ASIA HAND Fortress Bangkok targets business
By Shawn W Crispin
BANGKOK - Across the street from Thailand's main financial district,
anti-government protesters gathered sharpened bamboo poles while a speaker
dressed in black threatened to castrate soldiers deployed nearby if they moved
to disperse their protest site. A renegade army soldier who has accurately
predicted a bombing campaign across the national capital, Major General
Khattiya Sawsdipol, alias Seh Daeng, looked on in full uniform while the red
shirt-wearing crowd cheered his presence.
Now symbolically situated in Bangkok's contiguous luxury shopping and hotel
district, the United Front for Democracy Against Dictatorship's (UDD) five-week
protest has through shock
and awe tactics aimed to inflict economic damage to gain political capital over
the Democrat Party-led ruling coalition. An economic recovery was taking hold
in Thailand, with the government forecasting 5% gross domestic product (GDP)
growth after suffering from negative growth last year.
Prime Minister Abhisit Vejjajiva's government was expected to leverage that
economic bounce into electoral gains at upcoming polls, which must be called by
the end of 2011, but will now likely be held within this year in reaction to
the UDD's rally cry for parliament's immediate dissolution. Self-exiled former
premier Thaksin Shinawatra, the UDD's symbolic leader and chief patron, had
said in addresses to his supporters that only his pro-poor policies could
restore the economy.
The tourism industry, which accounts for 6.5% of GDP and is concentrated
largely in the Democrat Party's southern region stronghold, is especially
expected to take a hit. Abhisit had earlier pointed to the record number of
tourist arrivals in December as evidence that the country was returning to
normalcy under his leadership. The rival royalist People's Alliance for
Democracy (PAD) had similarly damaged the economy under a Thaksin-aligned
government when it seized and occupied Bangkok's airports for a week in late
Because Thailand's current recovery has been mainly externally driven, the
economic impact of the rallies has so far been more symbolic than substantial.
The estimated 20 billion baht (US$595 million) lost so far in tourism revenues
amounts to less than 0.2% of nominal GDP and some analysts note that if the
protest is wound up in the coming weeks, tourist arrivals have proved resilient
after previous crises of confidence.
One Bangkok-based financial analyst, who requested anonymity, suggests that the
overall impact will be marginal if the situation stabilizes before the
export-geared multinational corporations driving the recovery evacuate their
middle-level foreign management due to security concerns related to the
protests. He said it is difficult to reassign foreign managers for legal and
logistical reasons once they've been removed.
Notwithstanding a possible foreign business exodus, the UDD's rhetoric and
tactics have raised the risk and cost of doing business in Thailand.
International credit rating agency Fitch this week downgraded the country's
long-term local currency rating, reasoning that ďan escalation in political
uncertainty, coupled with a slow economic recovery and a deteriorating policy
environment, all of which are expected to impact adversely on sovereign
creditworthiness over time". Other risk analysts are monitoring to see if the
protesters adopt any anti-foreign messages beyond criticism of foreign media
coverage of their protests.
Those concerns are rooted in UDD protest stage rhetoric targeting certain
Thai-owned or founded big businesses, including conglomerates that are now
either majority owned by foreign investors or publicly traded on the stock
exchange. UDD leaders have claimed that certain Thai corporations are in league
with the bureaucratic elite that the protest group claims to be up against in a
self-styled fight for democracy and equal rights.
Several UDD leaders hail from militant leftist backgrounds, including time
spent in the 1970s and 1980s with the former insurgent Communist Party of
Thailand (CPT), and have played up the notion that they are engaged in a class
struggle pitting the rural poor majority against an urban elite minority. Red
shirts sold and worn by protesters have recently popped up at the rally site
emblazoned with the Thai word ''phrai'', which loosely translates to
''peasant'' in English, as well as the CPT's former single red starred caps.
The UDD has mobilized the potent symbolism while simultaneously drawing on the
personality cult of Thaksin, a Sino-Thai businessman who leveraged exclusive
telecom operating concessions from the state into a billion-dollar personal
fortune. Thaksin has vowed during different video-linked addresses to his
red-shirt supporters that he would completely eradicate poverty in Thailand if
restored to power.
Former left-leaning journalist and Thaksin government policy advisor, Pansak
Vinyaratn, himself born to an elite banking family, has played a key
behind-the-scenes role in crafting the class struggle symbolism that the UDD
has mobilized since overtaking Bangkok's high-end commercial district,
according to one Thai intelligence official tracking developments. The
bowtie-wearing Pansak could not be reached for comment.
But Finance Minister Korn Chatikavanij questions the sincerity of the UDD's
ideological jag. He says, "Thaksin was anti-free enterprise as a monopolist,
but never seen as anti-capitalist."
"It's a correct strategy for Thaksin and the red shirts that if you want to
tell a big lie you need to attach it to a big truth to make it believable,"
said Korn in a phone interview. "Thailand has income inequality and many Thais
lack access to economic opportunities. But the reality is that this government
has done more to address these issues in one year than Thaksin did during his
Korn says the government's new farmer price support scheme has ensured that
over four million farmers nationwide receive fair prices for their produce and
has faced fierce opposition from millers who were the chief beneficiaries of
similar schemes under Thaksin. The Finance Ministry's push for a new land tax,
which the cabinet approved this week, will over time structurally do more to
address issues of economic inequality than Thaksin's populist handouts, he
As part of the UDD's ideological messaging, its leaders have taken particular
aim at Bangkok Bank, the country's largest and now majority foreign owned
financial institution, for allegedly contributing funds to the rival PAD and
its commercial association with Privy Council president Prem Tinsulanonda.
Thaksin has openly accused Prem of orchestrating the 2006 military coup that
toppled his elected government - charges the royal advisor has denied.
Bangkok Bank's branches have in recent weeks been targeted in a series of
mysterious grenade attacks, for which UDD leaders claim they are not
responsible. Some analysts believe the UDD's earlier threat to extend its
protest to Bangkok's Silom Road financial district aimed partially to paralyze
Bangkok Bank's headquarters and operations. Kalaya Sophonpanich, a senior
Democrat member currently overseeing the party's strategic efforts to make
electoral headway in Thaksin's northeastern region stronghold, is married into
Bangkok Bank's founding family.
From their protest stage, other red-shirt leaders have pilloried agro-industry
giant CP Group, a long time rival to Thaksin's formerly owned Shin Corporation,
which also maintains its headquarters in Bangkok's financial district. Core UDD
leader Nattawut Saikua has in his recent addresses threatened to ransack and
loot the recently renovated Central World department store, which looms over
the UDD's current main protest stage, if troops attempt to forcefully disperse
The store and the UDD protest stage are significantly situated on land owned by
the royally affiliated Crown Property Bureau, which through holdings owns an
estimated 40% of all property in Bangkok's central business district. It's
unclear how much of the area currently occupied by the UDD is owned or leased
by the Crown Property Bureau, which the UDD has not publicly identified as
among its corporate enemies.
Minister Korn notes that "nearly all of the private companies targeted by the
UDD refused to kow-tow to Thaksin's government during the height of his power".
Bangkok Bank and Kasikorn Bank locked horns with Thaksin and personal advisor
Pansak in the early years of his administration because they refused to loosen
lending requirements and foster the economic recovery he promised to
orchestrate while on the campaign trail.
In response, Thaksin ordered state-owned banks to ramp up lending and cut
interest rates in a bid to lure corporate clients away from the more
conservative Bangkok Bank, Kasikorn Bank and royally affiliated Siam Commercial
Bank, which likewise has not been publicly criticized by UDD speakers. Many saw
Thaksin's pursuit of a free-trade agreement with the US as a pointed bid to
break the three banks' dominance over the local banking market through the
introduction of big American bank competition.
While many analysts thus see the UDD's corporate criticisms as more personal
than ideological, UDD leaders will face popular pressure to live up to their
radical calls for economic restructuring should they rise to political
prominence after the next polls, either through the formation of a new
political party or by association with the Thaksin-aligned opposition Puea Thai
If they do, it would mark a radical philosophical turn for many of the
established mainstream politicians in Thaksin's traditionally pro-business
camp. Few financial analysts and foreign investors who spoke with Asia Times
Online said that they would favor a switch from Abhisit's team - perceived as
competent technocrats - to an administration led by a former soldier and
current Puea Thai chairman, Chavalit Yongchaiyudh, who presided over the
country's spectacular financial collapse in 1997.
Nor was it apparent to them that Puea Thai or UDD leaders would introduce
policies to break up on an equal basis the various Sino-Thai-owned
conglomerates that dominate so many of Thailand's domestic markets and restrict
economic opportunities for the poor. Analysts and academics say that those
private businesses, through systemic union-busting and wage suppression, have
contributed more meaningfully to Thailand's yawning wealth gap than the state
bureaucracy. They note that both sides of the political conflict receive
substantial corporate backing.
Many heavily indebted Sino-Thai-owned businesses were opaquely bailed out with
massive state funds under Thaksin's watch, while his spin doctors and
state-controlled media played up his substantially lesser-funded populist
policies, including his heavily marketed village development funds, a debt
moratorium for farmers and a low-cost healthcare scheme, to promote his
pro-poor credentials. One Bangkok-based investment bank analyst believes
that Abhisit's government has pandered to the state-owned enterprises that
opposed Thaksin's privatization plans and coalesced under the PAD to force his
ouster. The analyst believes that the government last year backed down to an
illegal State Railway Authority wildcat strike and has delayed the introduction
of 3G telecom licenses as a sop to state-owned communications
agencies. Despite the rhetoric on both sides of Thailand's political
divide, few foresee a wealth-gap-bridging revolution on the horizon.
Shawn W Crispin is Asia Times Online's Southeast Asia Editor.