WHY THAILAND’S IMAGE IN THE INTERNATIONAL COMMUNITY DETERIORATED

In January 2007, Thailand’s élites were more than surprised, disappointed and hurt by the comparatively strong, almost hostile, reaction of the international community to a number of measures that the Surayud Government has been taking to clean up the political, economic and social divisions left by the former regime.

Like many of Thaksin’s admirers, foreigners were not aware of the seriousness of the anti-Thaksin sentiments that had been building in the last 5-6 years. Thaksin had made sure that foreigners were hearing what they love to hear and seeing what they love to see all the while. For over three decades, foreign investors have been doing business and investing in Thailand without any serious disappointment and interruption. They never had to essentially care about our local politics and were happy to be left alone by successive Thai governments to do their own thing and make their money in peace.

The first bombshell for the foreign community came with the coup of 19th September 2006. During the last ten years, they had been led to believe that a military coup in a country like Thailand would be unthinkable, let alone doable in the globalized world of today. Then too, foreign consultants, bankers, fund managers, investors and suppliers had been benefiting greatly from Thaksinomics. They flocked to Thailand and were thrilled and captivated by the former PM’s dashing CEO style of business management, speedy FTA negotiations, lucrative privatization of state enterprises, ludicrous sale and securitization of national assets – not to mention some THB 1.7 trillion mega projects that they were invited to participate in, on their own terms!

When Thaksin won landslide election victories in February 2005 and again in April 2006, most foreign investors did not hesitate to place all their bets on his regime’s continued hold on power for at least another 8 if not 12 years. Under the circumstances, any other government, let alone the interim government that came into being as the result of a military coup, would simply not be acceptable. With some 30 court cases pending against Thaksin, many foreign suppliers and contractors have become fearful that they too could be roped in for corruption investigations. This is why they have been pressuring the interim government for an immediate election, hoping perhaps for Thaksin’s quick return to power.

Then came the second bomb. In the heat of a speculative attack on the baht, the Bank of Thailand had to introduce the 30% reserve requirement for all incoming funds. For foreign fund managers and investors, capital control, in any form or degree, was unthinkable in this decade. Consequently, their dislike for Thailand’s interim government intensified further. They were sure that Thaksin would never have gone so far – not even to save the Thai exporters!

The third bomb was the proposed amendment of the Foreign Business Law (FBA). Since the end of World War II, Thailand had more or less followed a laissez-faire trade policy and private sector-led investment policy, with liberal promotional privileges and full support for foreign direct investment. For three decades, foreign investors had gotten used to the country’s accommodating attitude. They had also taken for granted Thailand’s non-enforcement of numerous existing laws and regulations on foreign trade and investment.

Most foreign investors in Thailand were also unaware of the political uproar triggered by the unexpected sale of Thaksin’s core family business to Temasek of Singapore in January 2006. To justify the transfer of key national assets of enormous security importance owned by Shin Corp, Thaksin quickly roped in 16 other companies for similar investigation. The glaring publicity and growing pressure meant the new Minister of Commerce could not ignore the issue when he came into office in October 2006. The message was unequivocal – Thai society wanted quick and meaningful action against the shameful breaching of the FBA in the Shin-Temasek deal.

The Cabinet’s indecisive handling and unfortunate timing jolted the foreign business community to the core. In one stroke, all their previous assumptions had changed. Nervous foreign investors, especially those in telecom, trading, wholesale and retail, and property development business, cried foul and complained bitterly that Thailand was closing down the country and no longer welcomed them.

In mid-January, another unthinkable event happened. For the first time in Thailand’s diplomatic history, the Government downgraded our diplomatic ties with Singapore. The Thai government was more than offended when Singapore’s Deputy Prime Minister played host to the deposed former PM Thaksin, notwithstanding a number of strong private warnings from our Ministry of Foreign Affairs. Rubbing salt in the wound, CNN in Singapore aired half an hour of their interview with the deposed PM.

Then there were Thaksin’s interviews with the ASWJ, Nippon Shimbun, Newsweek, Economist and Time magazines, attacking not only the CNS and the Surayud Government but also HM the King’s “Sufficiency Philosophy”. Thaksin’s foreign media offensive during his high-flying visits to London, China, Hong Kong, Singapore, Japan, Dubai and Australia has greatly upset the Thai people. They just could not believe that Thaksin could simply “buy” his way into foreign mass media without support from the powers-that-be!

We need only look at South America, which used to be favourite FDI (Foreign Direct Investment) destinations for the developed world, to understand why the foreign community has reacted so strongly against the interim government’s moves. They have also begun to question the government’s core policy based on HM the King’s Sufficiency Philosophy. Egged on by Thaksin’s insinuations, they probably have been afraid that Thailand would trigger a political “Tom Yam Koong” (Spicy Shrimp Soup) disease in South East Asia, similar to the past crises in Brazil and Venezuela!

The way things have been developing here and abroad, the CNS and the Surayud government had no choice but to shift their focus from peaceful reconciliation with Thaksin & Co. Swift and stern legal actions would now be taken in order to put an end to the former PM’s bid to return to power. It is sad that Thailand has been forced by unfortunate circumstances to walk through fire once more before we are able to get back to normal life and business-as-usual.

We hope therefore that true friends of Thailand have come to understand our most difficult circumstances and will be sensitive to our dire predicaments. We would like them to give us time to set our house in order. We expect them to hang in there with us as we ride out this political crisis, if they truly believe in our country and our people. That is what friends are for. •

CONSTITUTION ISSUE 1 JUN-SEP 2007 Vongthip Chumpani Advisor to Bangkok Bank, Former Advisor to the Senate Foreign Relations Committee
		GUEST WRITERS: WHY THAILAND’S IMAGE IN THE INTERNATIONAL COMMUNITY DETERIORATED by Vongthip Chumpani

		In January 2007, Thailand’s élites were more than surprised, disappointed and hurt by the comparatively strong, almost hostile, reaction of the international community to a number of measures that the Surayud Government has been taking to clean up the political, economic and social divisions left by the former regime. Like many of Thaksin’s admirers, foreigners were not aware of the seriousness of the anti-Thaksin sentiments that had been building in the last 5-6 years. Thaksin had made sure that foreigners were hearing what they love to hear and seeing what they love to see all the while. For over three decades, foreign investors have been doing business and investing in Thailand without any serious disappointment and interruption. They never had to essentially care about our local politics and were happy to be left alone by successive Thai governments to do their own thing and make their money in peace. The first bombshell for the foreign community came with the coup of 19th September 2006. During the last ten years, they had been led to believe that a military coup in a country like Thailand would be unthinkable, let alone doable in the globalized world of today. Then too, foreign consultants, bankers, fund managers, investors and suppliers had been benefiting greatly from Thaksinomics. They flocked to Thailand and were thrilled and captivated by the former PM’s dashing CEO style of business management, speedy FTA negotiations, lucrative privatization of state enterprises, ludicrous sale and securitization of national assets – not to mention some THB 1.7 trillion mega projects that they were invited to participate in, on their own terms! When Thaksin won landslide election victories in February 2005 and again in April 2006, most foreign investors did not hesitate to place all their bets on his regime’s continued hold on power for at least another 8 if not 12 years. Under the circumstances, any other government, let alone the interim government that came into being as the result of a military coup, would simply not be acceptable. With some 30 court cases pending against Thaksin, many foreign suppliers and contractors have become fearful that they too could be roped in for corruption investigations. This is why they have been pressuring the interim government for an immediate election, hoping perhaps for Thaksin’s quick return to power. Then came the second bomb. In the heat of a speculative attack on the baht, the Bank of Thailand had to introduce the 30% reserve requirement for all incoming funds. For foreign fund managers and investors, capital control, in any form or degree, was unthinkable in this decade. Consequently, their dislike for Thailand’s interim government intensified further. They were sure that Thaksin would never have gone so far – not even to save the Thai exporters! The third bomb was the proposed amendment of the Foreign Business Law (FBA). Since the end of World War II, Thailand had more or less followed a laissez-faire trade policy and private sector-led investment policy, with liberal promotional privileges and full support for foreign direct investment. For three decades, foreign investors had gotten used to the country’s accommodating attitude. They had also taken for granted Thailand’s non-enforcement of numerous existing laws and regulations on foreign trade and investment. Most foreign investors in Thailand were also unaware of the political uproar triggered by the unexpected sale of Thaksin’s core family business to Temasek of Singapore in January 2006. To justify the transfer of key national assets of enormous security importance owned by Shin Corp, Thaksin quickly roped in 16 other companies for similar investigation. The glaring publicity and growing pressure meant the new Minister of Commerce could not ignore the issue when he came into office in October 2006. The message was unequivocal – Thai society wanted quick and meaningful action against the shameful breaching of the FBA in the Shin-Temasek deal. The Cabinet’s indecisive handling and unfortunate timing jolted the foreign business community to the core. In one stroke, all their previous assumptions had changed. Nervous foreign investors, especially those in telecom, trading, wholesale and retail, and property development business, cried foul and complained bitterly that Thailand was closing down the country and no longer welcomed them. In mid-January, another unthinkable event happened. For the first time in Thailand’s diplomatic history, the Government downgraded our diplomatic ties with Singapore. The Thai government was more than offended when Singapore’s Deputy Prime Minister played host to the deposed former PM Thaksin, notwithstanding a number of strong private warnings from our Ministry of Foreign Affairs. Rubbing salt in the wound, CNN in Singapore aired half an hour of their interview with the deposed PM. Then there were Thaksin’s interviews with the ASWJ, Nippon Shimbun, Newsweek, Economist and Time magazines, attacking not only the CNS and the Surayud Government but also HM the King’s “Sufficiency Philosophy”. Thaksin’s foreign media offensive during his high-flying visits to London, China, Hong Kong, Singapore, Japan, Dubai and Australia has greatly upset the Thai people. They just could not believe that Thaksin could simply “buy” his way into foreign mass media without support from the powers-that-be! We need only look at South America, which used to be favourite FDI (Foreign Direct Investment) destinations for the developed world, to understand why the foreign community has reacted so strongly against the interim government’s moves. They have also begun to question the government’s core policy based on HM the King’s Sufficiency Philosophy. Egged on by Thaksin’s insinuations, they probably have been afraid that Thailand would trigger a political “Tom Yam Koong” (Spicy Shrimp Soup) disease in South East Asia, similar to the past crises in Brazil and Venezuela! The way things have been developing here and abroad, the CNS and the Surayud government had no choice but to shift their focus from peaceful reconciliation with Thaksin & Co. Swift and stern legal actions would now be taken in order to put an end to the former PM’s bid to return to power. It is sad that Thailand has been forced by unfortunate circumstances to walk through fire once more before we are able to get back to normal life and business-as-usual. We hope therefore that true friends of Thailand have come to understand our most difficult circumstances and will be sensitive to our dire predicaments. We would like them to give us time to set our house in order. We expect them to hang in there with us as we ride out this political crisis, if they truly believe in our country and our people. That is what friends are for. •



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