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Political distraction will put pressure on economic environment: UBS

UBS expressed concerns that political chaos in Thailand would distract the government from improving the business environment, which is now in a bad shape.

In the latest investment research on Thailand, it said "More broadly we remain concerned that the continued focus on constitutional amendments and amnesty arrangements arising from prior political conflicts in addition to ongoing court challenges and protests are distracting the government from working to improve Thailand's business environment. Although on most accounts Thailand remains a relatively easy place to do business, a failure to seize reform opportunities could put that position at risk."

Historically, anti-government protests have had a temporary near term impact on investment. Inward foreign direct investment was historically strong in early 2011 after the 2010 protests in Bangkok turned ugly. Public infrastructure investment would also likely be pursued by any government should the current government fall. However, temporary disruption to production and spending is possible - especially if transport infrastructure is impacted as was the case in 2008. Also, infrastructure spending could be again delayed if the current government remains in power but is stymied in its policies by recourse to the courts or the streets.

"We note that although passed by the senate and parliament the government's infrastructure bill has, as expected, been submitted by the opposition to the constitutional court."


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