Thailand goes to the polls this weekend with the lagging economy and the long-running military dictatorship looming in the minds of voters. They may well deliver a populist victory that pushes Paetongtarn Shinawatra into the prime minister's office. Her father, Thaksin, also rode the votes of the mass "red shirts" to power until he was ousted in a military coup.
The election will reflect broad unhappiness with the state of the economy. That's also reflected in Thai equities, with Thailand the worst-performing stock market in Asia to date this year by some stretch. The benchmark SET index is down 6.9% in 2023.
Other Southeast Asian equities are also in the red, more modestly, with Malaysian stocks down 4.7%, Indonesian equities off 2.0%, and the Straits Times in Singapore down 1.5%. That's in contrast to developed markets such as Japan, where the Topix broad-market index is up 12.2% in 2023.
Paetongtarn returned to the campaign trail this week after the birth of her second child on May 1. The party she helms, Pheu Thai or "For Thais," is the descendant via two now-banned predecessors that her father once led before he fled into exile. Her election could herald a return to Thailand for Thaksin.
But Pheu Thai has seen many of its populist policies emulated by other parties, and may need to form a coalition government depending on the results of Sunday's vote. In fact, the latest poll show a surge by the Move Forward Party, which could even win the most votes under its charismatic 42-year-old leader Pita Limjaroenrat, the heir to a rice-bran-oil fortune. He has been able to harness the votes of Thai students, who have played a large part in recent political demonstrations against military rule. Move Forward wants to alter the law on criticizing the king because it says the rules are being used for political purposes.
It is also an excellent question what kinds of "irregularities" the ruling government under former military chief and current Prime Minister Prayuth Chan-ocha detect if it chooses to contest the results. What's more, all 250 members of the Senate of Thailand, the upper house, are appointed by the military. But Prayuth's party, United Thai Nation, is consistently third well behind Pheu Thai and Move Forward.
Seeing a Shinawatra on the ballot allows voters to express their dissatisfaction with almost a decade under the current authoritarian government, which took power in a military coup in 2014. Although coups are common in Thailand, and often bloodless, never before has the installed government lasted so long.
It was Paetongtarn's aunt (and Thaksin's sister) Yingluck who was removed from power in the 2014 coup. A previous military coup had toppled Thaksin in 2006 while he was visiting the United Nations in New York.
A lot of voters would now like to see a change, and opposition politicians have promised a move toward democracy. Whether the military accepts the result is another question ...
The army has traditionally been a staunch pillar of support for the Thai monarchy. But the country was cast into political disarray by the death in 2016 of popular King Bhumibol Adulyadej. His son Maha Vajiralongkorn is seen with suspicion by many Thais, living much of his life in Germany, divorcing three wives, and appointing his pet poodle Fufu to the rank of Air Chief Marshal as an officer in the military.
Thais are not allowed to express their doubts about their king. There are strict laws against criticizing the monarch, members of the royal family, or the institution around the king. But there's current debate about whether to amend some of those rules, and the election of a democratic candidate would shake the confidence of conservatives in the "yellow shirt" royal camp.
Paetongtarn says she will work with parties that share the same policies as Pheu Thai if necessary, but will not cooperate with the military. The "red shirts" have always represented rural, often farming constituents as well as the working class. But their parties and goals have long been viewed with suspicion by monarchists, the urban educated elite and Thailand's traditional "power families."
A strong showing for Paetongtarn would indicate that there really are second, third and fourth acts in Asia politics, where ruling elites and dynastic families have for years dominated party politics. In the Philippines, Ferdinand Marcos Jr. is already installed as president, airbrushing over the nasty history from his namesake father's rule as dictator that ended so suddenly in the "People Power Revolution" in 1986.
Thaksin has indicated he would like to return to Thailand. Both he and his sister live abroad after being convicted of abuse of power when they were ousted, charges they say were only levied to keep them out of office.
Paetongtarn, nicknamed Ung Ing by her family, denies that her father would wield any influence if she wins. "Dad wants to come back to take care of his grandkids," she said. "He didn't say he wants to be prime minister." At 36, she is the youngest of Thaksin's three children. It's virtually the earliest opportunity for her to run, since the Thai constitution requires electoral candidates to be at least 35.
Thailand's economy will likely pick up pace this year, with a recovery in the all-important tourism sector already driving stronger performance in Q1. Thailand has lagged its Southeast Asian peers but the return of Chinese tourists in particular has delivered a shot in the arm for the Covid-ravaged hospitality industry.
Thailand's GDP grew 2.3% in Q1, year-on-year, according to 20 economists polled by Reuters. That's up from 1.4% growth in the prior quarter. The Q1 data is due out on Monday. For the full year, the Thai economy is likely to grow 3.7% in 2023 and 3.8% in 2024.
China suddenly scrapped its harsh zero-Covid policies overnight in December. Given that during the pandemic, it was virtually impossible to leave China if you wanted to return, it has taken time for Chinese travelers to plan trips. The country had essentially stopped issuing new passports, so the process takes time.
But as we have seen here in Hong Kong, group tours and individual travel out of China are gaining momentum and back in force. In Thailand, the 6.15 million tourist arrivals in Q1 through late March already exceeded the government forecast of 6 million.
The other main challenge facing the Thai economy is lackluster global demand for exports. Thailand is a major manufacturing center in Southeast Asia, particularly for electronics and automotive parts, so the sluggish shipment of goods is likely to act as a headwind in 2023. Domestically, inflation has been disruptive but is no longer the dominant force dictating voter decisions. Price increases have fallen from a 14-year high of 7.9% last August to 2.7% in April. Consumer spending is picking up as a result.
In the Philippines, the election of Marcos Jr. has been good news for the United States, with the new president keen to build back an alliance undermined by his predecessor, Rodrigo Duterte, who had courted Beijing. At the start of this month, Marcos headed to Washington to meet with U.S. President Joe Biden, the first such visit in over a decade, while the U.S. military already announced it would expand its presence with four new Filipino bases.
The Philippines said this week that Q1 GDP grew 6.4%, year on year, higher than forecast, and the eighth straight quarter of expansion. Manila is targeting growth of 6% to 7% this year, building on 7.6% growth in 2022, the strongest year since 1976.
Thailand has traditionally remained neutral in Asia but friendly toward the West. The Thai kingdom famously has never been conquered. Sunday's vote will show us whether the Shinawatra family can reclaim political power and maintain a cordial relationship with the current king.