Thailand

Politics:

• Analysis

  Thailand politics: Quick View - Opposition boycotts amnesty talks

  Event

  Opponents of Thailand's former prime minister, Thaksin Shinawatra, have boycotted government-sponsored talks to explore an amnesty for those caught up in political protests after the 2006 coup. This suggests that the country's rival red- and yellow-shirted political factions are still some way from any agreement.

  Analysis

  In early February a meeting between Korkaew Pikulthong of the pro-Thaksin, red-shirted United Front for Democracy Against Dictatorship and Parnthep Pourpongpan of the royalist, yellow-wearing People's Alliance for Democracy (PAD) had raised hopes that some sort of compromise was possible. The two men had agreed, in principle, to exonerate all protesters convicted of violating emergency decrees prohibiting street protests before moving on to assess the cases of political leaders accused of criminal acts, such as lese-majesty. However, only pro-Thaksin groups attended a follow-up meeting that was held in parliament on March 11th. The main opposition Democrat Party joined the PAD and others in refusing to attend the meeting, claiming that it represented a move by the Puea Thai-led government to expedite the return of Thaksin from self-exile in Dubai without having to serve time in prison for a 2008 corruption conviction.

  Although Thaksin's sister, Yingluck Shinawatra, has achieved an impressive degree of political stability since she became prime minister in 2011, the future of her elder brother could yet plunge the country back into crisis. After her Puea Thai party failed in its attempt to defeat the incumbent, Democrat governor in Bangkok on March 3rd, anti-Thaksin groups are becoming more assertive. So, too, are some pro-Thaksin groups. Around 40 Puea Thai members of the House of Representatives (the lower house of parliament) recently tried to schedule discussion of an amnesty bill in the legislature. The government blocked the move, but it is evidence of growing impatience among some members of the ruling party.

  March 12, 2013

• Background

  Thailand: Key figures

  Thaksin Shinawatra

  Having been ousted in a military coup in September 2006 and found guilty of corruption and abuse of power in October 2008, Thaksin is likely to remain a fugitive in self-imposed exile abroad for the foreseeable future. However, he remains a conspicuous and wealthy figure (despite the fact that around one-half of his US$2bn in frozen assets has been confiscated), and he will continue to have a strong influence on Thailand's political scene. Thaksin, who has rejected the guilty verdict against him as politically motivated, has succeeded in rallying his red-shirted supporters via telephone and video addresses. He continues to claim that he stands ready to "work for the people" and is willing to return home to help his country. Much unconfirmed, behind-the-scenes work has been done by the Puea Thai government, led by Thaksin's youngest sister, Yingluck, to engineer the former prime minister's return to Thailand as a free man. Such a development would end the current period of calm in Thailand, as Thaksin remains a deeply divisive figure, idolised by the rural masses but loathed by the urban elite.

  Yingluck Shinawatra

  Yingluck had been a politician for only around two months before leading Puea Thai to victory at the July 2011 general election and becoming Thailand's first female prime minister. Her political inexperience has been more conspicuous in her policymaking than in her negotiating: she has managed to bring a degree of calm to Thailand's explosive political environment, but some of her economic policies have flirted with fiscal recklessness. Yingluck had earlier worked at Advanced Info Systems, a company founded by Thaksin that is now Thailand's dominant mobile telecommunications operator. Although a newcomer to politics, Yingluck fought a successful campaign, striking up a rapport with voters with her traditional greetings and smiling demeanour. However, her critics claim that she is simply a puppet of her elder brother.

  King Bhumibol Adulyadej

  Now in his 80s, the world's longest-reigning monarch is increasingly frail and may not survive the next five years; he has already withdrawn from most public functions. During King Bhumibol's 60-plus years on the throne Thailand has evolved into a modern state, but one that suffers from chronic inequality between those living in the capital, Bangkok, and those inhabiting the countryside. The king is widely regarded as being a unique stabilising and unifying force for the Thai people in times of crisis, but the September 2006 coup appeared to bear out claims by critics of the crown that King Bhumibol has kept himself politically paramount at the expense of Thailand's development as a democracy. If the king does not indicate plans for a smooth and effective succession, the resulting royal transition will convulse Thailand's political landscape.

  August 17, 2012

• Structure

  Thailand: Political structure

  Official name

  Kingdom of Thailand

  Form of state

  Constitutional monarchy

  The executive

  Under the 2007 constitution, the prime minister must be an elected member of parliament and may not hold office for more than eight years consecutively

  Head of state

  King Bhumibol Adulyadej

  National legislature

  Under the constitution, the National Assembly consists of the House of Representatives (the lower house) and the Senate (the upper house). At the time of the July 2011 general election the membership of the lower house was increased from 480 to 500, with 125 members elected by proportional representation under a party-list system (up from 80 previously) and 375 elected by geographical constituencies on a first-past-the-post basis. The 150-member upper house is only partly elected: 74 of its members are appointed by a selection committee

  National elections

  An election for 76 members of the upper house took place in March 2008; the next upper house election is due in 2014. A lower house election took place in July 2011; the opposition Puea Thai party defeated the ruling Democrat Party (DP) and holds a majority in the chamber. The next lower house election must be held by July 2015

  National government and opposition

  Puea Thai won a majority of seats in the lower house at the July 2011 general election, but rules in coalition with five smaller parties, namely Chart Thai Pattana, Chart Pattana Puea Pandin, Palung Chon, Mahachon and the New Democrat Party. The DP is the main opposition party. Three other parties-Bhum Jai Thai, Rak Prathet Thai and Rak Santi-are also in opposition

  Main political organisations

  The main political parties are Puea Thai, the DP, Bhum Jai Thai, Chart Thai Pattana, Chart Pattana Puea Pandin and Palung Chon

  Prime minister: Yingluck Shinawatra

  Deputy prime ministers: Yongyuth Wichaidit

  Chalerm Ubumrung

  Kittirat Na-Ranong

  Chumpol Silpa-archa

  Plodprasop Suraswadi

  Surapong Towikajchikul

  Phongthep Thepkanjana

  Key ministers

  Agriculture & co-operatives: Yukol Lim-laemthong

  Commerce: Boonsong Teriyapirom

  Defence: Sukampol Suwannathat

  Energy: Pongsak Ruktapongpisal

  Finance: Kittirat Na-Ranong

  Foreign affairs: Surapong Towijakchaikul

  Health: Pradit Sintavanarong

  Industry: Prasert Boonchaisuk

  Interior: Charupong Ruangsuwan

  Justice: Pracha Promnok

  Labour: Padermchai Sasomsap

  Transport: Chadchart Sittipunt

  Central bank governor

  Prasarn Trairatvorakul

  March 07, 2013

• Outlook

  Thailand: Key developments

  Outlook for 2013-17

  • The eventual passing of King Bhumibol Adulyadej, who is now in his eighties, will be highly destabilising. Thaksin Shinawatra, who was deposed as prime minister in a 2006 coup, will remain a divisive influence.
  • Any attempt to pardon Thaksin for corruption would threaten the fragile truce between the government, led by Thaksin's youngest sister, Yingluck Shinawatra, and the military-backed royalist establishment.
  • The Bank of Thailand (BOT, the central bank) will begin to raise interest rates in the second half of 2013, but it will not tighten monetary policy aggressively until economic growth begins to accelerate in 2014.
  • Real GDP growth will slow to 4.4% in 2013, from 6.4% in 2012, when the economy rebounded from devastating floods in 2011. Growth will average 5.1% a year in 2014-17.
  • The rate of inflation will edge upwards to 3.1% on average in 2013, reflecting price pressures arising from the introduction of a Bt300 (US$10) daily minimum wage. Inflation will then average 4.1% a year in 2014-17.
  • In 2013 the current account will record a surplus equivalent to 1.6% of GDP, supported by a recovery in the surplus on merchandise trade. In 2014-17 the current-account surplus will average 2.8% of GDP.

  Review

  • The Thai armed forces repelled a strong attack by around 50 rebels in the southern province of Narathiwat on February 13th. Despite the military's victory, the scale of the attack underscores the rebels' growing ambitions.
  • Thailand's rival colour-coded protest movements, the red-shirted United Front for Democracy against Dictatorship and the yellow-wearing People's Alliance for Democracy, are moving closer to an agreement on a political amnesty.
  • Thai real GDP bounced back from floods to expand by 18.9% year on year in the fourth quarter of 2012, and by 6.4% for the whole year, the fastest rate of annual growth since 2003.
  • Yingluck's cabinet has approved a Bt2.53trn (around US$85bn) budget for fiscal year 2013/14 (October-September). The government expects the deficit to narrow to 1.9% of GDP from an estimated 2.5% in 2012/13.
  • The BOT left its main interest rate, the one-day repurchase rate, on hold, at 2.75%, at its regular meeting on February 20th. Exporters had been calling for a rate cut to halt the ascent of the local currency.

  March 07, 2013

Economy:

• Background

  Thailand: Country fact sheet

  Fact sheet

  Annual data	2012a	Historical averages (%)	2008-12
  Population (m)	68.8	Population growth	0.7
  GDP (US$ bn; market exchange rate)	365.6b	Real GDP growth	2.3
  GDP (US$ bn; purchasing power parity)	653.0b	Real domestic demand growth	2.6
  GDP per head (US$; market exchange rate)	5,313	Inflation	1.8
  GDP per head (US$; purchasing power parity)	9,491	Current-account balance (% of GDP)	2.7
  Exchange rate (av) Bt:US$	31.1b	FDI inflows (% of GDP)	2.5
  a Economist Intelligence Unit estimates. b Actual.

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  Background: Thailand's constitutional monarchy has provided political continuity, but the military has staged frequent coups. The most recent, in 2006, removed the Thai Rak Thai administration led by Thaksin Shinawatra. A general election held in 2007 after more than a year of army rule was won by the pro-Thaksin People's Power Party (PPP). A year later, the PPP was controversially dissolved by the courts, and the Democrat Party (DP) took office at the head of a six-party coalition. The DP was defeated in the July 2011 election by the latest pro-Thaksin party, Puea Thai, led by the former prime minister's youngest sister, Yingluck Shinawatra. Following the 1997-98 Asian financial crisis, the rate of GDP growth recovered, but the 2008-09 global financial crisis and severe flooding in the country have restricted expansion in recent years.

  Political structure: Under the 2007 constitution, the lower house serves a four-year term. The new charter ushered in major changes to the Senate (the upper house), which is no longer a fully elected body of 200 members, as under the 1997 constitution, but instead has 150 members, of whom 76 are elected and 74 are appointed. In May 2011 the Constitution Court approved an increase in the number of seats in the lower house from 480 to 500, with 125 of the chamber's members now elected by proportional representation under a party-list system, compared with 80 previously.

  Policy issues: Yingluck's administration will pursue populist economic policies modelled on those implemented by Thaksin during his time as prime minister from 2001 to 2006, nicknamed Thaksinomics. The introduction of a nationwide daily minimum wage of Bt300 (US$10) was completed in January 2013. In an attempt to appease businesses, the Puea Thai administration has lowered the rate of corporate income tax.

  Taxation: The government cut the rate of corporate income tax from 30% to 23% at the start of 2012 and to 20% in 2013. Tax concessions are available for companies that list on the stockmarket. Value-added tax (VAT) stands at 7%. Personal income tax rates rise to 37% on annual taxable earnings exceeding Bt4m (around US$130,000).

  Foreign trade: According to the latest IMF data, which use a different methodology to that used for the Economist Intelligence Unit's estimates, Thailand recorded a merchandise trade surplus (fob-fob) of US$8.3bn in 2012, down from US$17bn in 2011. The current-account surplus fell to US$4.3bn (equivalent to 1.3% of GDP) in 2011, from US$13.1bn (4.1% of GDP) in 2010. Machinery and manufactured goods account for around 50% of Thailand's exports. The country relies heavily on oil imports.

  Major exports 2012	% of total	Major imports 2012	% of total
  Machinery	40.6	Machinery	36.9
  Food	12.7	Minerals, fuels & lubricants	19.5
  Manufactured goods	12.6	Manufactured goods	16.5
  Chemicals	10.2	Chemicals	9.8
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  China	12.3	Japan	18.4
  Japan	10.8	China	13.4
  US	9.8	US	6.3
  Hong Kong	7.4	UAE	5.9

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  March 07, 2013

• Structure

  Thailand: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 07, 2013

• Outlook

  Thailand: Country outlook

  Thailand: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Thailand's prime minister, Yingluck Shinawatra, has achieved an impressive degree of stability since she led Puea Thai to a decisive victory at the July 2011 general election. Most striking about the 18 months or so since Yingluck became the country's first-ever female prime minister has been the absence of large-scale protest. A fragile truce has been established between the Puea Thai-led government and the country's conservative establishment, comprising the palace, the military and senior bureaucrats, which was ultimately responsible for ousting Yingluck's elder brother, Thaksin Shinawatra, as prime minister in a September 2006 coup d'état.

  ELECTION WATCH: The four-year term of the lower house will end in July 2015. An election for 76 of the 150 members of the Senate (the upper house) will take place in March 2014. A number of pro-Thaksin governments have been dissolved by the courts in recent years. At present, there is no sign of any legal challenges to the legitimacy of the Puea Thai-led government, but it is possible that opposition parties will seek to persuade the Constitution Court to dissolve the administration. Such a move would trigger renewed instability.

  INTERNATIONAL RELATIONS: Thailand faced some criticism from Western governments following the 2006 coup, but relations have improved since the return to civilian rule. Foreign policy will continue to be influenced by the country's polarised political scene, as was evident in June 2012, when the Puea Thai-led government was forced to break off co-operation with NASA, the US space agency, after the opposition alleged that plans to use Thailand's U-Tapao airbase as a centre for climate-change research were part of a conspiracy to grant Thaksin a visa to visit the US. The lese-majesty law will also attract Western criticism.

  POLICY TRENDS: Yingluck's administration is pursuing populist economic policies modelled on those implemented by Thaksin during his time as prime minister in 2001-06, nicknamed Thaksinomics. In line with Puea Thai's pre-election pledge to introduce a daily minimum wage of Bt300 (around US$10), wages were raised by around 40% in April 2012, with further increases in wages averaging around 26% on January 1st 2013 (except in Bangkok and six other provinces, where minimum wages are already relatively high). All Thai workers are now entitled to the Bt300 wage. In an attempt to appease businesses, Puea Thai reduced the rate of corporate income tax from 30% to 23% at the start of 2012, and again, to 20%, at the start of 2013. The government is also considering raising income-tax exemptions for small and medium-sized firms (SMEs), which have been hardest hit by the higher minimum wage. In another initiative, Puea Thai has revived a scheme whereby the state pays farmers a guaranteed price for unmilled rice of Bt15,000/tonne (US$500/tonne--a price far above the level in the international market). The populist tone of the government's policies continues to give rise to concern that decisions are being taken on the basis of political considerations.

  ECONOMIC GROWTH: Thailand's rate of economic expansion accelerated in 2012 following severe floods in 2011. In January-March real GDP grew by only 0.4% year on year, but it was up by 10.8% in quarter-on-quarter, seasonally adjusted terms--the fastest pace of expansion on this basis since records began in the early 1990s. In October-December real GDP surged by a record 18.9% year on year, taking growth for the whole year to 6.4%. This rapid pace of expansion owed much to the low base of comparison in the flood-hit, year-earlier period and will not be sustained in 2013. However, the government's populist-inspired policies are supporting domestic demand, and growth in some of Thailand's main trading partners, notably China and Japan, is accelerating. The Economist Intelligence Unit expects Thai real GDP to grow by 4.4% this year.

  INFLATION: Consumer price inflation slowed to 3% on an annual average basis in 2012, from 3.8% in 2011. In 2013 wage pressures are likely to rise, at least in the formal sector, owing to the introduction of a national minimum daily wage of Bt300. For Thailand's lowest-earning workers, this represents a wage increase of almost 90% since April 2012. The impact of the government's decision to raise minimum pay rates will be cushioned by the relatively large size of Thailand's informal sector and by the supply of cheap migrant labour from Myanmar, Laos and Cambodia. Nevertheless, we expect the rate of inflation to edge upwards, to 3.1% on average this year, notwithstanding a fall in global oil prices (dated Brent Blend) to an average of US$104.5/barrel in 2013, from an estimated US$112/b in 2012. In 2014-17 inflation will average 4.1% a year, in line with faster economic growth and higher oil and non-oil commodity prices.

  EXCHANGE RATES: Following rises in the value of the baht against the US dollar of 8.2% in 2010 and 3.9% in 2011, the currency depreciated by 1.9% on average in 2012. In 2013 the baht will appreciate by 2.3% on average, reflecting Thailand's relatively rapid pace of economic growth and a larger current-account surplus. In 2014-17 the currency will strengthen by 0.6% a year on average against the US dollar. The Bank of Thailand (BOT, the central bank) will intervene in the currency markets to prevent exchange-rate volatility and may introduce further measures to deter currency speculation, but it is not expected to attempt to reverse market-driven trends in the baht's value. The currency will remain vulnerable to sudden swings in investor sentiment towards emerging markets, as occurred in September 2011, when the baht weakened by 3.7% against the US dollar in a single month, owing to concerns triggered by the sovereign debt crisis in the Euro zone.

  EXTERNAL SECTOR: Owing to a large fall in the merchandise trade surplus, we estimate that the country's current account (measured according to the IMF's older, BPM5 presentation of the external accounts) moved into deficit in 2012 for the first time since 2005. Thailand's main export markets grew weakly, while imports expanded strongly as manufacturing firms shipped in replacements for equipment destroyed in the floods of 2011. In 2013 the current account will record a surplus equivalent to 1.6% of GDP, supported by a recovery in the surplus on merchandise trade. In 2014-17 the current-account surplus will average 2.8% of GDP. The services account will remain in deficit in 2013-17, but the shortfall will narrow, owing partly to rising tourism earnings. Tourism inflows will be vulnerable to any renewed deterioration in Thailand's security environment. The income account will continue to post a large deficit, reflecting the repatriation of profits and dividends by foreign-owned firms in Thailand.

  March 11, 2013

• Forecast

  Thailand: Country forecast summary

  Country forecast overview: Highlights

  • The political scene will remain turbulent in 2013-17, as competing forces vie for power and influence ahead of the inevitable royal succession. The eventual death of Thailand's revered monarch, Bhumibol Adulyadej, who is 85 years old and has been in and out of hospital since late 2009, will be deeply destabilising.
  • The Puea Thai party, led by Yingluck Shinawatra, won a decisive victory in the general election in July 2011. Attempts by the government to revise the 2007 constitution will remain divisive. The opposition claims that constitutional reform is a thinly disguised attempt to bring back Yingluck's older brother, Thaksin Shinawatra, who was deposed as prime minister by the army in 2006.
  • Thailand's relations with Cambodia have improved as a result of Puea Thai's election victory, but Yingluck's government has yet to resolve a dispute with Cambodia about sovereignty over the territory surrounding the Preah Vihear temple.
  • After keeping monetary policy loose to support the economy, the Bank of Thailand (BOT, the central bank) will begin raising interest rates in the second half of 2013. Interest rates will rise more sharply in 2014 as the pace of economic expansion accelerates.
  • After expanding by 6.4% in 2012, as the economy recovered rapidly from the previous year's floods, real GDP will grow by 4.4% in 2013. Economic expansion will then average 5.1% a year in the remainder of the forecast period as global trading conditions improve.
  • The rate of consumer price inflation will edge upwards to 3.1% on average in 2013. Global commodity prices will rise only slowly, but wage pressures will grow rapidly, owing to the government's decision to increase minimum wages. In 2014-17 inflation will average 4.1% a year.
  • The Thai baht will appreciate by 2.3% against the US dollar on an annual average basis in 2013, supported by the country's relatively rapid pace of economic growth and an improvement in the current-account balance. The local currency will remain vulnerable to sudden swings in investor sentiment.
  • In 2013 the current account will record a surplus equivalent to 1.6% of GDP, supported by a recovery in the surplus on merchandise trade. In 2014-17 the current-account surplus will average 2.8% of GDP.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%)	6.4	4.4	4.6	4.9	5.2	5.6
  Consumer price inflation (av; %)	3.0	3.1	3.4	4.3	4.2	4.3
  Budget balance (% of GDP)	-4.4	-2.9	-2.2	-1.5	-2.1	-2.4
  Current-account balance (% of GDP)	-0.5	1.6	1.9	2.4	3.2	3.7
  Commercial banks' prime rate (av; %)	7.1	7.1	7.4	7.7	7.7	7.8
  Exchange rate Bt:US$ (av)	31.1	30.4	30.0	30.0	29.8	29.7
  Exchange rate Bt:¥100 (av)	39.0	32.8	31.8	31.1	30.5	30.7

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  March 07, 2013

View detailed map

Country Briefing

Total area

514,000 sq km

Population

69.5m (mid-2011; IMF estimate)

Main provinces

Population in millions (local administration departments, December 2005):

 Bangkok (Metropolitan; capital): 5.66

 Nakhon Ratchasima: 2.55

 Ubon Ratchathani: 1.77

 Chiang Mai: 1.65

 Udon Thani: 1.52

 Nakorn Srithammarat: 1.50

A total of 12 other provinces have populations above 1m

Climate

Subtropical

Weather in Bangkok (altitude 2 metres)

Hottest month, April, 35-40°C; coldest month, December, 20-31°C; driest months, January-March, no rain; wettest month in central and northern regions is September, with 305 mm average rainfall, and in the south it is December, with 400 mm average rainfall

Language

Thai

Weights and measures

The metric system is officially used. For local dealings, traditional units are used:

1 pikul = 60 kg

1 wah = 2 metres

1 rai = 1,600 sq metres

1 tang = 20 litres

1 tical or baht (jeweller's measure) = 15.24 grams

Currency

Baht (Bt); Bt1 = 100 satang. Average exchange rates in 2011: Bt30.5:US$1; Bt38.2:¥100

Time

7 hours ahead of GMT

Fiscal year

October 1st-September 30th

Public holidays

January 1st (New Year's Day); February 25th (Makhabuja—regulated by Buddhist calendar); April 8th (Chakri Day); April 15th-16th (Songkran Festival); May 1st (Labour Day); May 6th (Coronation Day); May 24th (Visakhabuja—regulated by Buddhist calendar); July 1st (Mid-Year Closing Day); July 22nd (Asarnha Bucha Day); August 12th (Mother's Day—the queen's birthday); October 23rd (Chulalongkorn Day); December 5th (Father's Day—the king's birthday); December 10th (Constitution Day); December 31st (New Year's Eve)

January 08, 2013