Bangkok Thailand’s controversial head of government, Prayut Chan-ocha, has no reason to celebrate on the eighth anniversary of his inauguration. His office in downtown Bangkok is cordoned off over a large area. Barbed wire, armored vehicles and security forces block the access road. Shipping containers are piled high behind them – they are intended to make Prayut’s seat of government an impregnable fortress in the event of renewed mass protests.
But no demonstrations by democracy activists will slow down the 68-year-old, who has been in power in Thailand since his coup in 2014, this Wednesday. Instead, it is the constitutional court, which is actually considered pro-government, that abruptly put a stop to the career of the former military chief – at least for the time being.
The judges in Bangkok temporarily suspended the prime minister over allegations that he had exceeded the maximum allowed time in office. Whether he can ever return as prime minister remains to be seen. Until the facts are clarified, Southeast Asia’s second largest economy is threatened with a power vacuum that could set back the sluggish recovery even further.
With the exception of the civil war country Myanmar, Thailand’s economic growth is the lowest in Southeast Asia. The World Bank expects gross domestic product to grow by just 2.9 percent by the end of the year. By contrast, all other major emerging countries in the region – Indonesia, Vietnam, Malaysia and the Philippines – are facing growth in economic output of more than five percent.
Top jobs of the day
Find the best jobs now and
be notified by email.
In contrast to them, Thailand’s economy is still well below the level before the start of the corona crisis.
32 million fewer tourists
The main reason for the restrained recovery is the slowly returning tourism business, which is of crucial importance for the holiday country. Although there have been almost no travel restrictions since the beginning of May with the abolition of testing obligations, the tropical country no longer attracts the same large number of visitors as before the pandemic began.
There are still no tourists on Thailand’s beaches. This puts a heavy strain on the economy.
(Photo: dpa)
In July, the country counted more than one million arrivals for the first time since February 2020. But compared to the average 3.3 million monthly visitors who came to Thailand in 2019, that’s still little. For the year as a whole, Thailand’s central bank expects eight million tourists – 32 million fewer than three years ago.
The difference has enormous consequences: Every million holidaymakers represent around 0.4 percent of economic output, central bank governor Sethaput Suthiwartnarueput told his audience on Wednesday at an investor conference in a Bangkok five-star hotel.
He explained that neither the relatively high inflation nor feared capital outflows due to interest rate increases in the USA would worry him particularly. “But what worries me the most is tourism,” he said. Another setback for the vacation industry – whether from another virus variant or a worsening of geopolitical tensions – is the main risk for the country, Sethaput said.
The statements by the supreme central banker came just hours before the constitutional judges put another risk on the agenda: With their provisional suspension of the prime minister, they are triggering a new phase of political uncertainty.
Their decision goes back to a new constitution that Prayut himself put into effect in 2017 with his then-ruling military junta. It provides for a maximum term of office of eight years for heads of government. The opposition argues that Prayut’s term is now up, eight years after he was first proclaimed prime minister.
The decision will be made after 15 days at the earliest
Prayut’s supporters see it differently: they believe that the new constitution cannot be applied retrospectively – and that the eight-year limit only applies to the term of office since 2017.
Until the constitutional judges make a decision as to which side is right, Prayut is no longer allowed to exercise his duties. It is unclear how long the judges will take to create clarity. They gave the suspended prime minister 15 days to comment on the issue.
The court is not considered politically neutral: Most of the judges were appointed by Prayut’s allies in the Senate. In the past, they have regularly stood firmly on the side of the government.
Thailand before troubled times
Pending a verdict, Prayut’s deputy, 77-year-old former army chief Prawit Wongsuwan, will take over the government. He is considered to be one of the main organizers of the 2014 military coup and is as unpopular with large sections of the population as Prayut was recently. According to opinion polls, two-thirds of Thais recently spoke out against a continuation of the Prayut government.
Business representatives see turbulent times ahead: The Thai industry association FTI warned that the constitutional court decision could exacerbate the economic problems, no matter what it turns out.
Should Prayut be finally dismissed, there would be negative consequences for the state economic stimulus programs, it said. Should he be able to remain in office, new mass protests would be expected, which could disrupt the business climate.
Analysts expect that the situation will also unsettle foreign companies. The new political risks could delay investment decisions by companies planning to move manufacturing facilities to Thailand, commented Amonthep Chawla, chief economist at Bank CIMB Thai.
But he believes the direct economic impact of the government crisis will be limited: there will be no significant impact on consumer confidence or tourism until anti-government protests escalate into violence. “We hope this will not happen as tourism is the main hope for economic recovery.”
More: How Thailand wants to attract rich foreigners