The BGA Thailand Team led by Managing Director Teerasak Siripant, wrote an update to clients on the swearing in of Thailand’s new government.

Context

  • Thai Prime Minister Srettha Thavisin and his Cabinet members were sworn into office at the Royal Palace on September 5, marking the beginning of Thailand’s new government and the departure of former Prime Minister Prayut Chan-o-cha, who had been in power since 2014.

  • The Cabinet lineup of the Pheu Thai-led coalition favors the political interests of each party. Despite their different ideologies and views on certain policies, the new coalition partners are united in their desire to stay in power to advance electoral promises. Compared to the relentless opposition against the Move Forward Party and its leader Pita Limjaroenrat, the short-time process from the day when Srettha was picked to when his Cabinet was sworn in partly shows that the current government arrangement is preferred by the powers that be. This should somewhat guarantee its stability in the long term.

Significance

  • The coalition partners will be incentivized to promote growth to support their prospects in the next election. Having been out of government for more than nine years, Pheu Thai will be eager to reintroduce the old populist strategies that brought its past electoral successes. Srettha is poised to resort to Pheu Thai’s old populist measures of guaranteeing wages and prices and handing out freebies, including his signature THB 10,000 ($280) in digital cash to Thais who are 16 and older. Apart from pump-priming, the Pheu Thai-led government is expected to come up with a deficit-spending budget, which will gamble on pro-growth.

  • The new government has identified economic revitalization as its top priority. Srettha’s policy proposals include immediate fuel and electricity price cuts, a debt moratorium, THB 10,000 ($280) in digital cash handouts and tourism promotion schemes. He is expected to outline his policies in a parliamentary session from September 11-12.

Implications

  • The new government will be challenged to accommodate the diverse interests of an 11-party coalition. This will likely impede policy thrust and result in policy fragmentation along party lines. Over the next year, BGA expects growth areas and projects along line ministries and sectors. Business strategies should be less broad-based and more targeted. Companies are encouraged to monitor ministerial policy priorities and tailor their business plans and advocacy accordingly.
  • With the new government’s expansionary fiscal posture, monetary policy tightening and higher interest rates may be in store; however, the Bank of Thailand (BOT) has not signaled that it will take a confrontational stance so far. The current central bank governor hails from the Prayut era, when the BOT was seen as accommodating to government preferences. Yet it is plausible that the final deal that brought former Prime Minister Thaksin Shinawatra back from a 15-year self-imposed exile last month could indicate that the Srettha government has establishment backing, which matters in a time when central bank autonomy has been in question.

We will continue to keep you updated on developments in Thailand as they occur. If you have comments or questions, please contact BGA Managing Director Teerasak Siripant at tsiripant@bowergroupasia.com.

Best regards,

BGA Thailand Team

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Managing Director

Art is an intuitive leader with a strong set of relationships with Thailand’s government, business, media and civil society leaders. His network spans a diverse set of stakeholders, from farmers in rural Thailand to the top echelons of Thailand’s political leadership. Prior to joining BGA, Art spent a decade serving as the chief political advisor to the Australian ambassador to Thailand. In this role, he had a front row seat to the most significant political and economic developments in Thailand. Earlier, he served as an army intelligence officer in the Royal Thai Armed Forces. Art has played a central role ... Read More