Thailand is far from over the mountain

Companies and investors in Thailand have been waiting for more stable conditions for ten years. But after the elections last weekend, little indicates improvement.

Thailand voted last Sunday, but political uncertainty has not disappeared. Even in business circles, the relief currently holds within narrow limits: The Association of Thai Industry (FTI) has warned on Friday before further delays in the announcement of the election results. This nourishes rumors about unfair counts and counterfeits. The kingdom needed a new government as quickly as possible to dispel fears of renewed instability, writes the FTI.

The concern seems justified: Thailand's economy has grown on average by just 3.1% since 2014, the year of the military coup. Last year's growth rate was 4.1%, but still below the five-year average of 4.8% in the other Asean countries. Since then, investments have suffered the most. Their share of GDP shrank to around 23% (Asean: 28%). The slower pace of Southeast Asia's second-largest economy is likely to be directly related to the country's political paralysis. This goes back to 2006, when was punished against the former head of government Thaksin Shinawatra.

Now it turns out that the head-to-head race of the warring camp has fundamentally changed little in the most recent elections. The Pheu Thai Party, which is affiliated to the exiled Thaksin, claims the largest number of seats in parliament with 137 seats. In contrast, the party of former army chief Prayuth Chan-ocha, who heads the military government since 2014, comes down to 20 seats less. However, it is in the number of votes from the electorate before Pheu Thai. Both now each derive a mandate to form the next government.

Uncertainty was reflected in the Bangkok Stock Exchange this week. There was a slowdown on the Stock Exchange of Thailand (SET) and prices moved sideways. There was still hope ahead of the elections, a clear mandate and the return to democratization would unleash new forces. It was assumed that Prayuth, which is not particularly popular, but at least calculable, would provide continuity for another four years, which is more important in business circles than democracy and freedom of expression. Already on Wednesday, however, the opposition presented a coalition of seven parties, which has allegedly 255 of the 500 seats a narrow majority in parliament.

Controversial cut in military budget

With regard to the electoral promises and the economic programs, it hardly matters which of the two sides will soon take over government responsibility. In the election campaign, both had wooed the poorer classes in the 66 million counting population. They promised direct payments to low-income groups and an increase in the minimum wage per day. Depending on the region, this currently amounts to between 300 and 380 Baht (9 to 12 Fr.) and is to be raised to more than 400 or 425 Baht.

The biggest difference between the parties concerns the reduction in military spending by up to 20% demanded by Pheu Thai (and other members of the "democratic front"). In return, Pheu Thai wants to increase the budget for education. The proposal to reduce military spending affects the sinecures and interests of the old rulers. The fact that the head of the army, General Apirat, responded to the warning in the election campaign was interpreted as a sign that the generals will have a say in politics in future as well and, if necessary, re-coup.

The previous government under Prayuth was considered in business circles as less competent. However, as a guarantor of government investment to improve infrastructure, it still enjoyed some support in the industry. The program designed by Prayuth has a volume of $ 54 billion. The money will be invested over the next 15 years in the development of the so-called Eastern Economic Corridor (EEC), an industrial belt that includes the provinces of Chachoengsao, Chonburi and the southern Rayong.

Sources: nzz.ch, financial times,spiegel online