May 23, 2014 00:00 By Erich Parpart, Petchanet Prat
Both local and foreign businesses voiced concern yesterday about the military's seizure of power from the caretaker government, saying this would further tarnish Thailand's image.
Ferdinand Gyula von der Luehe, former vice chairman of the Thai Chamber of Commerce and the current director of the Swiss-Thai Chamber of Commerce, said yet another seizure of power was bad news for the Kingdom.
“A coup is never good in the eyes of the international community,” he warned.
He said the negotiation process, which was full of promise, appeared to have broken down because the parties involved were not able to agree on a solution that would please all sides.
Luehe said the economy had been suffering over the past six months because of the lack of a functioning government, though the consequences of the power seizure remained to be seen.
“It is too early to see how the coup will impact the economy and we will have to wait and see the next development on the political side,” he said.
However, he said business sentiment had not disappeared because existing investors were staying on, as they have been through similar circumstances in the past. But inbound investment would prove to be problematic.
Stanley Kang, chairman of the Joint Foreign Chamber of Commerce in Thailand, said: “I am a bit worried, but will wait and see what really happens.”
The baht weakened to 32.54 against the US dollar yesterday evening after the Army declared that it was taking over and put the National Peacekeeping Committee in charge of maintaining peace and ensuring political reform, a report from commercial banks’ currency trader said.
Vichai Assarasakorn, vice chairman to the Board of Trade, said it was too early to comment, though the business sector should not be affected if there was no violence.
Paiboon Ponsuwanna, former president of the Thai National Shippers Council, said he was disappointed by the power seizure, adding that Thailand’s image would definitely suffer in the international arena. For instance, he said, as soon as the Army announced the seizure of power, most foreign buyers immediately walked out of the Thaifex-World of Food Asia fair at the Impact Arena, Muang Thong Thani, in fear of the situation worsening.
However, he reasoned that if the military announced an exact date for the general election, then other countries should understand the situation.
Srirat Rastapana, permanent secretary of the Commerce Ministry, said she had immediately ordered Thai trade representatives overseas to explain the situation to their trading partners, adding that the economy and business transactions should not be affected by the coup.
The currency dealer’s report said the baht would probably drop further as the current political development would have a negative impact on the confidence of investors.
“We believe that the chance of widespread and sustained violence that could impair institutions and governance in Thailand remains unlikely. Despite the recent posturing by protest leaders, we believe that backers of both sides of the political divide have strong economic interests in maintaining stability. We expect the protesters to avoid clashes as a result,” the report said.
Agost Benard, the associate director of sovereign ratings for Standard & Poor’s, said the situation had become more risky over the past few days and there would be negative implications for Thailand’s sovereign ratings if widespread violence becomes likely.
Early this week, though, when the Army declared martial law, many local and foreign businesses reacted positively as they hoped the military would resolve the conflict and break the political impasse.
The Stock Exchange of Thailand will operate as usual today, though many department stores have announced that they will close at 8pm after the National Peacekeeping Committee announced a 10pm-to-5am curfew nationwide effective yesterday.