As it stands now, investors should be wary of Thailand
Dr Arno Maierbrugger
20 July 2013

After successful growth over the past years, the recovery from the 2011 floods, with a thriving capital market and a favourable investment incentive scheme, one could think that Thailand shouldn’t worry about its economic future and the attraction it emanates to global investors.


Under the surface of the country’s smiling attitude are seething troubles, and many economists advise investors to watch the short and even mid-term development in the country from a distance.

With the problems that have piled up with the populist government’s policies, Thai society has started brimming with contradictions that could break into conflict at any time. For the first time since the military coup that ousted former prime minister Thaksin Shinawatra in 2006, anti-government groups have started to hold regular protest marches in Bangkok since June 2013.

At a closer look, and behind the country’s shiny touristic façade, the state is in a crisis. It seems that coming to terms with the fractious forces that divide the nation has become more difficult in the recent past, and observers say it is not a question of whether, but when an open conflict breaks out again.

The risk of investors becoming collateral damage is real. Just after new confidence has been established after the 2011 floods that caused many factories to shut down, new volatility is arising. Recent events in Cairo have been monitored closely in Bangkok because of uncomfortable parallels. The elite in both countries made the same mistakes by manifesting their power without public consent, crippling the opposition and filling their pockets with public money. Such a situation, as a Bangkok commenter put it, cries for a “social reset button” being pressed in Thailand, be it through a coup or otherwise, but mostly likely violently.

But such a sentiment destroys long built-up confidence of investors. At the moment, for foreign businesses interested in Southeast Asia, it would be wise to look elsewhere. Thailand’s political and economic status is in limbo, and there are many shortcomings that can impossibly be corrected in the short term. First of all, it is the implementation of desperately needed social infrastructure, which has been neglected because there are not so many kickbacks to get out of it.

Qatar is an important new gas supplier for Thailand and has in the past looked to forge closer business ties with the kingdom. However, with a high change that political volatility turns into economic instability, it is better to stand at the sidelines and let the Thai government do their housekeeping first – if it is still able to do it.