the PAD opposes members of the new government, or if a PPP reincarnation wins power, then the impasse will not be resolved.

‘If they continue this way there is no end in sight, other than some kind of other form of government with the army behind it,’ he said.

The impact of the blockade on Thailand’s international trade and tourism industries have been profound.

Last week, the Board of Trade said that the blockade was costing three billion baht (S$128.3 million) daily in exports and imports alone. But over the weekend, it said that the cost to the economy was now ‘incalculable’.

Phatra Securities said that the worse is yet to come.

‘We believe that worse figures are in store over the next two to three months, because of a deteriorating political situation that now has two of the country’s major airports occupied by anti-government protesters. Apart from falling tourism income, outright contraction of exports and production is possible.’

PAD, which started its blockade of Bangkok’s Suvarnabhumi and Don Muang airports last Tuesday, has led months of street protests to oust PPP, which it says is a proxy of former prime minister Thaksin Shinawatra, who was deposed in a 2006 military coup. Prime Minister Somchai Wongsawat, Mr Shinawatra’s brother-in-law, has refused to concede to PAD’s demands for him to resign and for his party to quit politics.

‘There are still foreign investors that are interested in Thailand, but every day that the stand-off between the PAD and the government continues sees a further erosion in investor confidence,’ said David Tuck, head of research, Spectrum OSO Asia, a business intelligence consultancy. ‘What’s needed, as soon as possible, is a workable long-term solution to the impasse. Anything less will make it very hard to convince potential investors of the merits of Thailand.’

The blockade has stranded 240,000 tourists in the country so far, Tourism Association of Thailand said yesterday. The Thai government has pledged to pay stranded tourists 2,000 baht compensation a day, as well as providing free healthcare.

Yesterday military chiefs – who have repeatedly refused to use force to end PAD’s occupations at Government House and the airports – called again for the prime minister to step down.

Yesterday, the PAD effectively ended its three-month siege of Government House after a series of recent grenade attacks injured scores of its members encamped at the site. The alliance bussed the demonstrators to the two airports.

Over the weekend, Singapore’s Ministry of Foreign Affairs reiterated its advisory for Singaporeans to postpone all non-essential travel to Thailand.

International Enterprise Singapore said: ‘The current closure of the Suvarnabhumi Airport has undoubtedly resulted in disruption for businessmen travelling to and from Bangkok. We have received feedback from Singapore companies with business dealings in the city that they have had to postpone their travels due to cancellation of flights. Thailand is an important trading and business partner for Singapore and IE Singapore is monitoring the developments closely.’

Standard & Poor’s, a ratings agency, yesterday downgraded its outlook on Thailand’s sovereign credit worthiness to ‘negative’. Fitch Ratings yesterday affirmed Thailand’s long-term foreign and local currency Issuer Default Ratings at ‘BBB+’ and ‘A’ respectively, and revised the Outlook to negative from stable. Both agencies said they revised their positions due to the protracted domestic political turmoil.

Published December 2, 2008
© The Business Times