Thailand’s Political gridlock threatens economy
WORST-CASE SCENARIO
Political gridlock threatens economy
Confidence and growth at risk, say observers
Should the political situation descend to the worst-case scenario, business confidence and growth will suffer, some market observers warned yesterday.
“The latest gathering by the People’s Alliance for Democracy (PAD) to oppose government attempts to amend the Constitution supports our view that the political situation is shifting towards a worst-case scenario,” said Citigroup Thailand’s Investment Daily report yesterday.
The gridlock faced in the months prior to the September 2006 coup is again clearly visible, it said.
Fiscal Policy Office director-general Pannee Sathavarodom also expressed concern about fallout from the political situation at a time when the local economy appears to be enjoying a strong growth momentum.
Based on value-added tax (VAT) collection by the Revenue Department, the economy showed it was experiencing a pick-up in both consumption and investment.
Pannee said that last month VAT collection grew 12.2 per cent. Investment, particularly in real estate and machinery, also showed expansion, while taxes collected from business investment grew 44.6 per cent.
“We’re quite concerned about inflationary pressures, the political situation and the higher oil prices,” said Pannee.
The University of the Thai Chamber of Commerce predicts the local economy could grow at less than 4.5 per cent if the worst-case scenario is realised.
Thanawat Polvichai, director of the university’s Economic and Business Forecasting Centre, said: “Growth this quarter and next could be worse if political instability persists. We believe there will be a recovery in the fourth quarter if the government approves the next fiscal budget and implements mega-projects,” he said.
The university maintains its growth projection of 5.1 per cent and its range of economic growth at 4.5-5.5 per cent.
The university study showed the Central region enjoying the highest economic growth of 7.7 per cent in the first quarter, thanks to rising prices for rice and other cash crops, along with industrial investments, said lecturer Wachira Khuntaweetep.
Growth in the gross domestic product expanded 5.6 per cent in Bangkok and the surrounding provinces, 4.8 per cent in the Northeast, 4.7 per cent in the South and 4.4 per cent in the North.
Thanawat also predicted average growth could ease to 5 per cent this quarter in terms of lower consumption, fewer investments and a reduced employment rate.
“Despite rising crop prices, farmers must cope with skyrocketing oil prices and raw materials. Exporters still worry about the baht’s appreciation. If possible, the government should keep the baht’s foreign-exchange rate at 32 to the US dollar,” said Thanawat.
The university is also cooperating with the Comptroller-General’s Department to estimate the country’s grain situation. It predicts the price of rice will drop slightly at the end of the year, because more supply will enter the global market.
For Thailand, the price level for crops like rice, tapioca, corn and rubber continues to jump.
However, farmers have not gained as many benefits from the rising price as traders have, because of their high costs for fertiliser and oil.
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Constitutional amendment motion dropped
source: The Nation May 30 2008
Eight more MPs and Senators withdrew their support of constitutional amendment motion causing the motion to be dropped.
A total of 42 senators and two MPs have so far withdrawn their names from the motion seeking to amend the Constitution.
The motion is automatically dropped because the number of MPs and Senators supporting the motion is 124, less than 126 as required by the law.
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Constitution amendment motion dies
source: Bkk Post May 30 2008
The proposal to amend the constitution was automatically killed by parliamentary procedure on Friday after seven backers withdrew their support, meaning the measure no long has enough sponsors to be presented to the House.
The charter rewrite motion was lodged by 164 lawmakers last week, but the number went down to 124 on Friday.
At least 126 parliamentarians are needed as signed sponsors in order to put the measure onto the official agenda of Parliament.
Suphan Buri senator Prasit Photisuthon, one of the seven senators, said he pulled his backing for the amendment so that the supporters of the People’s Alliance for Democracy (PAD), would no longer have an excuse for their street rally against amendment.
PAD core leaders, meanwhile, presented a list of 31,881 people to Senate Speaker Prasobsuk Boondech to impeach the lawmakers who backed the motion.
The core leaders are scheduled to announce later Friday whether to continue to rally to oppose the charter rewrite.