Senin, 13/10/2008

Investors Leap Out from Thailand
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Investors Leap Out from Thailand

CULTURAL RICHES, picturesque tropical beaches and the hospitality of the Thai people have turned out to be insufficient for foreign investors to stay any longer in that country. The luster of the “White Elephant” country, once an investment magnet particularly for those from its neighboring countries, is now declining. Numerous political conflicts in Thailand have discouraged investors from making investment in that country, including property investors.

Political conflicts in Thailand have always been triggered by the less harmonious relationships among the three main pillars of power namely King Bhumibol Adulyadey, the government as represented by the prime minister and the military. Thailand adopted constitutional monarchic system in 1932. Since 1988 prime minister has been democratically elected through general election. Yet, the king has often sided with the military. With the king’s blessing, the military has often dissolved the government through coup d’etat before establishing a ‘puppet’ government. In 2006, a military coup d’etat brought down then Prime Minister Thaksin Sinawatra. His was the 18th civil government forcefully dissolved by the Thai military.

The latest political turmoil in Bangkok was triggered by the occupation on August 26, 2008 of the cabinet office by anti-government protesters from People’s Alliance for Democracy (PAD) and pro-government demonstrators from the Democratic Alliance Against Dictatorship (DAAD). The anti-government demonstrators demanded Prime Minister Samak Sundaravej and his cabinet members to resign without condition. They alleged Samak had failed curb corruption and the so many practices of power abuse among Thai political elites. The protesters also said he was the ‘extended hands’ of Thaksin who was involved in corruption and has fled Thailand. Protesters from the two opposing camps were involved in bloody fights on September 2, 2008, which claimed one life and wounded 44 people.

The turmoil forced Samak to declare a situation of emergency in order to curb fights between anti-government and pro-government protesters. The chaotic situation caused Thailand’s share and money markets drop around 24 percent. Investors hastily sold their shares and then left the country.

Federation of Thai Industries Chairman anti Villassakdanont said Thailand needed a prime minister who is acceptable to all sectors of power holders in the country. Thai prime minister should be able to act as a mediator and unite all the factions that apparently have divided the Thai people. It is expected that with such prime minister, Thailand’s political condition can return to normal and subsequently get its investment climate back to recovery.

Political stability is a crucial key to investments in any country. Political stability will push forward the economy and create good investment climate for investors, especially foreign investors, to come and do business in the country.

Unfortunately, the political situation in Thailand is unpredictable. Analyst Scott Lim said the country’s political instability will have negative impacts on its economic development in the long run. Investors who wish to make long-term investment do not see Thailand as a good place for doing business. Uncertain political climate is too risky for their businesses. Example, over the past two years, foreign investors’ demand for property in Thailand has dropped significantly, by 50 percent in Pattaya and by 30-40 percent in Phuket and Hua Hin.

Indeed, the Thailand property market is slowing, and, unfortunately, its political instability has contributed to it. Somchao Tanterdtham, president of Thai Real Estate Association, was quoted by Thailand Tonight as saying: “W real estate operators have been more cautious for the past few months and delayed new projects, mostly owing to a slowdown in the global economy and high oil prices. But the political turmoil is now adding to our problem”.

Beside the property sector, Thailand’s political instability has also affected its tourism sector as evidenced by the declining number of incoming tourists. Many visitors canceled their travels to Thailand. After the Thai government declared an emergency situation, the arrivals of foreign airline flights dropped 30 percent. The country’s total revenues also declined drastically due to a drop in its tourism revenues.

Political stability is indeed so crucial to investment in Thailand an any other country. The Thai people strongly aspire for a better political climate in their country. With better political climate, foreign investors will return to Thailand. Many investors now take a wait-and-see stance before deciding whether or not to continue doing business in that country. As a matter of fact, Thailand is a good place for doing business and provides great potentials for investors to make profits. Unfortunately, even after Thailand got new prime minister, Somchai Wongsawar, who took over from Samak, its condition has not got better. Anti-government protesters are continuing to their action against Samak and even forcefully occupied the cabinet office. They also continue opposing People’s Power Party.

In Thailand, people can very easily be divided due to the existence of opposing parties. Its protracted political uncertainty shows that Thailand still has to learn about democracy. Investors who left the country and now take a ‘wait-and-see’ stance may now carefully studying the Thai market and will return to that country after its political situation gets better. (GUN)