Hope coup would lead to functioning govt; Kingdom now stands to lose on new or increased investment
While foreigners worry about missed opportunities and a reduced investment inflow after the coup d’etat, business organisations believe that communication is the key to maintaining the confidence of foreign operators here.
Darren Buckley, president of the American Chamber of Commerce in Thailand, said the coup would only have any value if it led to a functioning government in the near future, in which case the economy might be able to escape further damage.
“A coup in itself is never positive, that is how it will be perceived by the international community,” he said.
Buckley acknowledged, however, that it was clear the negotiation process had failed to reach a resolution, and the military must have felt it had no choice but to take control as the dialogue was going nowhere.
“If this coup leads to a functioning interim government which can set a date for the next election, further damage to the country’s economy can be averted,” he said.
As for business sentiment, he said all inbound investors would be very wary of the situation, but major interests already in the Kingdom were unlikely to leave, since all their operations and infrastructure are in place. However, even they will be thinking more carefully about future investment in the country.
Buckley added that Thailand had the opportunity to become the leader in Asean, but the latest development had marred that prospect.
“Thailand is at risk of being marginalised within Asean, as investors will look elsewhere in the region. The country will also certainly miss out on future opportunities that will come along with the Asean Economic Community,” he said.
Daniel Giles, director of Vriens and Partners, a Southeast Asia-focused corporate advisory firm, said that even though foreign firms understood the situation and would not move away any time soon, Thailand would stand to lose out on new or increased investment.
“Many companies here have a good understanding of the country’s macro politics and factor in a degree of chronic political instability. Most business operations continue as usual, but it would be naive to believe that these sentiments can be maintained indefinitely without a sustainable resolution,” he said.
Other countries eyed
Giles said Thailand’s competitiveness was deteriorating through the dysfunctional politics and frequent coups. He said inbound investors would most likely look to other countries with more stability such as the Philippines and Indonesia for ventures, since the investment mood there is more optimistic.
“Thailand’s dysfunctional domestic politics has been getting increasingly worse in the past decade, and with each round of conflict investment confidence in Thailand deteriorates,” he said.
Buckley warned that jurisdictions such as the United States and the European Union might also decide to impose some form of penalties or restrictions on the country because of the coup, which would be yet another blow to the economy. However, he added that this was speculation at best for now. Yesterday US Secretary of State John Kerry said the United States was reviewing its military and other aid to Thailand, which is worth around Bt810 billion.
After a meeting of its members yesterday, Hugh Vanijprabha, executive director of the Thai-European Business Association, said foreign business operators wanted greater clarification of the orders from the National Peace and Order Maintaining Council (NPOMC) along with an established communication line to the council if they have questions related to their operations in the Kingdom.
“Communication is the key,” he said. “Investors, especially foreign investors, need to know whether the NPOMC’s orders, such as curfews, will affect their supply chains.”
Neighbouring countries also wanted to know if they could receive products from Thailand when there is a coup in place, he said. These are questions needing answers, and the NPOMC should provide more in-depth information on the orders that have been given out.
Stanley Kang, chairman of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), said the foreign communities would need to monitor the situation closely. As a foreigner, he doesn’t want to make any comment about Thai politics.
As the first priority, the thing foreign investors would like to see is more political stability in the future. He said that after this, all parties would hold discussions and find measures to boost the economic growth of the Kingdom and maintain foreign investors’ confidence as soon as possible.
The JFCCT plans to hold a meeting of its members to discuss such issues in the near future.