Will fixing Thailand's economy help salvage Pheu Thai's image? Possible, say analysts, but it won't be easy
26 August, 2023
Various economic stimulus efforts could be on the cards, say observers, as the Thaksin-backed party continues on the track of populist policies that have long defined its political brand.
Property mogul-turned-prime minister Srettha Thavisin is facing a monumental task of reviving Thailand’s sluggish economy – a binding campaign promise he has to keep in order to salvage the image of his party Pheu Thai.
Observers expect to see various economic stimulus efforts as the party continues on the track of populist policies, which have long defined its political brand and achievements.
However, with 11 parties in the coalition government, doubts have been raised over Mr Srettha’s ability in commanding and keeping the coalition together – especially when it is dominated by factions from the old ruling camp closely allied with the military. Also, there are questions over how much improvement on the economic front can trickle down to the political realm for Pheu Thai, said Mr Yuthaporn Issarachai, a political scientist from Sukhothai Thammathirat Open University.
“Solving economic problems belongs in the old world. Today, politics of the new world is no longer about that. It’s about political divisions,” he added.
ECONOMIC STIMULUS TO THE RESCUE
Analysts believe the new administration led by Pheu Thai will prioritise economic revival in order to regain confidence and quell criticisms of its path to power, once the cabinet seats are divided up and the government is installed.
“We do think that Pheu Thai will be able to deliver on its promises as early as the first half of 2024,” HSBC’s ASEAN economist Aris Dacanay told CNA’s Asia Now on Wednesday (Aug 23).
Their promises include boosting consumption through stimulus measures such as the THB10,000 (US$285) digital cash handout, increased daily minimum wage from about THB350 to THB600, and ensuring every household’s income is no less than THB20,000 per month.
“We also expect trade to drive the economy as Pheu Thai plans to lower tariff and non-tariff barriers,” Mr Dacanay added.
The Thai economy decelerated in the second quarter of 2023. Gross domestic product (GDP) only went up by 1.8 per cent, marking a downward trend from 2.6 per cent in the first quarter.
Due to an expected decrease in export volume, the government has lowered this year’s GDP forecast from the 2.7-3.7 per cent range to 2.5-3.0 per cent.
Still, after months of political stalemate, analysts expect a certain level of economic improvement now that Thailand has a new prime minister in place.
“We can get a sense of at least post-election uncertainty ebbing or fizzling out, and this fizzling out should support stocks, currencies and everything else,” said Mr Dacanay.
BANKRUPTCY OF CREDIBILITY
Pheu Thai has a campaign promise of delivering GDP growth measuring at least 5 per cent a year. Its economic ambition is closely tied to its urgent need to repair the party’s image after its controversial decision to join forces with the old ruling camp.
Coming second for the first time in the recent election, Pheu Thai joined electoral winner Move Forward in forming a so-called pro-democracy coalition with six small parties to support the former’s leader Pita Limjaroenrat as prime minister.
Mr Pita, however, was blocked from the premiership by the military-controlled Senate and later suspended from his duties as a member of parliament (MP) by the Constitutional Court over shares in a defunct media company.
Subsequently, Pheu Thai ditched its former ally to forge a new coalition with military-allied parties from the previous government.
Its political manoeuvre was fiercely condemned as a betrayal of voters’ trust and largely seen as the party’s desperate attempt to win power as well as facilitate a safe return of its de facto leader – former prime minister Thaksin Shinawatra – from exile.
“Pheu Thai has a mission to restore confidence and credibility of the party,” said Mr Yuthaporn of Sukhothai Thammathirat Open University.
He told CNA the party is facing “bankruptcy of credibility” after trading its political capital for power, and believes everything will be alright once its populist policies have improved the economy.
However, Mr Yuthaporn warned Pheu Thai is unlikely to fulfil its objective as Thailand and its people have changed from how they were two decades ago, when populist policies worked in favour of its predecessors – Thai Rak Thai Party and People Power Party.
He explained that the electoral result showed the majority of voters want the end of the system installed by the military junta – the National Council for Peace and Order – and military coups.
“It was not a reflection of the people’s wish for all sides to be united. That’s what politicians want, to merge and join forces with the old junta,” he added.
For Mr Yuthaporn, Pheu Thai’s economic policy is not only unsustainable but also unlikely to bring fundamental change, given that its conservative coalition partners will seek to preserve the status quo.
The structure of the new government, he said, is not so different from the previous one under former coup-maker Gen Prayut Chan-o-cha, except for the fact that it now has Pheu Thai in the picture.
“The old structure remains, as does the role and influence of capitalists and political conditions. It’s not so different from before. I don’t think Pheu Thai will be able to do much, and this will affect the party,” he added.
AN UNSTABLE GOVERNMENT
The Pheu-Thai government comprises 11 parties, which command a total of 314 MPs in the Lower House. However, political observers see Pheu Thai and its 141 MPs as a minority in its own administration.
Its coalition partners mainly consist of military-allied parties. They include Palang Pracharat, United Thai Nation, Bhumjaithai and Chart Thai Pattana, which have 157 MPs altogether.
Moreover, the first two parties are closely tied to Gen Prayut and ex-deputy prime minister Gen Prawit Wongsuwon – whose significant influence over the Upper House comes with great political power.
On Wednesday, Mr Srettha delivered a speech upon being royally endorsed as Thailand’s 30th prime minister.
He pledged to unite all Thais, respect differences of opinion in society, and lead the Pheu Thai-led government to make Thailand “a country of hope for the new generation and a land of happiness for people of all ages”.
Although Mr Srettha is holding the reins of the government, analysts say his party will have to compromise in its governance in order to achieve its political goals, while making sure its coalition government does not fall apart.
Talks over cabinet positions are taking place ahead of an official announcement expected soon.
Local media reported Pheu Thai is likely to claim top portfolios such as finance, transport and health, while having to sacrifice other key ministries to its coalition partners in exchange for their support.
Bhumjaithai is speculated to land the interior and labour ministries, while United Thai Nation is likely to get the energy and industry ministries.
Besides balancing the coalition’s dynamic, analysts say Mr Srettha will also have to act as a nominee of Mr Thaksin and protect the interest of the Shinawatras.
His rise to power has been associated with Mr Thaksin’s return to Thailand on Tuesday after spending more than 15 years in self-imposed exile.
His homecoming took place only a few hours before the prime ministerial selection in parliament, where Mr Srettha won the premiership with overwhelming support from both Houses.
According to Mr Yuthaporn, the Srettha administration has a hidden agenda of granting Mr Thaksin an amnesty as well as enabling a safe return of his sister – exiled former prime minister Yingluck Shinawatra, who was ousted from power in 2014 by Gen Prayut’s coup d’etat.
Following his return, Mr Thaksin was ordered by the Supreme Court to serve eight years in prison.
However, his time in jail lasted less than a day. Citing health conditions, the authorities transferred him in the middle of the night from the medical wing of Bangkok Remand Prison – where he was kept alone – to a hospital in downtown Bangkok.
“The parliament could pass an amnesty for political prisoners more generally, and that would include Thaksin,” James Ockey, an associate professor from the University of Canterbury, told CNA’s Asia First on Wednesday.
With military-linked parties in the coalition, Mr Ockey added, the new government could potentially pass such a pardon.
LONGER-TERM GOAL
Besides fixing its political image in the near term, Pheu Thai’s longer-term goal is to amend the constitution, written by a military-appointed committee following the coup in 2014, to make it “more democratic”.
It was what the party emphasised on Monday when unveiling its coalition aimed at restoring unity among Thais and putting the people’s interest at heart in its governance.
However, political analysts do not expect the Pheu Thai charter would be significantly different from the military-endorsed one as amending the constitution requires the approval of more than half of the national assembly.
The requisite approval must also include at least one-third of the Senate – a great challenge for Pheu Thai’s policy to reform the judicial system and independent governmental agencies such as the Constitutional Court, the Election Commission and the Office of the National Anti-Corruption Commission.
According to Mr Yuthaporn, Pheu Thai wants to amend the constitution to reduce the military’s power in these agencies, as they played a key role in the dissolutions of its predecessors Thai Rak Thai and People Power.
“They can’t amend it because eventually, they’ll be blocked. They can only change it at a superficial level,” he said.
“If they push, their coalition partners will pull out – and that’s it. If they try to amend anything that’s related to the probing mechanism, for instance, senators won’t vote for it.”
Source: www.channelnewsasia.com