Is 'teflon Thailand' Finally Losing Its Sheen?

[Coss]

My comments, inline in green

 

 

Is 'Teflon Thailand' finally losing its sheen?

by Apilaporn VECHAKIJ

 

BANGKOK, May 16, 2014 (AFP) - Thailand's once-vibrant economy is buckling under the strain of months of political turmoil that has paralysed government policy, scared off tourists and spooked foreign investors, analysts warn.

 

Long hailed as "Teflon Thailand" for its enviable record of economic resilience in the face of political upheaval, the fallout from a six-month crisis that has left 28 people dead and hundreds wounded is mounting.

 

Official statistics due for release on Monday are expected to show that the economy contracted in the first quarter of 2014 from the previous quarter, and experts fear the poor performance will drag on until the deadlock is resolved.

 

"When there is no government, people lack confidence to spend and invest because they fear constant political chaos," said Thanavath Phonvichai, director of the Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce.

 

"Also foreigners will not dare to travel to Thailand." TAT will as usual report projected massive increases in Tourism

 

Thanavath said there was a high risk that the economy would shrink in the second, third and fourth quarters of 2014.

"It is possible that we will have neither a government nor prime minister throughout this year," he warned.

 

- Rudderless ship -

 

Southeast Asia's second-biggest economy has not had a fully functioning parliament or government since December, bringing major infrastructure projects to a halt and disrupting wider state spending.

 

Consumer confidence is at the lowest level in 12 years while foreign tourist arrivals have slumped and foreign investors are watching the saga unfold nervously.

 

International tourist arrivals were down by roughly eight and nine percent in February and March respectively from a year earlier, according to government figures, but have since shown signs of stabilising.

 

A grenade and gun attack on anti-government protesters in Bangkok on Thursday that left three people dead has added to fears that the unrest could spiral, with the coup-prone army warning that it might have to intervene to quell the violence.

 

Grenade and gun attacks are seemingly tolerated in Thailand, little if any effective action seems to be taken subsequent to any attack.

 

Government supporters have warned of possible civil war if demonstrators achieve their goal of appointing an unelected premier following the recent removal of prime minister Yingluck Shinawatra from office in a controversial court ruling.

 

A clear indication that there are significant numbers of people who, on both sides of the argument, are prepared to ignore the rule of law.

 

Poll officials say a planned July 20 general election is now in jeopardy because of the risk of a repeat of the chaos seen in February when opposition demonstrators blocked voting.

 

Thailand's economic growth already slowed sharply in the fourth quarter of 2013, to just 0.6 percent year-on-year, from 2.7 percent in the previous quarter, according to official figures.

 

In March the Thai central bank reduced its official interest rate to the lowest level in three years to boost the stumbling economy.

 

The same month the Bank of Thailand cut its growth forecast for 2014 to 2.7 percent, after a 2.9 percent expansion in 2013.

 

- Stuck in the middle -

 

Fitch Ratings has warned that Thailand's "'BBB+" sovereign credit rating could be under threat if the deadlock continues through the second half of this year.

 

"Failure to establish a functioning government by mid-year would have a major impact on medium-term capital investment, consumer confidence and fiscal planning," it warned in a statement.

 

The crisis is delaying Thailand's escape from the low-investment "middle income trap" in which it has languished since the Asian financial crisis in 1997, Fitch said.

 

Eight years of political turmoil, along with the destruction wrought by devastating 2011 floods, have raised fears that long-term investors such as Japanese carmakers could stop new investment, or even move production to other, more stable countries.

 

Apocryphal information indicates that this process is well underway, understandably the Thai press has ignored these stories.

 

That would be a heavy setback for a country that has earned the nickname of the "Detroit of Southeast Asia" thanks to its status as a thriving regional auto manufacturing hub.

 

Thai car sales plunged nearly 46 percent in the first quarter of 2014 from a year earlier because of the weaker economy and the end of government subsidies for first-time buyers, according to an industry-wide survey by Toyota.

 

Experts say it appears unlikely there will be a functioning government in place in time to pass a 2015 budget within the next few months, delaying all non-essential state spending.

 

This could, also delay the syphoning of money from the trough. Resulting in lack of funding for the patronage networks, possible on both sides of the argument. Without this funding, these networks may prove fragile.

 

"It will take several months before we have a new government so by the time we have the new budget, it will be next year," said Somjai Phagaphasvivat, a political science professor at Bangkok's Thammasat University.

 

"Political calm will not come easily. The country will be polarised for quite a while," he said.

 

A very mild and understated comment.

 

 

http://www.afp.com/en

[Flashermac]

The big concern is once the free trade agreement kicks in, meaning no tariffs and a free flow of labour. Qualified people can work in their profession anywhere in Asean. Unfortunately, the Thais are screwed when it comes to speaking English, with Malaysia, Singapore and the Philippines way ahead of them. The government talks about starting special schools to teach Thais conversational English, but I doubt it would change things very much. As my wife said to me, "Anyone who is serious about learning English is already doing so." The same with the idea to introduce Mandarin into the public schools. Where do they think they will find enough people qualified to teach it? Thai students suffer because most of their primary and secondary school English teachers cannot speak English themselves.

[Mekong]

Frash,

 

Free Trade already exists it kicked in January 2014 freedom to travel between ASEAN nations is December 2015.

 

As I have mentioned previously the western English Teacher in Thailand will be a thing of the past, Pinoy 's speak decent English come cheaper and won't need a work permit, the Tie stall at Pratanum will go out of business.

[Flashermac]

I don't know about that, since Thais don't really regard Pinoys as native speakers of English. A Filipino (or more often Filipina) gets paid just 2/3rds of a native speaker's salary. Also, no university is going to touch them, except maybe some of the smaller private unis. I once met a Thai-American who was a native English speaker, but said he had a very hard time finding work. The schools would always say, "But you're not a Farang. You're a Thai." (The guy could barely even speak Thai.) The few times he was offered a job, he was told he would be paid at the Thai salary, not the native speaker salary.

 

Thais are big on image. They would rather hire a poorly qualified Farang than a better qualified Filipino or other Asian. Teachers are expected to look the part. (That is one reason African Americans and black Brits have difficulty getting hire here. Thais don't want someone who might be mistaken for a Nigerian. )

[BelgianBoy]

Thais are big on image.

Thais are big on face.....