Counting the Cost
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Counting the Cost


By WILLIAM BOOT Wednesday, April 7, 2010


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The Redshirt-Yellowshirt saga has taken a severe toll on the Thai economy, and there’s still no end in sight

The US $1.38 billion that Thailand’s supreme court recently confiscated from former Prime Minister Thaksin Shinawatra is mere pocket change compared with the financial damage inflicted on the country since the coup that brought down his government in September 2006.

Thai soldiers stop a convoy of supporters of deposed premier Thaksin Shinawatra at a check-point in Ayutthaya Province as they head to Bangkok for a mass anti-government rally on march 13. (Photo: AFP)

In the three and a half years since the tanks rolled onto Bangkok’s streets, the political and social upheavals that have consumed Thailand have been minutely documented. But so far, little effort has been made to add up the economic costs.

Economists say it will probably be impossible to truly calculate, but they agree it must run into tens of billions of dollars. One incident alone—the week-long Bangkok airports blockade by anti-Thaksin protesters in December 2008—cost about $8.5 billion, according to the Bank of Thailand.

That cost, in squandered air freight exports and tourism, does not take into account the lost income in the weeks and months following the airport siege, when many Bangkok and resort hotels were almost empty as visitors stayed away from the country for fear of a recurring blockade.

Other losses are even more difficult to assess, but are believed by most observers to be substantial. Apart from the periodic disruptions of normal economic activity caused by mass protests, there has also been a significant erosion of investor confidence. The governor of the Bank of Thailand, Tarisa Watanagase, blames prolonged political instability for a steady decline in non-government domestic investment.

Thailand’s economy has stuttered since the bloodless 2006 coup that removed Thaksin from power while he was attending a meeting of the UN General Assembly in New York. He has spent most of his time since then in exile to avoid prosecution and, later, a two-year prison sentence handed down to him in absentia in 2008 after he was found guilty of a commercial conflict of interest while he was prime minister.

The 2008 global economic crisis has also hit Thailand’s export-dependent economy hard. But even before many of the country’s major export markets, notably the US, Japan and the EU, went into a severe recession, Thailand’s performance was slipping behind that of fellow Association of Southeast Asian Nations (Asean) members Singapore, Vietnam and Indonesia.

The picture is even grimmer if you look beyond Asean. Although Thailand used to be compared with Taiwan in terms of economic development, today the country’s per capita GDP of $3,850 is only 25 percent of the Taiwanese average.

Thailand’s economy emerged from recession only in the last quarter of 2009, and economists are concerned that the nascent growth could slip in the first quarter of 2010 due to heightened political tensions.

The declaration of a state of emergency in the Bangkok region by Prime Minister Abhisit Vejjajiva in mid-March, giving the military special powers to deal with a massive pro-Thaksin march on the capital, underlined the continuing uncertainty in the country.

The Thaksin factor has not completely destroyed Thailand’s appeal as a place to invest, but it has given some pause to corporations worried about the country’s ability to weather the economic storms it has caused. Japanese firms have long been the biggest investors in Thailand, and a recent survey by the Japan Bank for International Cooperation confirmed that Thailand remains in the top five preferred destinations in Asia for Japan’s foreign cash. But the Japanese are also hypersensitive about anything that could adversely affect Thailand’s business climate.

“Japanese investors consider Thailand to have several positive factors. However, they were concerned about social and political instability,” Stock Exchange of Thailand President Pattareeya Benjapolchai told a Thailand-Japan business forum in February.

In 2009, Japan imported $15.7 billion worth of Thai-made goods and produce, making it second only to the United States as a market for Thailand’s exports.

Not all foreign investors are intimidated by Thailand’s messy domestic affairs, however.



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