Never-Ending_Destruction

5280710 EC 1 Section 8 13 May 2010 Instructor: Mr. Billy Illustration Never-Ending Destruction Thailand’s economy side by side with South Korea, Malaysia, Indonesia and others in Southeast Asia has been recovering and growing dramatically since the Asian economic crisis in the late 90s. All of that has changed when Thailand’s most successful and corrupt prime minister in the Thai history; Thaksin Shinawatra, has torn the country along with its economy apart after he was forced out of power my a military coup. Series of demonstrations against Thaksin and his nominees by groups of people, the largest one being the “Yellow Shirts” which led to problems that results to further destructive reactions that would take years for the country to recover. Right after the Yellow shirts stopped their activity, the opposition demonstrators started their movement and it is still going on today, even getting violent. The “Red Shirts” started their demonstrations and pulled the Land of Smile deeper into chaos, and this decade-long crisis has affected Thailand’s economy in a large perspective with no obvious effective solution in sight. The economy of South East Asia has benefited from a shift in foreign investment from the West to the East. Thailand’s Economy has attracted enormous amount of foreign liquidity inflow on the grounds that the government at the time has set economic regulation, ambition, healthy-looking conditions (Laplamwanit, N.D.), and other external elements, such as the expansion o the Japanese economy and a minor recession in Europe. To illustrate starting with the past, Thailand had a very regulated economy with many public companies ran by the government, however during the reign of General Prem Tilasulanont from 1980 to 1988, General Prem deregulated or in other words, opened up the economy of Thailand. This eventually led to a striking performance of 8.08% to 8.94% in GDP during 1991 to 1995 (Laplamwanit, N.D.). This period of 1985 to 1995 was a time of economic expansion but still very little political stability with many military coups overthrowing governments such as on the 6th October 1976 after a massacre of innocent college student of Thammasart University (Chartthai 2001) and on the 23rd February 1991 where citizens came on the street to demonstrate (Manager 2005). This economic glory has ended when Thailand along with all other Southeast Asian countries has entered a currency crisis in 1996. It was due to the speculations of the Baht that was depreciated after the government drained its foreign reserves trying to hold its currency stable in exchange with the US dollar. The catastrophe has ended and the situation showed signs of recovery. The economy of Thailand, with the help of the recovery from the 1996-97 crisis, was growing at a fast pace. The economy from 2001 to 2004 was enjoying a 5.3, 7.1 and 6.3% growth respectively (APEC, 2008). The demonstrations by the Yellow Shirts that started prior to the coup on the former Prime Minister, Thaksin Shinawatra, and later during the reign Samak Sundaravej, the re-elected prime minister whom was Thaksin’s nominees, started in 2004 have changed these figures. Many negative indicators, such as the increase in oil prices has started the downturn but above all the usual external effects, the demonstration has directly affected the consumer’s as well as the investor’s confidence in Thailand’s economy in the short term. Mr. Korn Chatikavanij, the Finance Minister stated that in his meeting with the British Finance Minister, he received feedbacks from the UK minister that: most foreign investors in UK are concerned about the chaos that is occurring in Thailand, though understand that these fragile issues will take time to resolve and believe that Thailand will recover (Exel 2009). These unsteady political circumstances in Thailand have pulled the country’s GDP down to an average of 4.6% in 2005 (APEC, 2008). The Yellow demonstration didn’t stop and went far enough to the point that two international airports of the most famous tourist attraction in Asia like Thailand has been taken over by demonstrators, costing the country at least 270 billion baht which is roughly 10% of the country’s public dept. Moreover, the reputation and the trust of Thailand from tourists have been diminished by the event, resulting to a slow down in Tourism industry (Tourism Operators, 2008) while Vietnam and Bali is flourishing. The world is in recovery but so is Thailand despite all the political vulnerability. Despite the nearly empty lobbies of five star hotels in Phuket, deserted tourist attractions in Bangkok, and above all the stalled grand shopping malls downtown, the economy is still growing undoubtedly. Negative indicators still exist but because the world’s economy is recovering especially China, one of Thailand’s greatest trading partner, is even growing at an extreme pace of 11.9% with its GDP worth over 6% of the World’s aggregate GDP (Trading Economics 2010)! This positive fact has increased Thailand’s Export to a stunning 43% and expected to grow another 23% by the end of the year (TBN One 2010). Since 2004 when the political crisis strike the country, Thailand has not experience a large growth in GDP, surprisingly this year with the democrats, Abhisit Vejjajiva, as Prime Minister, the forecasts by the Central Bank of Thailand is expecting a 5.8% - 6.2% in GDP (TBN Two 2010). Yes, the economy is affected by the political turmoil, but because the external effects from our partners are so positive, the country is still in a good shape, however if there were no such political unrests, the figures could be a good deal better. In conclusion, since democracy has been Thailand’s governing system in the 1930s, we’ve seen a process of violence, where people are getting closer to what they believe is true democracy. The link between the economics and politics are tighter than many people, especially the uneducated rural people, understand. Instability and violence would not only affect the middle or upper class in the city but in the other hand, would have a chain effects that would, in the end, directly affect them on their fields! This understanding of economics and politics should be taught to the people and therefore if they understand what demonstrations and shutting down public services mean, they would not even consider that option as the fight for democracy. A few questions remain: Will Thailand still attracts companies to invest their production base in Thailand or would these foreign investment shifts to other competitors like Vietnam or Indonesia' Will Thailand still sell enough goods and services to offset the losses from the political protests' Parts of these questions are already answered and the answer won’t be good for the people of Thailand if they are still not united and fight this competitive world trade as a nation. Reference APEC (2008), Asia-Pacific Economic Cooperation Economic indicator 2000-2008, P.1 Table 1 “Real Growth in APEC Member Economies, 2000-2008” www.apec.org Retrieved from: http://www.apec.org/apec/member_economies/key_economic_indicators.MedialibDownload.v1.html'url=/etc/medialib/apec_media_library/downloads/sec/pubs/2009.Par.0014.File.v1.1 Chartthai (2001) คณะปฏิรูปการปกครองแผ่นดิน www.chartthai.or.th Retrieved from: http://www.chartthai.or.th/old/political/pltc11.htm David, M.,(N.D.), Growth and recovery in East Asia. www.nber.org Retrieved from: http://www.nber.org/digest/oct01/w8373.html Exe l (2009) Finance Min: Political Uncertainty Erode Investor Confidence in Thailand. www.lefora.com Retrieved from:http://excelfanclub.lefora.com/2009/09/23/finance-min-political-uncertainty-erode-investor-c/ Laplamwanit, N (N.D.), A good look at the thai financial crisis in 1997-1998. www.columbia.edu Retrieved from: http://www.columbia.edu/cu/thai/html/financial97_98.html Manager (2005) รำลึก13ปี...พฤษภาทมิฬ www.manager.co.th Retrieved from: http://www.manager.co.th/Politics/ViewNews.aspx'NewsID=4790179268716 TBN One (7th May 2010) Can thailand’s economy survive its politics' www.thailand-business-news.com Retrieved from: http://thailand-business-news.com/medias/14913-can-thailands-economy-survive-its-politics/ TBN Two (8th April 2010) World bank forecasts thailand’s GDP growth to 6.2 per cent in 2010. www.thailand-business-news.com Retrieved from: http://thailand-business-news.com/news/top-stories/12830-world-bank-forecasts-thailands-gdp-growth-to-6-2-per-cent-in-2010/ Tourism Operators (2008, March 31) ผู้ประกอบการท่องเที่ยวนัดรวมพลัง-ร้องม็อบเลิกชุมนุม. www.bangkokbiznews.com Retrieved from: http://www.bangkokbiznews.com/home/detail/business/business/20100331/107904/ผู้ประกอบการท่องเที่ยวนัดรวมพลัง-ร้องม็อบเลิกชุมนุม.html Trading Economics (2010) China GDP growth rate. www.tradingeconomics.com Retrieved from: http://www.tradingeconomics.com/Economics/GDP-Growth.aspx'Symbol=CNY