Thailand recently witnessed a significant political upheaval when Pita Limjaroenrat, the leader of the party that won the May general election, was barred from running for Prime Minister by parliament. This decision has sparked anger among his supporters and has created an opportunity for his coalition partners to pursue the top job.
Parliament will reconvene on July 27 to vote again on the country’s new Prime Minister. Despite the setbacks faced by Pita, the eight-party pro-democracy coalition led by his Move Forward Party still maintains a chance of ending the nearly decade-long military-backed rule. Pheu Thai, the second-largest party in the alliance, is currently assessing the best strategy for the upcoming vote.
Although Pita has expressed his willingness to let Pheu Thai take the lead in government formation efforts, he has not officially conceded that all his chances have been exhausted. The situation is unfolding amidst a growing sense of urgency, as time is of the essence according to Srettha Thavisin, a prime ministerial candidate of the Pheu Thai party. The negotiation team will play a crucial role in determining the next steps and whether a new alliance will form.
The developments in Thailand bear similarities to previous cases involving Thanathorn Juangroongruangkit, the leader of Move Forward’s predecessor party. Thanathorn was disqualified as a lawmaker over alleged breach of election rules, and his party, Future Forward, was later dissolved. These events triggered a mass protest movement in 2020, with demands for monarchy reforms being raised.
As the political limbo continues, caretaker Prime Minister Prayuth Chan-Ocha, who came to power through a 2014 coup, remains in charge in the interim. However, policy-making has stalled, leaving the nation in a period of uncertainty. One of the key risks during this period is the potential delay in endorsing the country’s annual budget for the next fiscal year, which could further impact an economy already grappling with slowing exports.
The ongoing political turmoil also poses a risk to Thailand’s tourism industry, which is currently serving as the main engine of growth. It remains to be seen how voters will perceive the selected Prime Minister, and political noise is expected to rise even after the conclusion of the selection process.
The prolonged delay in forming a government, more than two months after the elections, and approving the budget have led to increased borrowing costs for companies. Meanwhile, the yield of 5-year BBB-rated local currency notes in Thailand has risen in July, in contrast to falls in Indonesia and Malaysia.
Moving forward, the coalition math becomes crucial in determining the path ahead. As the one-time nomination becomes a new precedent, Pheu Thai faces a challenge in deciding whether to continue its alliance with Move Forward. The conservative camp opposes Move Forward’s pledge to reform the lese majeste law, which deals with defamation or insults against the royalties.
A 250-member Senate vote is crucial for a victory, and it is evident that the next party to nominate a Prime Minister must not prioritize Article 112, the royal insult law. The ongoing Constitutional Court hearing regarding Move Forward’s disbandment offers Pheu Thai a legitimate excuse to explore alternative options and form larger alliances to secure enough votes for Prime Minister approval.
Pheu Thai may be enticed to align with conservative groups like the Bhumjaithai Party or the Palang Pracharath Party. However, the final decision and the future landscape of Thai politics will depend on complex calculations and negotiations among all relevant parties.
The uncertainty surrounding Thailand’s political situation is likely to persist. With potential ramifications for economic stability, the selection of the next Prime Minister and the subsequent policies adopted will shape the country’s future. As Thailand navigates through this challenging period, it remains to be seen how the political landscape evolves and what impact it will have on various aspects of the nation’s development.
Market Capital Research 