Politicking disrupts the Thai economy

Politicking disrupts the Thai economy

By Rajan Moses

BANGKOK (Reuters): The Thai opposition's constitutional
challenge to four executive decrees crucial to help repair the
battered economy has made Prime Minister Chuan government look
vulnerable, analysts said last Friday.

The move has raised doubts about the government's ability to
take decisive action to lift Thailand out of its worst economic
crisis in decades, they said.

Though the delay in ratification was seen only as a temporary
hiccup, analysts said it appeared to be a bad precedent for
Chuan's government, which took power last November on a wave of
popular public and market support.

"The delay in itself is not important as it is likely to be
short," said Richard Henderson, head of research at Krungthai
Thanakit Plc.

"But it does leave a slight lingering feeling that the
government has been outsmarted and does not have such a strong
grip on things as it did in past months," Henderson added.

Thailand has had three prime ministers, seven finance
ministers and four central bank governors since mid-1995.
The high turnover has resulted from intense politicking and
foreign investors' shaky confidence in the country, analysts
said.

Opposition members of parliament took the government by
surprise late last Thursday when they queried the validity of the
decrees and got the speaker of the lower house to refer them to a
constitutional court for a ruling.

The decrees, approved by Chuan's cabinet last month, would
have empowered the government to raise about $18 billion in funds
via the issue of local and foreign bonds and increase borrowings
from abroad, besides launching sweeping financial reforms to help
break out of a severe liquidity crunch.

Their ratification had been widely anticipated and the
unexpected delay had a slightly negative impact on the local
stock and baht markets last Friday, dealers said.

"It is worrying for the markets which would like to see the
Thai government's efforts to beat a liquidity squeeze and
undertake financial reform are successful," said Simon Flint,
analyst at Singapore-based research house I.D.E.A.

"That it (the decrees) could be derailed in parliament, albeit
temporarily, does cause us some worry," he added.

Market nervousness over the delay saw Thai stocks end the
morning 3.92 points, or 0.92 percent, lower at 352.62 in trade
worth a thin 743 million baht, dealers said.

Analysts said they expected a surge in political activity.
One diplomat said: "I see this as a minor hiccup, but I also see
more politicking rearing its head to make the government look not
so perfect in coming months as the economy worsens."

Finance Minister Tarrin Nimmanahaeminda and Chuan, clearly
miffed by the opposition's tactics, said the decrees' delay
undermined government efforts to repair the economy and restore
foreign investors' confidence.

"The decrees have not been defeated. The constitutional
interpretation sought by the opposition is not a loss of vote by
the government. They have a right to do so but it is sensitive to
economic reforms at this difficult time," Chuan said.

To the government's relief, the head of the constitutional
court, Chao Saicheu, signaled last Friday that he would ensure a
speedy ruling on the validity of the decrees.

He also said he doubted the opposition's motives in
questioning their validity.

But the opposition, arguing against the decrees in parliament
last Wednesday and Thursday had said the decrees would raise
Thailand's debt burdens further.

They were unfair to the nation's ordinary taxpayers and the
poor, as the funds raised would be used to help out an elite
minority with failed companies, they said.

Thais last Friday bombarded radio stations with phone calls
voicing dissatisfaction over the opposition bid to derail the
decrees, saying it jeopardized economic reform.

One businessman told a radio station that the opposition must
be held responsible if the Thai crisis worsened because of the
delay.

"Let it be known that the opposition is responsible if we have
a national bankruptcy in the next few months. How could it help
the poor if all businesses go bust?" he asked.