BANGKOK
The Thai junta has moved to try and shore up a business environment hammered by months of political unrest, but with the country rapidly losing ground to other more stable and dynamic regional players, economists are concerned how difficult that could be.
Hope lies in Thailand's emergence over the last century as Southeast Asia's second largest economy -- during which it has also had 19 coups. But this time worldwide economic circumstances are not the same.
"Whereas the country's last coup [2006] had limited impact as it occurred against a backdrop of a strong global economy, this time, the global economy is not so good," an economist following Southeast Asia for a major international investment bank told the Anadolu Agency.
"The military is speaking about stimulating the economy, but the starting point is much lower," he added.
On Tuesday, coup leader, army chief and self-elected Prime Minister General Prayuth Chan-ocha set up an advisory committee, which included former central bank governor and finance minister Pridiyathorn Devakula, former commerce minister Somkid Jatusripitak and central bank high ranking official Narongchai Akrasanee.
The junta has also placed economic ministries under the authority of military officers and prepared payments for hundreds of thousands of rice farmers owed money from the ousted government's troublesome rice pledging scheme -- decisions and appointments seen as a way to reassure the business community.
The latest figures drive home just how tough might be -- factory output for April fell 3.9 percent, the 13th monthly drop in a row; growth in the first quarter contracted 2.1 percent when compared to the previous, and 0.6 percent compared to the same period last year. Exports also decreased during the same period, foreign investment has been very slow since the beginning of anti-government demonstrations in November, and tourism -- an industry in which hundreds of thousands of Thais are employed -- has fallen 20 percent since the coup.
Malaysia has warned its citizens against travelling to Thailand, Singapore says those thinking of going should "seriously reconsider" their plans, the U.S. and Hong Kong have advised citizens to avoid nonessential travel, while the British government has told people to exercise "extreme caution and remain alert."
Pops stars such as Eric Clapton and Taylor Swift have attributed to tourists' fears, the British musician cancelling a February gig after violence left an adult and four children dead, while country pop singer Swift nixed what would have been her June 9 show in Bangkok following the military coup.
To top it all, a report released Monday by rating agency Moody’s Investors Service stated: "The coup (…) will not restore investor confidence or ease downward pressure on the economy, as reflected by real GDP trending far below its potential growth rate this year."
The junta has acted quickly, Chan-ocha meeting with a group of foreign investors, mostly Japanese, and announcing Wednesday that it will revive mega-projects to upgrade the country's infrastructure -- many of which were launched in 2013 by the May 22 deposed government, but blocked by a decision by the opposition-sympathetic constitutional court which rejected the funding plan.
Some doubt such moves will be enough.
"Private spending is likely to stay subdued until there is more clarity on policy direction and political stability," stated Capital Economics' Krystal Tan in a recent research report.
Chan-ocha declared Monday that elections would take place in the future, but has refused to specify a date -- at one point storming out of a press conference in which two journalists pressurized him to do so.
Asked, when a new government would be set up, he would only answer it is "in the process."
The economist -- who did not want to be identified because he was not authorized to speak to media -- said that although "good to bring in technocrats and it will reassure investors... the military tend to be authoritarian."
"It raises the question whether they will try to be more interventionist in the economy," he warned.
To add to Thailand's worries, other governments in the region have been making major reforms, removing legal limitations to foreign investment, reinforcing legal protection, lowering taxes for foreign companies and streamlining administrative processes to attract investment and strengthen growth.
"Countries like Vietnam and the Philippines are snapping at its heels and may overtake Thailand if the fundamental political challenges are not resolved," Frederic Neumann, co-head of Asian research at HSBC Holdings Plc in Hong Kong, told Bloomberg this week.
"The constant change in leadership and policy left adrift are taking a cumulative toll on Thailand’s economy and damping its long-term prospects."
Vietnam, Indonesia, Malaysia and the Philippines are forecast to grow more than 5 percent this year, while Thailand's national planning agency had forecasted a GDP rate between 1.5 percent and 2.5 percent for 2014.
But then came the political instability, which began in November, and then the coup -- during which government stagnated, unable to act while those around continued to surge forward.
"Thailand is certainly still an easy place to do business because of its good infrastructures, but the problem is that in the last eight years of political turmoil there has not been many pro-business reforms compared to neighboring countries," said the economist.
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