Thai Prime Minister Prayuth Chan-ocha has ordered the two-meter fence around government house raised, which critics describe as a metaphor for the government’s growing spate of dilemmas, especially with a swirling scandal over skyrocketing pork prices driven up by an outbreak of African flu that officials apparently tried to cover up, according to reports.
The country heads into 2022 as divided as ever and with the economy still in decline despite media attempts to dress it up. It is going into the third year of the Covid-19 pandemic following a 6 percent 2021 GDP decline according to the World Bank. Public debt is running at 58.8 percent of GDP, while household debt is now Bt14.27 trillion (US$430.2 billion), or 89.3 percent of GDP. Non-performing loans are increasing. Stagflation is a rising danger.
The official unemployment rate is only 2.25 percent, but it is believed that more than 2.5 million workers in the informal sector are either unemployed or under-employed. With the tourism sector still decimated, the only shining light within the Thai economy was the 16.4 percent increase in exports last year. Establishment-linked economists have downgraded their GDP growth expectations to 3-4.5 percent in 2022 as the latest Covid-19 wave sweeps the world.
Although the government has released Bt1.5 trillion in cash handouts to boost the economy and provide some relief to hard-hit people over the past 18 months, many are financially desperate due to job loses and business restrictions due. The government, insensitive to public opinion, earned strong criticism when it recently announced the purchase of four F-35 stealth fighter aircraft from the United States.
Handling the pandemic
After two years into the pandemic, the government has decided to reopen gradually and treat the tourism hubs like Pattaya, Phuket and Chiang Mai. Thailand’s ‘test and go’ pass which provided minimal quarantine for vaccinated international arrivals was hastily suspended, leaving the Phuket ‘Sandbox’ program which provides for quarantine as the only way for tourists to enter the kingdom.
Case numbers grew from around 3,000 per day at the beginning of the month, plateauing to 7-9,000 per day at the middle of January, in contrast to the pattern through South Africa, Europe and the United States, where cases rose dramatically. The Center for Covid-19 Situation Administration (CCSA) is already talking about easing restrictions.
Those testing positive are mandatorily whisked off to either a hospital, community field hospital, or private hospital for quarantine/treatment. Some 77,000 people are hospitalized in this way, the second highest level in the world to the United States, which is currently experiencing more than 1 million new cases per day.
Scandals have hit community field hospitals including drug and sex parties and fleeing patients, triggering police searches. Many are not reporting sickness out of fear of being forced to one of these facilities. Many Thais who can afford Bt45,000-100,000 pay for an upgrade to a hospital. Incoming international arrivals who either test positive or have come into contact with someone testing positive are rushed to private hospitals or other facilities, incurring exorbitant bills, with many of these horror stories reaching international media.
With many field hospitals at capacity, the vulnerable who really need hospitalization are missing out. Private hospitals are offering home visit servicing for those who can afford it, raising concerns it will be difficult to scrap this system given vested provincial business interests running these schemes.
After a shaky start to the vaccination program and a delay from the local manufacturer of the AstraZeneca vaccine, Thailand was able to catch up over the second half of the year. There were allegations that members of the cabinet were financially benefiting from regulating the supply of vaccines. However, over the second half of 2021 the government met vaccination targets, with 71.1 percent of the population now having received at least two shots.
Some economic bright spots
Although the pandemic has devastated many parts of the economy, especially in international tourism, many rural communities, especially those reliant on commodities like rubber are thriving. In addition, some of Thailand’s largest corporations have grown, including those in retail, food, telecommunications, and manufacturing.
While traditional international tourist areas have become ghost towns, entrepreneurial SMEs have developed tourist projects that cater for domestic tourism. Industrial projects like the Eastern and Southern Special Economic Corridors are set to expand. While shopping malls are quiet, online shopping is booming.
Kickstarting international tourism
Before the beginning of the pandemic, tourism contributed 20 percent to Thailand’s GDP, with nearly 40 million international visitors in 2019. Restarting international tourism has been a high priority with traditional international tourist precincts targeted early for vaccination drives.
In mid-July, the Phuket Sandbox program was commenced to allow international arrivals to travel to the island for seven days before being allowed to travel freely around the country after a negative PCR test. Even with the cumbersome and ever-changing rules, the scheme had some success. In November, the government launched the Thailand Pass ‘test and go’ scheme with vaccinated international arrivals exempted from quarantine if they tested negative upon arrival. More than 260,000 people arrived through the scheme up to mid-January. But with the advent of Omicron, the Thailand Pass system has been suspended.
The scheme was only partly successful amid criticism about the necessary procedures required. Vietnam, Laos, Maldives, and Bali are reportedly much easier to enter. Some international arrivals found their insurance didn’t cover detention in a hospital if they were asymptomatic or were forced to quarantine due to close contact with someone who tested positive.
The onset of Omicron has reportedly led to mass cancellations from foreign tourists, some areas up to 60 percent. However, domestic tourism so far appears not to have been affected.
The Tourism Authority of Thailand (TAT) recently launched the concept of ‘Amazing Thailand New Chapter,’ announcing “white routes” for tourists, and green economic development strategies for more sustainable and safe tourism. TAT optimistically forecasts 9 million international tourists, and 15 million if land borders are reopened. A Bt300 entry fee is to be charged on all incoming tourists from April 1st April, plus an insurance scheme for accidents to cover Bt500,000 in medical fees, or a Bt1 million payment if death occurs.
Despite these moves, red tape and arbitrary rule changes have cut into the choice of Thailand as a potential tourism destination, making this year uncertain for international tourism.
African Swine Fever and inflationary threats
Thai veterinary authorities detected African Swine Fever in Nakhon Pathon province after Taiwanese health authorities detected the disease in a batch of sausages from Nakhon Ratchasima, where no outbreak had been detected at the time, leading to suspicion of a cover up, with little action taken to stem any potential outbreak. The price of pork has risen more than fourfold since the beginning of the year. This is also occurring in many other staples like eggs, chicken, beef, and flour. Food stalls across the country are raising their prices to compensate.
This bout of inflation is being blamed on the rising cost of imported inputs, the weakening baht, the increase in petrochemical product prices, with inflation measured at 2.7 percent in November before market prices for food items began to rise.
Thailand is in danger of experiencing a bout of stagflation, as the economy is in recession, unemployment is high, particularly within the informal sector, and inflation is beginning to run rampant. This is going to put pressure on interest rates at a time the government needs to boost economic activity, and the economy is deeply in debt.
Prayuth aiming to stay in power
Prime Minister Prayuth has withstood many political challenges, even from within his own Palang Pracharat Party. But the 2017 constitution limits his tenure to eight years. Prayuth became prime minister after the 2014 coup. His forces are using the excuse that his tenure began only after ratification of the supposedly democratic constitution after 2019 general election.
A general election is not due until 2023. Many pundits predict a possible election this year, but he would gain little from early polls. Both government and opposition ranks are unstable with disputes and power struggles. Palang Pracharath was able to make inroads on the Democrat Party within their southern stronghold in a by-election last year, leading to the possibility that the Democrats could be wiped out in a general election. The opposition Pheu Thai and Future Forward could even end up standing against each other in the upcoming elections. There will be a change in the electoral system allowing double ballots, which will favor the larger parties over newer and smaller ones.
Student clampdown, constitutional reform absent
Last year saw a heavy clampdown on the student movement, which has become deeply fragmented since the mass protests early last year. Courts on November 10 ruled that speeches by three activists at an August 10 rally constituted an attempt to overturn the democratic system with the king as head of state although the students were calling for reform rather than abolition of the monarchy.
Formal measures to reform the constitution were defeated in the parliament last year. Section 272 of the 2017 constitution, which allows the appointed 250-member Senate to vote with the 500-member popularly elected lower house thus stands, almost ensuring the military will dominate politics for years to come.
The lese majeste law has been used to charge more than 150 activists to date. The government is pushing through a number of measures to restrict freedom of speech. Human Rights watch has criticized the government for prosecuting dissenters, violently dispersing peaceful protest and censoring news and social media. Twitter has blocked accounts associated with the military, there are reports of military personnel influencing voters in by-elections, and the government has a draft bill before parliament to regulate the operation of non-governmental organizations (NGOs).
Thailand ranks 137th of 180 countries in the Reporters Without Borders 2021 Press freedom Index, while the government has a draft bill before parliament to introduce a media code of conduct to further restrict reporting by allowing the suspension of media licenses on the grounds of breaching the ‘good morals of the public.”
Freedom House ranked Thailand 30/100, classifying the country as “not free.” The 2021 ranking gave Thailand 5/41 for political rights and 25/60 for civil liberties. Perhaps the best way to sum up the view of entitlement of the power elite is to quote former deputy minister Thammanat Prompao, a convicted drug smuggler with fake degrees, who recently said that MPs should be restricted to people with a good family background and recognizable family names.
Thailand has many challenges ahead in 2022. The country is still under heavy restrictions, with unofficial curfews in some parts. There is still great uncertainty over the extent of the Omicron variant. Increasing illegal entries from strife-torn Myanmar could be yet another challenge. The country is in recession, with growing unemployment and inflation showing signs of running out of control. The bureaucracy has been found to be too rigid and procedural. Institutional reform is needed to get Thailand going once again.
Originally published in the Asia Sentinel. Murray Hunter’s blog can be found here
Murray Hunter has been involved in Asia-Pacific business for the last 30 years as an entrepreneur, consultant, academic, and researcher. As an entrepreneur he was involved in numerous start-ups, developing a lot of patented technology, where one of his enterprises was listed in 1992 as the 5th fastest going company on the BRW/Price Waterhouse Fast100 list in Australia. Murray is now an associate professor at the University Malaysia Perlis, spending a lot of time consulting to Asian governments on community development and village biotechnology, both at the strategic level and “on the ground”. He is also a visiting professor at a number of universities and regular speaker at conferences and workshops in the region. Murray is the author of a number of books, numerous research and conceptual papers in referred journals, and commentator on the issues of entrepreneurship, development, and politics in a number of magazines and online news sites around the world. Murray takes a trans-disciplinary view of issues and events, trying to relate this to the enrichment and empowerment of people in the region.