Following the Constitutional Court's order on Wednesday to suspend Move Forward Party (MFP) leader Pita Limjaroenrat from his duties as an elected member of the House of Representatives, concerns are mounting among the business sector about a potential surge in widespread street protests.
This order represents yet another setback for Mr Pita's aspirations of assuming the nation's leadership, despite his party's impressive electoral victory.
Nath Vongpanich, president of Central Restaurants Group (CRG), said politics is not the primary factor influencing the expansion of their restaurant and beverage business, but he still hopes for an appointment of a new prime minister as swiftly as possible to effectively manage the country.
He believes political stability is one of the vital factors in attracting foreign investment.
Meanwhile, Praphon Potivorakhun, deputy managing director of Mitsubishi Electric Kang Yong Watana, a joint venture between Thai and Japanese companies which distributes and markets Mitsubishi electrical appliances, expressed concern about possible street protests.
He fears that such rallies could negatively impact the pace of the country's economic recovery.
"Domestic economic slowdown and an unstable political situation will likely deter foreign investment in Thailand," said Mr Praphon.
RISE OF PHEU THAI
Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), expects the Pheu Thai Party to lead a new government and resume or start plans to drive the economy.
"It is very difficult for Mr Pita to secure enough support from parliament to be the new prime minister, following his unsuccessful bid in the first parliamentary voting last week," he said.
"The latest order issued by the Constitutional Court to suspend Mr Pita from duty as an elected member of the House of Representatives will further reduce his chances and cause a change in Thailand's political scene."
Given these political circumstances, a prime ministerial candidate from the Pheu Thai Party will be nominated and should eventually get the top job in the administrative branch, said Mr Kriengkrai.
Nevertheless, he said he is not worried about the change and its political impact as long as the process to set up the new government still follows the timeline.
The FTI believes the country will see a new prime minister in the third parliamentary voting.
"But if the government establishment process faces a delay, caused by political conflicts including street demonstrations by Mr Pita's supporters, this will be a big concern," said Mr Kriengkrai.
Under this scenario, new investment plans and the budget planning for the new fiscal year will be affected, he said.
According to Mr Kriengkrai, many business people want to see who will be in the new government and what policies it will implement before making decisions on their investment projects.
Thailand also needs to speed up work on budget planning to kick start plans to boost and recover the economy.
Mr Kriengkrai said the business sector does not want to see street protests as this will affect tourism which is recovering, following the easing of Covid-19.
CLEARER PICTURE
Asia Plus Securities (ASPS) said the political situation will become clearer once the new government is formed and starts working next month.
"The political situation is becoming more predictable, so the SET index has a more limited downside," the brokerage noted.
If the Pheu Thai Party and the original eight-party coalition forms a new government, the SET index is expected to be at around 1,545-1,560 points.
If Pheu Thai joins forces with other parties to form a new government, the SET index may initially fluctuate and political movements outside parliament must be watched closely, ASAP said in a research note yesterday.
Over the past three days, Thailand saw a three-day net buying of US$114 million or 3.9 billion baht, while the SET index rose 41 points or 2.97% to 1,535.3 points.
"Foreign fund inflow has returned to Thailand as institutions and proprietary investors were net buyers boosting the SET index," said ASPS.
"Positive momentum is expected to continue as the baht strengthens, especially if the political situation is stable and a new government is formed soon. Statistically, the SET index tended to rally when Pheu Thai was the leader in the government's formation," it pointed out.
Prakit Siriwattanaket, managing director of Merchant Partners Asset Management, said after the Constitutional Court's order, there are many questions along with risks that investors need to be aware of.
"In my opinion, there will be implications in politics, economics and investment. The Pheu Thai Party is expected to lead the new government's formation while the MFP will turn into an opposition party. The new government will stay for up to four years," he said.
"The MFP is expected to be dissolved and the party's executive committees deprived of political rights, possibly including MPs. The 2024 annual budget won't be endorsed for usage this year and the economy will deteriorate in the latter half of 2023, resulting in a decline in profits of listed companies," he added.
"The risks are that political rallies will come in waves, with both small and large rallies. This is my personal opinion, not related to the company."
EXPEDITED FORMATION VITAL
Visit Limlurcha, president of the Thai Future Food Trade Association and honorary president of the Thai Food Processors Association, said the private sector has reiterated calls for the swift establishment of the government, regardless of who becomes prime minister or which factions form the new government.
"If the formation of the government can be accomplished within August, it would still be within the expected timeline. Although there might be some delays, overall the economy can still move forward," he said.
"However, what the private sector is most concerned about is that long delays in forming the government could potentially impact state projects and investment budgets that await approval from the new government. During this period, the global economy is facing uncertainties and we cannot solely rely on increased exports to boost GDP growth," Mr Visit said.
Additional reporting by Pitsinee Jitpleecheep and Phusadee Arunmas