Thai protests shake fragile investor confidence | The Daily Star
12:00 AM, August 29, 2008 / LAST MODIFIED: 12:00 AM, August 29, 2008

Analysis

Thai protests shake fragile investor confidence


Buddhist monks sit with anti-government protesters during a demonstration inside Government House in Bangkok yesterday. Analysts say the protests will shake investors in Thailand, already wary of a global slowdown.Photo: AFP

Protests that have brought chaos to Bangkok's government district will shake investors already wary of a global slowdown and prolonged political uncertainty in Thailand, industry experts say.
Many of the 35,000 protesters who stormed through the Thai capital earlier this week are now camped out in the main government compound -- a sight unlikely to reassure investors considering pumping money into Thailand.
The Stock Exchange of Thailand has lost nearly 18 percent since the People's Alliance for Democracy (PAD) began protesting at the end of May demanding that Prime Minister Samak Sundaravej step down.
"The political situation in Thailand now is not good at all. It is not good for investment or tourism," said Chen Namchaisiri, chairman of the Garments Industry Club, a member of the Federation of Thai Industries.
"It is not going to be good for Thailand's development in the long term."
The upheaval is the latest chapter in years of turbulent politics, which peaked with the 2006 coup that removed business-friendly prime minister Thaksin Shinawatra.
Global factors including the slowdown of the US economy and soaring fuel prices have also taken their toll, and the central bank has revised down its economic growth forecast for this year from 5.8 percent to 4.3 percent.
"This come at a time when investors already had their energy sapped by global economic uncertainty," said Song Seng Wun, a regional economist at CIMB-GK investment bank in Singapore.
"So the political goings-on in Thailand is just going to be another excuse for them to say well, this is a reason for us to sit this out."
Samak's election in December and the unveiling to his coalition government in February boosted investor confidence, he said, especially after a series of missteps by the military-installed government.
But recent signs have been more sobering.
Inflation in July hit a fresh 10-year high of 9.2 percent, while gross domestic product growth dipped to 5.3 percent in the second quarter of 2008, down from 6.1 percent in the first quarter.
Tourism too could suffer from this week's crisis, analysts say, although it has only slowed slightly despite the 2006 coup, a string of bombings later that year, and more than a year-and-a-half of military rule.
Foreign Minister Tej Bunnag has attempted to play down the economic threat posed by the rallies by the PAD movement, which despite its name is trying to bring down the elected government.
"While the demonstrations may have some effect on Thailand's tourism industry and economy, the foreign minister hoped that the situation will not escalate and turn violent as this would not benefit the kingdom," his ministry said.
"The Thai economy is currently doing well, with the government trying to introduce further stimulus measures to ensure that the economy continues to expand during the second half of this year."
Some industry experts say that Thailand -- with its 18 coups since end of absolute monarchy in 1932 -- knows how to weather a bit of turbulence.
"The current protest led by People's Alliance for Democracy causes little concern among automotive industry members," said Surapong Paisitpatanapong, spokesman at the Automotive Industry Club.
"We worry more about the government's policy and the current economy. We have seen several protests, military coups and other political activities in Thailand. Eventually, all ended with another election."
On Thursday, Samak vowed to end the siege of Government House by peaceful means, and as long there is no bloodshed in the streets, Song Seng Wun said, investors will not abandon Thailand entirely.
Stocks dipped 1.37 percent Tuesday after the recent protests erupted, but were up again Wednesday and at midday Thursday, albeit on light trading.

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