Thaksin's reasons for fleeing don't bear scrutiny

It is rather odd that Thaksin cites, among his reasons for fleeing the country, interference in the judicial system and unfair treatment when the fact is the court has not yet issued any verdicts against him. And what about an alleged attempt to bribe Supreme Court officials with Bt2 million concealed in a box of chocolates by a team of Thaksin's lawyers, who are now serving a six-month jail term? If Thaksin has no confidence in the judicial system, why has he been launching a series of lawsuits against his political opponents?

With Thaksin's exit, the structural conflict in the political system, which has paralysed the country over the past three years, has been resolved for now. Fears of another coup have proved to be unfounded. The political instability has bottomed out. Another political tsunami should not occur, though there could be some jitters manifested in the infighting among key members of the People Power Party. A reshuffle in Thai politics will take place over the coming months to fill the void left by Thaksin.

With Thaksin's departure from the political equation, a report by Thanachart Securities - Siam Senses - has called for a re-rating of the stock market. It suggests that the Thaksin factor, which has been weighing on political stability, should be pulled out.

Secondly, the sharp drop in oil prices is very good news for the economy. As Asia's largest net oil importer to GDP, the economy is sensitive to high oil prices.

Thirdly, the Bank of Thailand will have to manage its monetary policy more artfully.

But the economic problem of Thailand is structural. For the country to enjoy sustainable growth, it needs a return of a long-term investment cycle. Corporate earnings growth is still not attractive enough, with Siam Senses |projecting a mediocre rate of 5 to 7 per cent until 2011.

"The lack of a new investment cycle has limited potential growth. High utilisation alone can't create a new, long-term investment cycle as expansions can be carried out gradually," Siam Senses indicated.

"Thailand needs major, investment-oriented government spending and new growth sectors for private investment.

"We believe investing long-term in Thailand will remain difficult as long as there's no new investment cycle. Earnings growth will probably remain at best mediocre."