Thailand's Short Term Economic and Political Perspective 2010

BANGKOK

Feb. 21st 2010

Thai economic growth is projected to rise between approximately 4 to 5 percent on higher exports and rising economic fundamentals in 2010, reflecting increases in tourist arrivals and employment, as well as the new AFTA Asian Free Trade Agreement. However, political difficulties and domestic turbulence should also be factored in. The current situation is littered with the potential for highly unpredictable events and creating an uncertain climate.

Gold has recently decreased about $50 per ounce on lagging demand in world markets with an overall 11% drop in demand in 2009 from 2008. Locally, current prices have relaxed with prices in Bangkok at 17,300 baht for buying rates, while gold was selling at 17,400 baht earlier this week.

This week the baht was trading at just under 33.2 to the dollar while the Japanese yen traded at 100 yen to 36.33 -36.45 baht. The battered euro was trading at near 45 baht to the euro.

On the Stock Exchange of Thailand (SET), shares have recently declined about 10% from their 9 month highs on January 10-11, 2010 to current market levels of approximately 700 points for the main index. Friday in Bangkok the SET was up over four points to close at 700.44.

Most European and Asian markets lost momentum Thursday, plunging in response to the U. S. Federal Reserve Bank's surprise announcement of a.25% rise in the emergency loan rate it charges to banks.

Negative risks weighing on Thailand's economic prospects include the uncertainty posed by the fate of approximately 65 industrial projects worth billions of dollars still awaiting the Central Administrative Court's ruling on whether they will be allowed to continue due to environmental lawsuits brought by local villagers, threatened protests by the UDD/ Phuea Pandin and Thai Red Shirt allied activists at Bangkok's Suvarnabhumi International Airport and other venues, as well as fears of political threats and uncertainties regarding the asset seizure of former deposed Prime Minister Thaksin Shinawatra's $76 billion baht against senior political figures and Supreme Court judges involved in the final decision, due on February 26. The assets were seized amid allegations of corruption and Mr. Thaksin's failure to return in August 2008 to appear to face charges after being allowed to fly to Hong Kong after posting bail to travel to the 2008 Summer Olympics in Beijing.

Since then, Mr. Thaksin has made a variety of countries his temporary home including London, Dubai, China and Cambodia, while recent tensions between Cambodia and Thailand have also emerged at a variety of international high level meetings, such as the recent ASEAN meeting in Hua Hin. Hun Sen has dubiously offered the former Thai prime minister free access and a safe haven while appointing him Cambodia's economic advisor, a move the current Thai government in Bangkok considers interfering in its sovereignty, judicial system and internal politics, allowing that Thailand and Cambodia have extradition treaties, which Cambodia has failed to fulfill in regard to Mr. Thaksin.

Mr. Thaksin, his wife Pojamarn and their three adult children have faced numerous corruption investigations which political activists, rural supporters and allies supporting the former prime minister's camps view as politically motivated. The final verdict is due to be decided shortly now that final arguments have been delivered.

Thai-Cambodia Relations: No Love Lost

While relations with Cambodia were at near crisis levels last month, neither Hun Sen nor Thailand's Prime Minister Abhisit Vejajiiva seem willing to reconcile their positions.

Some political analysts and Thai media lay partial blame on Mr. Abhisit's government for the appointment of its foreign minister, alleged to have overtly insulted the Cambodian leader, for getting its diplomatic relationship with its neighbor off on the wrong foot.

The Cambodian Prime Minister and his wife attempted to visit a Buddhist religious site near disputed border areas along the Thai- Cambodian border in early February, sparking fresh Thai government initiatives to calm the issue, where forces fighting border skirmishes had left approximately a dozen Thai and Cambodian troops injured or dead within the last year.

Last week a Cambodian government website launched a fresh war of words in its spat with Thailand, making a variety of volatile accusations against the current Thai Prime Minister, Abhisit Vejajiiva. It was also reported in Thai media that Hun Sen's wife had invoked curses aginst the Thai prime minister at a temple near their border. Hun Sen is also reported to have invoked occultic curses against the Thai leader.

Trouble in Paradise...

The largest Thai bank, Bangkok Bank was prescient to close its main office and headquarters to customers at noon Friday, Feb. 19 after about 1000 protesters gathered and a police contingent of approximately 500 officers closed traffic to the area. The protesters, from the Red Shirts/UDD, or the United Front for Democracy Against Dictatorship are seeking revenge and garnering support for what they allege is financial support for Prem Tinsulanonda by the bank's owners.

Meanwhile, last week in Bangkok between Saturday night and Sunday morning, a pair of explosive devices were intended to gain publicity in the upcoming case involving former Prime Minister Thaksin. In the first, an M-79 grenade was detonated in a parking lot near the Government House, where officials and leaders, including the prime minister, frequently work.

The second explosive was a 3 lb. C-4 bomb that had been placed near the perimeter of the Supreme Court's Division for Holders' of Political Offices, where the asset seizure case will be decided. It is widely thought that violent acts and protests will likely increase before the upcoming case is decided. The device was safely removed and disabled by the Bangkok Metropolitan Police Bureau's bomb squad. More protests have also been taking place in venues throughout Bangkok and in outer provinces, but so far have remained mostly peaceful.