Gauging the political winds

Gauging the political winds

While some pundits see changes to leadership happening next year, industry heads caution against volatility

Mr Srettha greets Chinese tourists at Suvarnabhumi airport following the start of the visa exemption scheme for visitors from the mainland.
Mr Srettha greets Chinese tourists at Suvarnabhumi airport following the start of the visa exemption scheme for visitors from the mainland.

The cabinet last week began its mobile cabinet meetings in Nong Bua Lam Phu, Thailand's poorest province, with plans to visit many more provinces over the coming months.

All the political parties are intensifying their activities in several provinces in a bid to increase their popularity among voters.

There is already speculation about the possibility of a cabinet reshuffle, with a change in leadership or dissolution possible next year.

Political stability has always been regarded as a significant risk factor for the country's economy.

As the current administration was only established a few months ago, analysts are concerned about its long-term outlook, particularly as it tries to enact its campaign pledges, such as the 10,000-baht digital handout, which still faces legal vetting.


Political changes could hamstring the country's volatile economy next year, but politicians must not waver in promoting investment, especially for new foreign business projects, said the Federation of Thai Industries (FTI).

Investment is often sensitive to politics. Whether investment will expand depends greatly on domestic political stability, although global economic circumstances can also play a role, according to the federation.

"We don't want investment promotion policies to be negatively affected by political turmoil because Thailand needs to increase foreign direct investment," said Kriengkrai Thiennukul, chairman of the FTI.

The country cannot lose more opportunities to attract new investment projects after seeing Vietnam become more attractive to many foreign investors over the past several years, he said.

Mr Kriengkrai was commenting following recent political predictions by Thai analysts that next year Prime Minister Srettha Thavisin is likely to reshuffle the cabinet, with more changes planned for the Move Forward Party.

Move Forward's election campaign to amend Section 112 of the Criminal Code, also known as the lese majeste law, landed it in a legal dispute as to whether it was an attempt to overthrow the constitutional monarchy.

If Move Forward is found guilty by the Constitutional Court, the party, which won the largest number of parliamentary seats, could be dissolved.

No matter what political changes emerge in 2024, entrepreneurs will continue to operate and try to adjust to the situation, Mr Kriengkrai said.

The Joint Standing Committee on Commerce, Industry and Banking expects the global economy to decelerate again next year because of the tight financial environment in both the US and Europe, while it predicts Chinese economic growth of less than 5% as that country's property sector implodes.

Thailand also faces various economic problems, including a high level of household debt, elevated interest rates and costly electricity bills, with power costs blamed for the country losing out on foreign investment.

"The government must deal with these factors carefully to avoid unpleasant impacts and drive up economic growth," said Mr Kriengkrai.


Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce (UTCC), said he expects the level of political risk to be relatively mild, noting the premier may not resign even if the Council of State determines the government's loan bill to finance the digital wallet scheme is invalid.

In this scenario, the premier could potentially use the fiscal budget to fund the digital wallet scheme instead, and this is considered a manageable risk, he said.

In the event of a change in leadership, any replacement would be expected to come from the Pheu Thai Party, with a serious impact to the government's stability unlikely, said Mr Thanavath.

However, if a political shift did occur, with the Bhumjaithai Party leading the government and party leader Anutin Charnvirakul becoming the premier, there could be a shift in the government's core policies, he said.

Such a situation would require close monitoring, but it would not likely result in a severe disruption, said Mr Thanavath.

There could be a political vacuum if a new government needs to be formed, he said.

"If the loan bill proposed for the digital wallet handout fails to pass the House of Representatives, it could become a political risk," said Mr Thanavath.

"This may lead to the parliament's dissolution, necessitating new elections, and the government would then transform into a caretaker government."

He said this scenario would impede the economy, causing it to lose any impetus that would have been generated by the 500-billion-baht economic stimulus of the digital wallet scheme. As a consequence, Thai GDP might contract by 0.5 percentage points, said Mr Thanavath.

"GDP growth could potentially drop to 2.5% if parliament is dissolved," he said.

"This situation would create a 'wait and see' scenario, potentially delaying foreign investments."

Democracy Monument is lit at dusk. There are murmurs among political analysts of a cabinet reshuffle next year. Pattarapong Chatpattarasill


With less than a month left in 2023, the tourism sector is projected to miss the government's revenue target of 2.38 trillion baht this year.

Earlier in the year, the Tourism Authority of Thailand forecast tourism revenue in 2023 to reach 80% of the level recorded in 2019, then expanding to match that pre-pandemic total of 3 trillion baht next year.

Sisdivachr Cheewarattanaporn, president of the Association of Thai Travel Agents, said it would be difficult for tourism to maintain steady growth or fully recover if there was another change in administration, or if the government was unable to continue its policies from this year.

He said tourism development in recent decades has been disrupted many times by domestic politics, which caused the country to lag behind rivals based on its inconsistent tourism policies.

"Political upheaval has been an obstacle in our path for decades, while neighbouring countries have been able to grow much faster. Tourism policies require consistency and take more time to bear fruit," said Mr Sisdivachr.

"Any change in the current administration will definitely have an impact on the tourism recovery, which is now at a critical point."

For example, the visa exemptions offered to a few countries did not instantly stimulate the tourism market as they might have in the past because many nations are struggling with a weak economy, he said.

With the Chinese market sinking to 3.1 million arrivals from roughly 10 million in 2019, it would be a challenge to achieve the annual tourism revenue target this year, particularly when many countries are competing for the same market using similar schemes such as visa exemptions, said Mr Sisdivachr.

He said Mr Srettha and the cabinet have an opportunity to prove themselves as many tourism obstacles have been piling up for years.

Mr Sisdivachr said he understands the government cannot fix these problems overnight, such as the issue of tourist safety.

He said he acknowledges changes in leadership happen regularly in democracies, but he believes Mr Srettha and his team should be given more time to continue their work.

"Before judging the success or failure of the government, we should let them have enough time to settle," said Mr Sisdivachr.

"Any abrupt change in Thai politics in a very short period of time would not be good for the perception of Thailand."

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