More mayhem feared in run-up to election, as kingdom nears 'failed state' status
Renewed violence, reflected in the latest bomb attack at Banthad Thong Road yesterday, has fuelled concerns among the private sector, which fears this will hurt the country’s image and the economy.
Federation of Thai Industries (FTI) vice chairman Thanit Sorat said the period leading up to the general election on February 2 could see more violence. Thailand is falling into the status of a failed state, and this will wipe out economic confidence, he warned.
“We believe about 500,000 tourists this year have already gone, and if the political violence is prolonged, that number might rise to a million. The prolonged political unrest is expected to hit export-sector orders from partners overseas,” he said.
Weidt Nuchjalearn, Krungthai Bank first senior executive vice president, is worried about the impact on financial transactions. Since the “Bangkok shutdown” started on Monday, small enterprises that are suppliers to businesses in Bangkok have suffered a drop in orders. Some hotels that are customers of KTB have zero occupancy rates. Credit activities are also slowing down, as customers are wary of spending.
KTB, which has temporarily closed more of its branches than other banks, will increase security measures after yesterday’s bomb attack.
More bank branches shut
When the afternoon stock trading session started, the SET Index was 12 points below the morning session. After closing above 1,300 points for the first time this year, the index ended yesterday at 1,295 points, 6.07 points or 0.47 per cent lower from the previous closing. Turnover was thin at Bt32.9 billion.
After net sales of Bt1.83 billion on Thursday, foreigners bought Bt607 million net yesterday, taking their net sales so far this month to Bt919 million.
Elsewhere, most Asian markets also slipped, following a negative lead from Wall Street after a disappointing set of corporate results and soft economic data.
Yesterday’s bomb attack raised fears in the banking sector and another 56 branches were closed during the day, bringing the total to 92. According to the Bank of Thailand, the number of bank branches closed this week was 123 on Monday, 130 on Tuesday, 45 on Wednesday and 46 on Thursday.
“Overall, the political situation will put pressure on Thai stocks next week and foreign investors should remain net-sellers,” said Asia Plus Securities.
Technically, the increase in Thai shares in the past week also pushed up the market price-to-earnings ratio to 14.3 times, against the 13 per cent earnings growth forecast.
The sentiment is now poor also because of economic recovery in developed economies, which will pressure all regional markets.
Asia Plus also foresaw the continuation of the political vacuum for an unpredictably long period, with or without the national election on February 2. The process to find a new prime minister would be complicated.
Piyaman Tejapaibul, president of the Tourism Council of Thailand, said the bomb attack against anti-government protesters in Banthad Thong would have a negative impact on the tourism sector.
“Local travel agents with overseas partners have evaluated the reaction from their foreign clients when hearing about such violence, and how particular countries will increase the warning level to their people on coming to Thailand,” she said.
“However, the bomb attack will primarily affect the tourism industry in Thailand during the Chinese New Year period, which will run from the end of January to the beginning of February.”
The total number of Chinese tourists coming to Thailand this month is forecast at about 400,000.
Pornsilp Patcharintanakul, vice chairman of the Thai Chamber of Commerce, said the bomb attack on the procession led by People’s Democratic Reform Committee secretary-general Suthep Thaugsuban at noon yesterday sent a signal that the political tension had escalated into violence. The incident might draw a greater number of demonstrators.
If the government is still unable to resolve the conflict, this might bring further damage to the country and the business sector in particular, ranging from the tourism sector to the investment climate.
He also urged the government to find a solution quickly to tone down the tense situation. He said there was no need for the entire government to step down but only the prime minister, and then the government can press ahead to start the country’s political reform, of which representatives of all parties should be invited to take part.
The PDRC has said repeatedly that it will not negotiate and wants to install an unelected “People’s Council”.