Thailand’s damaging political stalemate will not derail its ability to develop vital infrastructure, the country’s finance minister, Thanong Bidaya, says. The Thai economy has been in limbo since a general election in April was ruled invalid. The snap poll, called by prime minister Thaksin Shinawatra, was boycotted by rival parties. Now Thaksin remains in power as head of a caretaker government.
A general election must be held to resolve the impasse, but is now unlikely before late November, election commissioner-designate Apichart Sukhakkanon said last week. The uncertainty has prevented the government from signing long-planned free trade agreements or moving on with its infrastructure spending programme.
Finance minister Thanong told Emerging Markets he was certain that even a change in government would not damage the viability of long-term infrastructure projects.
“In the past, certainly we have seen a lot of indecisiveness of governments,” he said. “But from the last government to this one we have seen continuity: the new airport [which opens later this month in Bangkok] was conceived by the last government and has been done by this one. I don’t see that any government would come in with a change of commitments.
“Upcoming projects will probably will take less and less time because of the experience of the governments.”
They are unlikely to take any longer than in the past. Earlier, Thanong had told a seminar that the soon-to-open airport in Bangkok was being planned when he was young over 40 years ago, and the new subway system 20 years ago. But he said Thailand planned to develop 10 new subway lines and was optimistic about their viability.
He also spoke about greater cooperation among neighbouring economies on infrastructure, such as the hydroelectric projects it has developed with Laos. “Thailand’s energy projects are more and more like Indochina projects,” he said. “We can stand alone, but we know we need to grow together with our neighbours.”
Despite the minister’s confidence, Thailand’s political situation has driven investors away. Foreign investment applications in January-July this year were down 27% year on year. Year-on-year GDP growth in the second quarter slowed to 4.9%, compared to 6.1% for the first quarter.
In an earlier interview with Emerging Markets, the Bank of Thailand’s governor, Pridayathorn Devakula, identified the diversion of foreign direct investment away from Thailand towards China as a “threat.” He said Thailand’s inability to match other nations’ export performance is a consequence of the higher proportion of exports accounted for by agriculture.
Malaysia’s finance minister, Tan Sri Nor Mohamed Yakcop, called on foreign investors to get involved in his country’s infrastructure. “We are here basically to tell you that we are serious in wanting to grow,” he said. “Our rate of investment is growing between 10 and 20% now; we want 30 to 40%. We want you assistance in making this happen on a win-win basis.”