Thailand needs a 'govt of unity'

Respected commentator Prawase Wasi suggested Thailand set up a "national government" to end all the conflicts which are gripping Thailand's politics and economy and scaring away investors and tourists.

According to Prawase, former prime minister Thaksin Shinawatra is the cause of ongoing political conflict that has shaken Thai society to its core. One side suspects that Thaksin is corrupt and does not trust him and the other side loves Thaksin and wants to amend the Constitution to help him escape the justice system.

To end this problem, the People Power Party, which won the most votes, must change its aggressive behaviour and refrain from using force against political rivals. Antigovernment protesters must also use reason, not force, and avoid confrontation while accepting that the PPP won the election to be the ruling coalition party.

The People's Alliance for Democracy's decision to continue their protests until the government is out of office creates fears of possible confrontation.

For two days since the chance of confrontation looked imminent on Saturday, the Stock Exchange of Thailand shed 3.21 per cent, before ending at 806.86 points yesterday.

James McCormack, the head of Fitch Ratings' sovereign group in Asia, said in a conference in Beijing that the political tensions in Thailand may continue to hurt the country's growth and could get worse before getting better. He remains concerned about the situation in Thailand and has had such concerns for some time now.

"The economy and other economic institutions were essentially on auto-pilot," Dow Jones Newswires quoted McCormack as saying. "That can go on for a period of time, but not indefinitely. If there were further political turmoil in Thailand . . . more violence, that could prove more disruptive to economic policies this time around."

McCormack said some areas of policymaking, such as infrastructure spending and financial sector reforms, came to a halt amid the uncertainty following the political transition after the bloodless September 2006 coup that ousted former prime minister Thaksin Shinawatra. 

"It was already weighing on growth," he said. "Now with the export sector probably weakening, the impact of the current situation on Thailand's growth would show up in the headline numbers."  

Despite problems at home, the Stock Exchange of Thailand has maintained its planned roadshows in Singapore, London and New York next week. SET President Pattareeya Benjapolchai said the top of the agenda would be the political situation, citing that investors would be assured of the government's capability to control it.

She noted that the continued protest by the People Alliance for Democracy would shake investors' confidence, but briefly. Once the situation turns normal, investors will resume their trading and companies planning to launch initial public offerings would also resume their plans.

Another concern is government intervention, reflected through the diesel discounts by PTT's refinery affiliates. This issue must be clarified or it could affect investment, she noted.