Thai voters: Do we need politicians?

Political gridlock hasn't slowed the economy – or trash pickup. But some fear the standoff's long-term impact.

Crisis? What crisis?

Six months after the dissolution of parliament triggered a botched election that left a political vacuum, Thailand seems to be doing just fine.

The trash is collected on time, the currency is up 10 percent against the dollar, and exports hit a new monthly high in July. Nor has the political gridlock in Bangkok kept millions of tourists away from Thailand's sun-drenched beaches, which have shaken off their post-tsunami slump. Despite high oil prices, economic growth is likely to stay above 4 percent this year.

As Thai politicians begin stumping for the Oct. 15 election, voters might be wondering if they're better off without them. The situation is reminiscent of the 1995-96 US federal government shutdown that prompted similar musings. But for all the talk of turmoil, Thailand's buoyant economy points to the strength of a private sector that has for decades ridden the wave of East Asia's postwar boom without relying on its political masters to steer the ship.

"Our secret is that our governments are quite inept, so the economy keeps growing. We've succeeded because the government has mostly left the private sector alone," says Supavud Saicheau, managing director of Phatra Securities and a former adviser to the Ministry of Finance.

Slowdown in foreign investment

Thailand's hands-off approach contrasts with that of China and Vietnam, where five-year plans are the norm and industrial champions are hand-picked. Authoritarian China and Vietnam have outpaced rivals in recent years, sending ripples of concern across Southeast Asia's less regimented economies, where business leaders bemoan a slowdown in foreign investment.

Thailand shouldn't adopt a centrally planned economy, or usurp the role of entrepreneurs, say Thai economists and politicians. A lighter government touch can give Thailand the edge, they say.

"I don't believe that politicians are the best people to decide which industry is likely to do well or not over the next 20 or 30 years," says Korn Chatikavanij, deputy leader of the opposition Democrat Party and a former investment banker. "Governments should aim to be smaller."

However, Mr. Korn and other politicians argue that Thailand's resilience shouldn't be taken as a sign that it's business as usual. They say that political gridlock is crimping consumer confidence and deterring local and foreign investors who want a new government in place before they commit capital. Without an end to the political crisis, Thailand's gains could quickly evaporate.

Tony Sukreepiron, an entrepreneur with a hand in property, tourism, and manufacturing, agrees that the standoff is damaging. He worries that major projects that generate jobs and spin-off opportunities will be shelved as the politicians duke it out. "If we don't have a real government, foreign investors might give up on Thailand," he says.

Since parliament was dismissed in February, power has been in the hands of a caretaker administration led by Prime Minister Thaksin Shinawatra. Mr. Thaksin, a former police colonel turned telecommunications billionaire, won a second victory last year before running into a storm of controversy in January. The tempest was over the tax-free sale of the family's stake in a telecommunications company that Thaksin founded to an arm of Singapore's government. The row fueled street protests in Bangkok and polarized its political elite.

On Thursday, the first day of the election campaign, police defused a bomb hidden in a car near Thaksin's house, AP reported. An Army officer was detained.

Under pressure to resign, Thaksin agreed to take a "political break" after the April 2 polls, only to reverse his decision a month later. He remains popular in rural areas and is still seen as the candidate to beat. But with his party caught up in a slugfest with the opposition, and Thaksin facing an inquiry into the telecom deal as well as election tampering, there's little time for policymaking.

A practiced bureaucracy helps

So day-to-day governance falls largely to powerful civil servants. They have had plenty of practice. During the 1990s, the average government lasted 18 months, and ministers rarely spent enough time in their jobs to make changes.

While Thaksin's government has had more staying power, his frequent cabinet reshuffles have had a similar effect.

Economists say that a bureaucracy running on autopilot won't revive confidence. 'The real problem ... is that the private sector has started to seize up with the political situation. How long before we start to see long-term damage to the economy?" asks Bill Belchere, an economist with Macquarie Bank in Hong Kong.

Infrastructure projects are one area where governments play a crucial role, say economists. Without political consensus, nothing is likely to get built at a time when Thailand's neighbors are rapidly upgrading their infrastructure.

Another victim is a US-Thai free-trade agreement, on hold after two years of talks. The US has since turned its attention to other Asian trading partners such as South Korea and Malaysia.

Then there's education, often seen as a weak link. Inspectors said this week that two-thirds of 30,000 primary and secondary schools underperform. Urgent reforms are needed, say economists, if the workforce is to hold its own.

Kasit Piromya, a retired diplomat turned opposition politician, goes a step further, arguing that the government needs to raise its own game. "We can't compete with India and China on unskilled, low-tech workers, but we can compete on good governance and having an open society," he says. "This should be our strong point."

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