Business leaders not phased by coup

Most of the negative reaction is coming from foreign sources, although the American Wall Street Journal published an upbeat article on the long-term effects of the coup this morning.

An editorial at New York Times website, actually a International Herald Tribune editorial, is positively misleading, likening yesterday's coup to the authoritarian deviations from democracy found in Myanmar and Singapore. The Thai coup essentially supported the anti-authoritarian political movements that quickly gained momentum after Mr. Thaksin's tax-free sale of Shin Corp earlier this year.

Perhaps Thaksin supporters simply don't feel free to speak up.

Or more likely, this is a reflection of the pragmatic nature of the Thai business community and their deep abiding faith in their king, His Majesty King Bhumibol Adulyadej, the ultimate source of political legitimacy in Thailand.

It may be difficult for most foreigners to understand how even in the 21st century monarchy continues to play a crucial role in the political stability of some countries, but understand they must if they want to understand Thailand and what makes Thai politics tick.

Thailand's monarchy derives its legitmacy from three sources: 1. A tradition of kingship that goes back over one thousand years from Bangkok, to Ayutthaya, to Sukhothai, all the way back to the first Tai rulers in what is now Yunnan, China, 2. The personal charisma of the King and the positive examples of sustainable economic development over the long-term that he provides his subjects, 3. The deep respect shown for representative democracy by what is a constitutional monarchy. Nepal has not been as lucky as Thailand in this respect.

Most of the comments of Thai business leaders are upbeat and reflect the strong fundamentals of the Thai economy and the peaceful nature of the coup.

The president of Thailand's central bank, M.R.Pridiyathorn Devakula, seems to be be the most likely candidate for next Prime Minister which is a good sign.

Today's article is the front page article in the business section on how the business community views the coup.

Update:

Blogger, Google's free blog hosting service, selected the apparently pro-Thaksin Bangkok Pundit blog as it's "blog of note" today, for its commentary on the coup, based mostly on Bangkok Post articles, but also on the off-hand and not very well thought out grandstanding comments of British journalist Richard Lloyd Parry who introduces articles written by local Thai newspaper The Nation with inflammatory verbage bordering on racism, such as: "Read the rest of the pusillanimous, gun-licking, uniform-worshipping drivel on your own..."

A consistent problem with much reporting on the coup seems to be knee-jerk expressions of personal opinion by foreigners without listening to the locals and observing how they are reacting to the coup first. Some foreign journalism, like CNN's recent article, seems to be coming around to seeing events from a more local perspective.

Finally, there is already a Wikipedia article being written in real time on the coup. It will be interesting to see how well it serves as an accurate and complete aggregator of information.

I found some inaccuracies in the Wikipedia article that I corrected and casual musings by foreign journalists unsupported by argument or fact, such as the following Australian journalist:

"..the week's events hark back depressingly to the chaotic days of the 1970s and 80s.

[Why? What exactly is the analogy here? The mere fact that there was a coup? I don't believe in coups either, but this coup is different than the coup 15 years ago, it is 1. bloodless and 2. there is a promise to hand over administration to a civilian government in two weeks.]

"They once again raise the spectre of an activist army claiming for itself a warrant to interfere in politics when, in its leaders' judgment, civilians fail the nation."

[The army only became activist after months of political stalemate. Perhaps this is inconceivable in Australia or the United States where public opinion and a strong middle class would bar it, but public opinion polls after the coup here supported it.]

"Tears for democracy, not Thaksin"

[As one of early resignation from the Thaksin cabinet put it, good governance consists of: 1. participation (i.e. democracy), as well as, 2. legality, 3. transparency. All the events surrounding the Shin sale made many educated Thais feel that legality and transparency had been manipulated by those in power (read Pasuk's biography), and they acted accordingly, life in the agricultural provinces moves at a much slower pace, mediated by local power brokers and pork barrel politics and ordinary people would simply not question the powerful village level Thai Rak Thai consensus.

Driving in the rural Thai locale where I live before the election, I encountered illegally posted signs threatening the end of 30 baht healthcare, signs which many locals took on face value, meanwhile 30 baht a day health care would not have bought an oxygen tank to keep my sister-in-law alive when she was in a coma, she is now a mother with a three month year old baby, the rural viewpoint is not to question these things, so what people keep calling a threatened "democracy" in the rural areas was a lot more coercive than they think.]

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Reading Questions

Here are some questions to guide your reading (See answers at end):

1. What is the long-term prognosis for post-coup Thailand?

2. What will help boost the image of Thailand in international eyes?

3. What is the projected timetable for return to democratic civilian rule?

4. When will the political situation likely return to normal?

[Check back shortly for more]

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Bangkok Breaking News Article: September 21, 2006

Business leaders hope time is right for reform to take hold

Baht off sharply, SET reopens today POST REPORTERS

While Tuesday's military overthrow will shake local markets in the short term, many business leaders and analysts say political reforms and an end to the infighting that had paralysed policymakers for much of the year would benefit the country in the future.

The military yesterday ordered local banks and the Stock Exchange of Thailand to close, and many private businesses also voluntarily shut their doors in the capital city.

In overseas trade, the baht dropped against the US dollar while yields on Thai bonds widened against US treasuries, as investors reacted negatively to the first coup in Thailand in 15 years.

Asian stock markets closed mostly lower in reaction to the coup and overnight losses on Wall Street.

Business leaders agreed that a rapid return to democratic rule would help minimise the negative impact on the country's image. The Council for Democratic Reform (CDR) said it would appoint an interim prime minister within two weeks, with constitutional reforms to be finished within one year.

Ajva Taulananda, the honorary chairman of the Board of Trade, said he believed the situation would normalise with the appointment of a publicly accepted figure.

''The coup might surprise some foreign countries and affect their feelings, as this is not a democratic solution. But we need to explain that this was the best way out of Thailand's prolonged political conflict,'' he said.

Thanavath Phonvichai, an economist at the University of the Thai Chamber of Commerce, agreed. ''The coup might delay investments of local and foreign investors, especially in the Thai bourse, but it is likely just in the short term.''

Peter Van Haren, the president of the Joint Foreign Chambers of Commerce (JFCC), said many foreign investors were caught off-guard, as the general feeling was that Thailand's democracy had finally evolved beyond the coup-prone past.

But moves by the military to reassure foreign diplomats and maintain economic and foreign policies unchanged were seen as a positive step.

''There is certainly going to be an impact on investment, as the decision-making process will be slowed down. But if the military returns power to the people quickly, [the change] could be positive,'' Mr Van Haren said.

But securities analysts warned that stocks could fall sharply when the SET re-opens today.

SET president Patareeya Benjapolchai said the exchange would use its ''circuit-breaker'' system if needed. The system, which has never been used in the 30-year history of the SET, calls for a 30-minute suspension of trade if the main index falls 10%, followed by a one-hour break if the index drops by 20% and ultimately the possibility of an early closure if declines continue.

Mrs Patareeya said closing the market yesterday had a benefit in that investors had time to consider developments, and added that during the 1992 Black May uprising, the SET fell a total of 11% over four days.

Pichai Lertsupongkit, an executive vice-president at Prudent Siam Securities, said foreign investors would likely sell off shares as many did not fully understand the dynamics of Thai politics.

''It wouldn't be unusual to see a panic sale when the market opens today. Foreign investors will dump their holdings to reduce risk while retail players may follow suit,'' he said.

Stocks related to the Shin Group, including iTV, Advanced Info Service, Shin Satellite and Shin Corp, are likely to drop, including speculative stocks that had gained in the past due to associations with government ministers.

In Singapore yesterday, shares of the mobile operator Total Access Communications fell nearly 8% before rebounding to close off 2.79% at US$4.18. Beer giant Thai Beverage closed off 1.72% at S$0.285.

Adisorn Sermchaiwong, president of SCB Asset Management, agreed that most investors would look to consolidate their holdings until more was known about the policies of the CDR.

''In my opinion, the public seems to have supported the council. People feared a coup, and now the worst has happened. Things can only get better, I hope,'' Mr Adisorn said.

Thailand has been run under a caretaker government since the April 2 election was voided by the courts over allegations of election fraud. Public opposition against Thaksin Shinawatra over his ethics and personal interests has also increased since his 73.3-billion-baht sale in January of his Shin Corp shares to Singapore's Temasek Holdings.

But analysts said the Thai economy, expected to grow by around 4% this year, had remained relatively strong despite the political uncertainties of the past year. Foreign reserves are at an all-time high at $60 billion, while exports continue to grow at a steady pace.

A breakthrough and rapid return to democracy would potentially strengthen the country's position in the future, assuming that a credible, capable administration is appointed shortly.

''Initially if you look at it, then it is not a good move. But if you think it through, I would say it is a very good for the future,'' said Frederick Wong, a senior investment analyst at UOB Asset Management in Singapore.

''With what I've read, they're looking to appoint credible people from outside to key posts and this could give us some buying opportunities.''

Samuel Koh, a partner at Pacific Asset Management in Singapore, said the market was already absorbing the news.

''The market [yesterday] was not as bad we had anticipated. If you look at the credit spreads, they have widened by just 10 basis points, from the initial 20 basis points on the open. This is not bad at all considering what has happened in the country,'' he said.

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Vocabulary (in introduction above)

not be phased by - not be upset, angered, or worried by something that happens

to speak up - to say what you think, instead of remaining quiet

what makes someone tick - what causes someone to act and behave the way they do

upbeat - optimistic, feel that the future will be good

reflect - show, make visible (what probably cannot be seen)

fundamentals - the important things that make an economy function like efficient agricultural and goods production, distribution, transportation, and communication, infrastructure (not superficial things like sudden temporary changes in stock prices on the stock exchange)

inflamatory - said to make people angry

verbage - lots of words without much meaning

pusillanimous - timid, afraid, cowardly

drivel - very silly

grandstanding - trying to draw attention to yourself (trying to get people to look at and listen to you, for example by being controversial, rather than seriously addressing the issues)

Vocabulary (in article)

prognosis - opinion about the future

reform - changes to improve a political or economic system

to take hold - to happen, to occur (for a change to finally have an effect)

infighting - among the members of a group, arguing, quarrelling, fighting

paralysed - the organisation cannot function

US treasuries - the bonds used to finance the US government, a very safe investment

Council for Democratic Reform - the name of council governing Thailand after the coup

interim - between, temporary (in the period of time between two governments there is an interim government)

the situation would normalise - the situation would return back to the normal situation of the past

prolonged - existing for a long time, too long

a bourse - a stock exchange

Joint Foreign Chambers of Commerce (JFCC) - the organisation that represents the foreign business community in Thailand

caught off guard - surprised by

prone - have a tendency for something to happen, to do things in a certain way

to reassure - to increase confidence about something

a circuit breaker - the electronics that shuts off electricity when there is an electrical problem

suspension of trade - trading in strocks stopped temporarily

the 1992 Black May Uprising - the Thai coup of 1992

the dynamics of Thai politics - the system of Thai politics, the way that politics works in Thailand

a panic sale - lots of people selling because they are afraid

dump their holdings - sell the shares of stock that they own

rebounding - going up, after going down

consolidate their holdings - combine the shares that they own

ethics - whether what ones does is right or wrong

personal interests - the companies and assets that one personally owns

credible people - people you can believe, trustworthy people

not as bad as we had anticipated - we expected the situation to be worse than it is, the situation is better than expected

credit spreads - the difference between interest rates

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Answer Key:

1. What is the long-term prognosis for post-coup Thailand?

It may negatively affect local financial markets in the short-term, but in the long-term the end to the political paralysis that the country has experienced recently will help business.

2. What will help boost the image of Thailand in international eyes?

A rapid return to democratic rule.

3. What is the projected timetable for return to democratic civilian rule?

a. An interim civilian prime minister will be appointed within two weeks.
b. Constitutional reforms before a new election will be completed with one year.

4. When will the political situation likely return to normal?

In two weeks when a "publicly accepted figure" is appointed Prime Minister.

After the last coup 15 years ago, Anand was appointed Prime Minister and was highly successful as interim Prime Minister.

Posted by Jon Fernquest at 10:07 AM | Permalink | Comments (0)