Thailand in Transition: Impacts and what it means to others!!

thailandWith the recent political unrest in Thailand the strategic importance of this country in South East Asia and its place as a stable economic base is becoming more understood.

As this remarkable economy rebounds, there remains no doubt that indelible “power of the poor people” can no longer be ignored.

Moving around Bangkok you could be forgiven for thinking that the calamitous May 2010, period never occurred .  Remarkably too, if you can believe the statistics unemployment stands at less than 2% and is one of the lowest in the world.

Thailand, like the elsewhere has an underclass”. But compared to 12% in the U.S., 14% in Britain, 36% in Bangladesh. statistics,”officially” Thailand has an estimated 10% of population below defined poverty line levels.

Traffic jams and hubbub continue as people go about daily lives. Thai Stock markets also show undisputable positive growth and the semi-untied currency is strong and remains stable. Economic indicators for the past quarter shows growth of around 4% with predicted levels as high as 8% by the end of this year as demand for Thai products continues in spite of the local and global issues. As testament to resilience The Thai consumers’ confidence index in May rose sharply immediately after the political unrest ended. Domestic political stability and the global economy influences however still remain risks.

One has to wonder why Thailand has continued to enjoy fiscal growth and financial stability. This too is despite the current budget being fifth straight year of deficit spending, The answer perhaps lies in its world position as a consistent net exporter for decades which has built up foreign reserves, of $US138 billion, (THB 4,478 billion) and is 10th highest in the world. By comparison Britain has $US56 billion and Australia $US45 billion.

On the issue of poverty, retired mainstream Asian affairs journalist Robert Woodrow recently gave some insights. In his researched paper he entitled The Down-Trodden Rural Poor of Thailand – It’s not quite what you think, it commences with a bold statement that says the Thai poor are the richest poor people in the Third World.

He warns too that even with statistics being notoriously unreliable, wealth distribution in Thailand as reported no more extreme than in most industrialized countries.

The poorest 10% of the people of Thailand own 2.6% of the nation’s wealth. The richest 10% own 33.7%.Comparable figures for the U.S., are 2% and 30%, in the U.K. 2.1% and 28.5%. These statistics may not be wholly reliable, but distribution of wealth is unquestionably much more equitable than in China, India, Brazil or South Africa

clip_image001

Woodrow goes on to say that Europe and North American comparisons of poor are not meaningful. Thai poor, typically the rural people, tend to live on family land rent-free, pays nothing to moderate the climate, produce their own vegetables, chickens, eggs and pork, and ride their own motor-cycle to their jobs. American lifestyle seen on TV, it’s so far beyond the range of their experience, so they don’t feel deprived.

He reports too that every village in Thailand is on the electricity grid and almost every village family has a refrigerator, electric rice-cooker, TV, radio and oscillating fans. Almost all rural households have a motorcycle, and in every villageclip_image003e many families own cars and pickup trucks.

The wealthy absentee landlord is almost unknown with farming families tending a small plot of land they own outright and mortgage-free  This is due to a paternalistic law preventing unscrupulous practices of the past,  forbidding land being put up as security with money-lenders. People however can borrow on anticipated small cash crop harvests which they sell a  through a co-operative.

Main roads in Thailand are well paved and equally or close to first-world standards. And most secondary roads are surfaced, as are many tracks that lead into remote villages. Last month Thailand government announced it would borrow a further THB 270 Billion from local and the world banks to revitalize its economy. At the same time it announced the plans for THB 70 billion of this to be committed immediately from a 15 year borrowing tranche to fund Thai roads being upgraded.

This will bring the national debt to around 40% of GDP.  Tax collections, of around 15% of gross domestic product, are relatively low compared to other countries, so it does leave room for improvement to repay this. In the future that will of course also level the playing fields that presently gives Thailand investors advantage while it develops more .

But it is not only foreign investors who are benefiting from a strong Thai economy. The surrounding countries Like Myanmar Laos and Cambodia all rely heavily on Thailand to be buoyant for work and as buyers of their cheaper production. Trading partners like Australia, New Zealand and others in the APAC regions, see a strong Thai economy with it 65 million people and political stability as very important.  Other factors, such as the US determination to maintain its presence and influence in Asia, relies heavily on having strong economic and political ties with Thailand And balancing that of course Japan and now China too as with many in Europe have similar reasons to keep up their long-standing unbroken ties.So as to why things continue to rebound seems to be not only due to the fact that Thailand is still developing. It is strategically important to others.

But as the country continues its  upward economics, primarily based on its rich resources and a cheap labor force, it will continue to bring with it conflicts of power. The rebellious protests and riots in Bangkok in May 2010 seriously placed the economy and social fabric in jeopardy for nearly two months and will likely fester again if there is no acceptable change. This is a concern to many watching, as this difficult task must bring with it the much-needed harmony and reconciliation of vested interest  political agendas as social demands now accelerate with the relative prosperity.

Divisions are still clear as opposition voices claim the so-called road maps do not go far enough. Academics and civic leaders have questioned the absence of concrete plans beneath the political rhetoric. In the meantime Thai justice is still making headlines as it goes after those  responsible for the killings during the protests. This has been vigorously pursuing more arrests of perpetrators who lead the unrest. This includes ex-Prime Minister Thaksin, in exile, who will likely face terrorism charges if he sets foot in the country again.

But even in the unlikely event of present leaders disabling their political opposition who leveraged poor people to want reform, there remains little doubt that the indelible “power of the emerging poor ” can no longer be ignored with social reform now in transition.

In the aftermath of the unrest the powerful people in the political oppositions at the next elections are hell-bent to take back control of the countries riches . But whoever leads, if they cannot deliver the social change and restore harmony, it will be very hard to avoid more unrest. The longer term impact is not only in Thailand, but the region and many in global economies.

Leave a Reply