Political red tape puts stoppers on Thai recovery

Thailand's Recovery

Thailand's recovery from the global financial crisis, and its economic performance in general, is likely to be put in danger thanks to political instability and an ongoing dispute over one of the country's most important industrial sites, Map Ta Phut (pictured).

Recent figures on GDP and exports have been encouraging for the Thai government, but analysts and investors have issued a stark warning that this nascent recovery could be swiftly derailed by the two looming crises.

Thailand's private sector have finally voiced concerns they have harboured for some time, warning that outbreaks of political violence will harm the economy, which has only just started to recover from recession. Thailand's economy will be "forced onto the back foot" if this month's planned protest by supporters of former prime minister Thaksin Shinawatra turns violent, said Wilaiporn Liwgasemsan, director of the Tourism Council of Thailand (TCT).

"Tourism will be the industry hit first and hardest by any violence," she told an economic seminar held yesterday by the Senate Standing Committee on Economy, Commerce and Industry.

"Sentiment only returned to normal last December [after political upheavals over the previous 12 months]."

Environmental dispute

Tourism is a huge source of revenue for Thailand and further social unrest could be seriously damaging to the economy, in 2008 it took the government and private sector about eight months to rebuild tourist confidence after protests forced the closure of Bangkok's two international airports in late 2008 and riots erupted on the capital's streets last April.

A survey of TCT members showed this year's foreign tourist arrivals are expected to reach 15.6 million, generating income of 600 billion baht, therefore ensuring further outbreaks are avoided is vital.

Meanwhile at Map Ta Phut, one of the biggest petrochemical hubs in the world and the driving force behind Thailand's industrial growth for many years, projects have been put on hold due to an environmental dispute.

Last September the Constitutional Court put the brakes on after local environmentalists successfully argued that several new projects were in breach of pollution laws. Again politics had its part to play, because with so many changes in government in recent years pollution regulations have never been properly established meaning no one really knew where they stood.

The court ruled that more than 70 projects at Map Ta Phut should be suspended.

Things have changed

The level of bureaucracy has made investors, domestic and foreign, increasingly nervous. Thus lenders and contractors are seeking reassurance that contracts will be honoured. Nonetheless, the environmental problems must be addressed.

As the plant has increased in size so too has its environmental impact and air quality has become progressively worse, affecting local crop production as well as the health of local people.

But the government says it is listening, providing peripatetic clinics providing free health checks for local people.

Thailand's economic future lies with the government being able to untanlge the legal limbo surrounding Map Ta Phut and resolving outstanding differences with the local people. With global attention shifting to making sure big firm's have greater environmental responsibility, the private sector can no longer take things for granted. Things have changed, and Thailand's economy depends on this happening peacefully.

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Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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