Half democracy may be our best bet in the short-term

Export orders have started to flow in to Thailand and the Thai bourse has moved up with the rest of world.

But local politics is unsettled and it has more or less held the country back, hurting investor confidence and consumer consumption.

"We have to make [all parties] know that political violence affects all aspects of economic activity including investment and consumption," said Sara Lamsam, a young executive from the Lamsam family and president of Muang Thai Life Assurance.

Business communities have joined a campaign with the Thai Journalists' Association to call for opposing parties to adopt peaceful means to resolve political conflicts which have negatively affected all aspects of people's lives.

No one knows what direction politics will take over the next few years. The government has indicated it may dissolve Parliament early next year, after the amendment of the Constitution is endorsed.

"If political parties cannot solve the conflicts, the military may again intervene, and if so it would stay in power for a long period, not just one year as it did after the 2006 coup," warned Chai-Anan Samudavanija, a noted political scientist.

If such a scenario is realised, Chai-Anan foresees the country may opt for political stability with limited democracy, and technocrats would be invited to run the country's affairs.

Many business executives may agree with him if political chaos under the guise of a fight for democracy resurfaces again. Such unrest would do even more harm to the economy, as it has during the past three years of political turmoil.

Technocrats may again be preferred over politicians, as they can run economic policies based on rationale instead of making bad decisions in exchange for political popularity.

Looking back, technocrats who served General Prem Tinsulanond between 1980 and 1988 were credited with attracting huge flows of foreign direct investment. Then we Thais called that period "prachatipatai khrung bai": half-democracy. Going back further, Puey Ungpakorn, former governor of the Bank of Thailand, worked closely with dictators Sarit Tanarat and Thanom Kittikachorn from the late 1950s to the early 1970s. Puey was praised by later generations for his great contribution to the development of the modern Thai economy.

Now looking around the region, China is a model free-market economy, but it has restricted politics. Apparently it has an advantage in terms of economic development and increasing peoples' welfare. Meanwhile, the Japanese economy is weakening due to political instability caused by frequent changes of government.

These factors should be a wake-up call to politicians and leaders of the opposing yellow and red shirts.

The challenge is how to advance democracy while at the same time allowing business to operate in a relatively peaceful environment.

While many are largely pessimistic about the emergence of the yellow and red shirts - an indicator of a deeply divided society - Chai-Anan sees some positives in the development of Thai democracy. "Don't blame the yellows or reds; it is the first time we have been serious about politics," he said.

However, he was concerned about the personal issue of former premier Thaksin Shinawatra, who can be seen as an obstacle to real democracy. The end scenario could thus be a half-democracy with a free-market economy.

The Internet has created opportunities for both new businesses and the advance of democracy. Wide use of the Internet and related media may prevent Thailand slipping back into half-democracy as dissidents could exchange views and information via electronic means. Conservatives may see this as a threat, but if they are open-minded, new media can help move the country forward. On the business side, many young executives may emerge to take advantage of new economic infrastructure.

However, Thailand is lagging behind other countries in the region, such as South Korea, in communication infrastructure investment and productive use of information technology. So, Thai companies have not yet made their brand names known in the world market compared with, say, Koreans, who are successful in computer games and related entertainment industries.

Supachai Chearavanont, chief executive officer of True Corporation, cited good access to high-speed Internet in South Korea - for up to 90 per cent of Korean families - as a factor behind the success of the younger Korean generation.

Supachai laments that only 5 per cent of Thai families can access high-speed Internet currently - about one million families out of a total 19 million.

The government plans to invest Bt1.4 trillion from this year to 2012 in third-generation communications, logistics, mass transit and other infrastructure that may boost private investment.

 If opposing political parties adopt peaceful means to resolve their differences, we may yet achieve genuine democracy and move toward a knowledge-based economy.