Markets cheer Thai tycoon's election victory

Markets cheer Thai tycoon's election victory

BANGKOK (Reuters): Controversial tycoon Thaksin Shinawatra pledged on Monday to build a coalition this week with the clout to dominate Thai politics following his landslide general election victory.

But despite winning the biggest ever mandate in Thai history, the 51-year telecoms billionaire could still see victory snatched from his grasp by the country's Constitutional Court, which is examining graft allegations against him.

Thaksin said he aimed to build a coalition by Thursday to command about 320 seats in the 500-seat parliament.

"I will try to form the government by this Thursday. It should be a three-party coalition because we are aiming at forming a government with 320 seats," he told reporters.

He said he was prepared to talk to any party and it would probably take a month for the new government to be formed.

"There is no haste," he said. "It will be another month before the full lower house can convene and a speaker is selected. Only then a prime minister will be picked. I have to wait for the process."

Unofficial results from Saturday's election suggested Thaksin's populist Thai Rak Thai (Thais Love Thais) Party just won an absolute majority in parliament, taking 254 seats.

It is the first time one party has won a majority and the biggest parliamentary win since the abolition of Thailand's absolute monarchy in 1932.

Building a coalition will give him an even stronger power base, and allow him to avoid a parliamentary censure motion, which requires the support of at least 200 legislators.

Outgoing Prime Minister Chuan Leekpai's Democrat Party won just 128 seats, mainly in its heartland in southern Thailand.

Thaksin won his resounding victory through promises of lavish spending to boost the economy. Voters punished Chuan for a perceived failure to lift the economy out of the doldrums.

The Democrats conceded defeat on Monday, with deputy leader Abhisit Vejjajiva saying the party would return to opposition. Counting continued in dozens of constituencies and at least four were due to hold re-votes after allegations of serious voting irregularities, Election Commission officials said.

Most results were expected to be announced officially on Monday, Election Commissioner Gothom Arya told reporters. Angry protests by some voters and unsuccessful candidates delayed the results, originally due on Sunday.

The final result was due by Feb. 5, following re-votes in some constituencies, Gothom said.

Thaksin's likely choices for coalition partners are the New Aspiration Party of former prime minister Chavalit Yongchaiyudh and the Chart Thai party of ex-premier Banharn Silpa-archa.

The three parties together can dominate parliament. But the main threat to Thaksin's supremacy comes not from other parties, but from the Constitutional Court.

Thailand's anti-graft agency ruled last month Thaksin had failed to declare assets when he was a minister in the 1990s.

He denies any wrongdoing. But if the Constitutional Court upholds the ruling, he will be barred from politics for five years. A decision may take several months.

Thaksin won strong rural support with a pledge to allocate one million baht ($23,250) from the national budget to each of Thailand's 70,000 villages. He also plans a suspension of debt repayments for three years for small farmers.

Thaksin also wants to form a national asset management company to take over bad loans from ailing banks and kick-start the economy.

The Thaksin's landslide was welcomed by Thai financial markets, which were among the worst performing in the world in 2000.

The baht rose on Monday, trading at around 43 per dollar by 1100 GMT, from around 43.25 late on Friday. At one point the currency traded as high as 42.74 to the dollar on Monday. The main Thai stock market index closed up 3.17 percent, with shares linked to Thaksin's telecoms empire sharply higher.

One of the fears of investors before the election had been of an unclear result, which could have left a political vacuum and government policies in doubt. That fear has proved unfounded.