Thailand. Country Profile 2007

Transcription

1 Country Profile 2007 Thailand This Country Profile is a reference work, analysing the country's history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Unit's Country Reports analyse current trends and provide a two-year forecast. The full publishing schedule for Country Profiles is now available on our website at The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom

2 The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For 60 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom Tel: (44.20) Fax: (44.20) london@eiu.com Website: New York The Economist Intelligence Unit The Economist Building 111 West 57th Street New York NY 10019, US Tel: (1.212) Fax: (1.212) newyork@eiu.com Hong Kong The Economist Intelligence Unit 60/F, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) Fax: (852) hongkong@eiu.com Electronic delivery This publication can be viewed by subscribing online at Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2007 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN Symbols for tables "n/a" means not available; " " means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.

3 VIETNAM Chiang Rai MYANMAR Phayao LAOS ANDAMAN SEA Chieng-Mai Chiang Lamphun Lampang Phrae Phumiphon Res. Mae Sot Khao Laem Res. Tak Ping R. Nakhon Sawan Nam Chon Res. Yam R. Nan Siri Kit Res. Uttaradit Phitsanulok Phetchabun Srinakarin Lopburi Res. Suphan Buri Saraburi Ayutthaya Kanchana Buri Nonthaburi Nakhon Pathom BANGKOK Ratcha Buri Samut Prakan Samut Chon Buri Sakhon Petchaburi Pattaya Hua Hin Prachuap Khiri Khan Udon Thani Ubol Ratana Res. Rayong Mekong R. THAILAND Khon Kaen Ko Chang Nakhon Ratchasima Chanthaburihaburi Ko Kut Trat Nong Khai Sakon Nakon Mun R. Aranyaprathet Lam Pao Res. Mukdahan Kalasin Roi Et Chi R. Sisaket Surin Nakhon Phanom Meko n g R. CAMBODIA Ubon Ratchatani Khuraburi Ranong Isthmus of Kra GULF OF THAILAND Chumphon Ko Phangan Ko Samui Surat Thani VIETNAM Phangnga ga Phuket Krabi Trang Ban Kantang 0 km miles The Economist Intelligence Unit Limited 2007 Ban Hat Yai Nakhon Si Thammarat Phatthalung Songkhla Yala Pattani MALAYSIA Narathiwat Main railway Main road International boundary Main airport Capital Major town Other town May 2007

4 Comparative economic indicators, 2006 Gross domestic product (US$ bn) Gross domestic product per head (US$ '000) South Korea Singapore Indonesia Hong Kong Taiwan South Korea Thailand Taiwan Hong Kong Malaysia Malaysia Thailand Singapore Indonesia Philippines Philippines Vietnam Vietnam ,000 Sources: Economist Intelligence Unit estimates; national sources Sources: Economist Intelligence Unit estimates; national sources. Vietnam Gross domestic product (% change, year on year) Indonesia Consumer prices (% change, year on year) Singapore Vietnam Hong Kong Philippines Malaysia Thailand Indonesia Malaysia Philippines South Korea South Korea Hong Kong Thailand Singapore Taiwan Sources: Economist Intelligence Unit estimates; national sources. Taiwan Sources: Economist Intelligence Unit estimates; national sources. Country Profile The Economist Intelligence Unit Limited 2007

5 Thailand 1 Contents Thailand 3 Basic data 4 Politics 4 Political background 5 Recent political developments 10 Constitution, institutions and administration 11 Political forces 14 International relations and defence 17 Resources and infrastructure 17 Population 18 Education 19 Health 20 Natural resources and the environment 21 Transport, communications and the Internet 24 Energy provision 24 The economy 24 Economic structure 25 Economic policy 29 Economic performance 31 Regional trends 31 Economic sectors 31 Agriculture 34 Mining and semi-processing 34 Manufacturing 36 Construction 37 Financial services 39 Other services 40 The external sector 40 Trade in goods 42 Invisibles and the current account 42 Capital flows and foreign debt 43 Foreign reserves and the exchange rate 44 Regional overview 44 Membership of organisations 47 Appendices 47 Sources of information 48 Reference tables 48 Population 48 Labour force 48 Central government finances 49 Central government expenditure by function The Economist Intelligence Unit Limited Country Profile 2007

6 2 Thailand 49 Interest rates 49 Money supply 49 Gross domestic product 50 Nominal gross domestic product by expenditure 50 Real gross domestic product by expenditure 51 Gross domestic product by sector 51 Prices and earnings 51 Crop production 52 Minerals production 52 Manufacturing production 52 Construction statistics 52 Banking statistics 53 Stockmarket indicators 53 Main composition of trade 53 Main trading partners 54 Balance of payments, IMF series 54 External debt, World Bank series 55 Foreign reserves 55 Exchange rates Country Profile The Economist Intelligence Unit Limited 2007

7 Thailand 3 Thailand Basic data Total area Population Main provinces Climate Weather in Bangkok (altitude 2 metres) Language Weights and measures Currency Time Fiscal year Public holidays ,000 sq km 65.28m (2006) Population in million (local administration departments December 2000) Bangkok (Metropolitan; capital) 5.68 Chiang Mai 1.59 Nakhon Ratchasima 2.54 Nakorn Srithammarat 1.52 Ubon Ratchathani 1.77 Udon Thani 1.52 Twelve other Thai provinces have populations in excess of 1m Subtropical Hottest month, April, C; coldest month, December, C; driest months, January-March, no rain; wettest month in central and northern regions is September, with 305 mm average rainfall, and in the south is December, with 400 mm average rainfall Thai The metric system is officially used. For local dealings, traditional units are used: 1 pikul=60 kg 1 wah=2 metres 1 rai=1,600 sq metres 1 tang=20 litres 1 tical or baht (jeweller's measure)=15.24 grams 1 baht (Bt)=100 satang. Average exchange rates in 2006: Bt37.9:US$1; Bt47.6: 1; average exchange rates on May 22nd 2007: Bt34.7:US$1; Bt43.0: 1 Seven hours ahead of GMT October 1st-September 30th January 1st (New Year's Day); March 3rd (Makhabuja regulated by Buddhist calendar); April 6th (Chakri Day); April 13th-15th (Songkran Festival); May 1st (Labour Day); May 5th (Coronation Day); May 31st (Visakhabuja); July 30th (beginning of Buddhist Lent); August 12th (Mother's Day the queen's birthday); October 23rd (Chulalongkorn Day); December 5th (Father's Day the king's birthday); December 11th (Constitution Day); December 31st (New Year's Eve) The Economist Intelligence Unit Limited Country Profile 2007

8 4 Thailand Politics Thailand's political scene underwent dramatic change in 2006, with the military launching a coup (the country's 18th since the absolute monarchy was abolished in 1932) on September 19th The military ousted the government of Thaksin Shinawatra, a former telecommunications tycoon. His party, Thai Rak Thai (TRT), came to power in 2001 on a groundswell of public support. It led a coalition government to an unprecedented full term in office, before securing a major victory in the 2005 election that enabled it to become the first party to lead a single-party government. However, mass public demonstrations against Thaksin's government were held in early 2006 in the capital, Bangkok, forcing Thaksin to dissolve parliament. The political instability that ensued culminated in the military's intervention. Political background Absolute monarchy gives way to rule under a constitution Another military coup takes place in 1991 The first unified Thai kingdom emerged in the 13th century at Sukhothai in the northern part of the Chao Phraya river basin. Subsequently the Thai state (called Siam until 1939) shifted down to the city of Ayutthaya, from which its hegemony extended southwards to Malaya and east into the Khmer empire. When the Burmese sacked Ayutthaya in 1767, the capital was moved to its present site in Bangkok. Political conflict between the established monarchical order and new groups in society led to the establishment in 1932 of a constitutional monarchy, which still exists. Thailand is the only country in South-east Asia not to have been colonised by a European power. From the establishment of the constitutional monarchy until 1973 the country was ruled by a succession of military governments. Only in 1973 was the last of the military strongmen removed in a student-led uprising. Subsequent civilian governments, weakened by rivalry, were usually short-lived and almost always ended in military takeovers, mostly bloodless. Throughout this turbulent period the civilian bureaucracy and the king lent an element of stability to the system. During the second world war the Thai government initially formed an alliance with Japan, but switched its allegiance to the Western powers mid-way through the war. It has since remained a close ally of the West. After 1973 socioeconomic pressures that built up during the course of rapid economic growth changed this general pattern, and military involvement in government was limited to power-sharing with civilians. However, factionalism and corruption persisted, and eventually led to another military coup by the National Peacekeeping Council (NPC) in February Fresh elections were held in March 1992 and were narrowly won by a coalition of parties that had backed the NPC. When this coalition could not agree on a candidate for prime minister, the NPC installed the retiring army chief, General Suchinda Kraprayoon. Public opposition to the appointment of an unelected military man ran deep, and thousands turned out in urban centres to protest. In May Suchinda's allies in the army and the police resorted to violence in an attempt to suppress the protests in Bangkok, resulting in many deaths. Following the Country Profile The Economist Intelligence Unit Limited 2007

9 Thailand 5 intervention of the revered king, Bhumibol Adulyadej, Suchinda was forced to step down, and a fresh election was held in September 1992, which led to the formation of a coalition government of "pro-democracy" parties under the Democrat Party (DP) leader, Chuan Leekpai. Unstable coalitions become the norm in the 1990s The Chuan administration that came to power in late 1992 was severely weakened by policy indecision and constant faction-fighting between the five coalition partners. Corruption charges over a land reform programme forced Chuan to dissolve the House of Representatives (the lower house) in May The DP lost the subsequent election to the Chart Thai (CT) party under Banharn Silapa-archa. However, Banharn was forced to call an election in September 1996, when the six-party coalition split on the eve of a censure debate. The New Aspiration Party (NAP) led by a former general, Chavalit Yongchaiyudh, narrowly defeated Chuan's Democrats in the November 1996 election. Chavalit assembled another six-party coalition, but he was subsequently blamed for failing to prevent the collapse of the baht in July 1997 and for appearing indecisive in the face of the ensuing economic crisis. In November 1997 Chavalit was forced to step down. Chuan became prime minister for the second time in December 1997, replacing Chavalit and the NAP, with a shaky line-up of six parties in coalition and 12 defectors from a seventh party, Prachakorn Thai (PT). The ruling coalition increased its 20-seat majority in October 1998 by including Chart Pattana (CP), which controlled 51 seats in the lower house. Despite persistent in-fighting among the coalition partners there was progress on political and legislative reform, but by 2000 the public was becoming weary of the slow recovery from the economic crisis and impatient with the government, which was seen as relatively uncorrupt but lacking in dynamism. Recent political developments Thaksin enjoys spectacular rise to power Thaksin and his TRT party won a historic victory in January 2001 in the first general election under new electoral laws. The TRT, formed less than two years earlier, mounted an aggressive populist campaign that captured the public's mood and won 248 seats in the 500-seat House of Representatives. In forming the TRT, Thaksin brought together many members of parliament who were disillusioned with their original parties, but who had cultivated political strongholds in their constituencies. For the first time, this election also offered the Thai public a policy agenda, rather than simply "personalities". Thaksin surpassed the achievements of all of his predecessors by completing a full four-year term in office. Despite this increased political stability, Thaksin's first term in office was controversial. In his first year in office he narrowly avoided a guilty verdict on charges of having made a false asset statement in 1997, while serving as a government minister. His government then went on to consolidate its hold on power, with covert efforts made to weaken the institutions empowered under the 1997 constitution. Non-governmental organisations criticised the Thaksin administration for its poor record on human rights, and it was also subject to criticism for its mishandling of the upsurge in violence in the Muslim-dominated southernmost provinces. The Economist Intelligence Unit Limited Country Profile 2007

10 6 Thailand Nevertheless, in a generally free and fair election in February 2005 the TRT recorded another resounding victory, winning 377 seats in the House of Representatives. Although the election outcome had been widely expected, the margin of victory was in doubt. In the end the TRT fell short of its ambitious target of 400 seats, a result that would have prevented the parliamentary opposition from censuring government ministers, but this was more than sufficient to enable it to form a single-party government, the first in modern Thailand. The TRT maintained its dominance in all regions except the south, which has long been a DP stronghold. The political scene destabilises quickly Within a year of the 2005 election Thailand's political scene had undergone a major upheaval. On February 24th 2006 Thaksin dissolved parliament and called a snap election in the hope of receiving a fresh mandate to govern after months of demonstrations in Bangkok demanding his ouster. Pressure on Thaksin to step down had been building rapidly since late 2005, when Sondhi Limthongkul, a media tycoon, began regular anti-thaksin demonstrations in the capital. Sondhi's anti-thaksin movement expanded in late January, soon after the controversial decision by Thaksin's family members to sell their controlling stake in Shin, the telecommunications company founded by Thaksin. The sale of the stake to Temasek Holdings of Singapore (an investment company owned by the Singaporean government) drew widespread criticism, mostly because the Shinawatra family managed to avoid paying capital gains tax on the Bt73.3bn (US$1.9bn) deal. Thaksin's opponents also claimed that the sale illustrated a serious conflict of interest, with Thaksin putting his family's interests above those of the nation, and a clear abuse of power. Although the TRT secured the majority of votes in the April 2nd 2006 poll, the leading opposition political parties, the DP, CT and Mahachon, all boycotted the election, claiming that Thaksin's decision to call a snap election was designed to serve his own interests. The opposition's boycott essentially turned the election into a referendum on whether Thaksin and the TRT should remain in office. The protest vote in Bangkok was sufficient to show that the capital's middle class had had enough of Thaksin and the TRT, but the party remained immensely popular in the north, north-east and central regions, and the support of the rural electorate ensured that the TRT still won around 60% of the popular vote. However, because of the opposition's boycott, the election failed to deliver a full complement of 500 members of the lower house, and in May the Constitutional Court annulled the results of the election to avert a constitutional crisis. After taking a "holiday", Thaksin returned to assume the responsibilities of caretaker prime minister in late May, and a fresh election was scheduled to take place on October 15th The military takes over again, ousting Thaksin Thailand's political crisis reached a climax on September 19th 2006, when the military staged a coup d'état while Thaksin was attending the UN General Assembly in the US. Citing the need to bring to an end "unprecedented division in the country" the coup leader, the army commander General Sonthi Boonyaratkalin, moved quickly to declare martial law and place full power in the hands of a military council, which eventually became known as the Council for National Security (CNS). The military was quick to state that it had Country Profile The Economist Intelligence Unit Limited 2007

11 Thailand 7 no intention of holding on to power, pledging to return power to the people "as soon as possible". After imposing martial law, the military junta also announced that it had abrogated the constitution and dissolved the House of Representatives, the Senate (the upper house), the cabinet and the Constitutional Court. However, it ordered the king's advisers, the privy councillors, to remain on duty and stated that the courts of justice (excluding the Constitutional Court) would retain all their powers. The military's justification for the coup was centred on the need to bring to an end the political crisis that had seriously undermined national unity. The coup leaders also claimed that their action was necessary to prevent violent clashes between Thaksin's supporters and opponents, which they believed could occur on Thaksin's scheduled return to the country on September 20th. The military had additional reasons for the coup. It stated that its intervention was necessary because the nation had been governed in a "corrupt manner", with independent agencies subject to political interference. The coup leaders also said that the situation had got to the point where the king's safety could be at risk. Soon after the coup General Sonthi gained the explicit backing of the king according to a Royal Order, the king's support was given "for the sake of peace and national unity" after he had been informed by General Sonthi that Thaksin had "caused severe division within the nation and destroyed national unity". The king had previously granted General Sonthi an audience as early as midnight on September 19th, but it remains unclear whether or not he had actually given tacit approval for the coup before it took place. The king had been notably critical of Thaksin, often directing veiled criticism at the TRT leader during his annual birthday speeches. It was also clear that there were deep divisions between Thaksin and some of the members of the Privy Council, many of whom, including the council's president, Prem Tinsulanonda, were no doubt in favour of Thaksin's removal. Although the king's endorsement of the coup was vital for the military junta to claim legitimacy, the military enjoyed a high degree of public support in Bangkok for its moves to oust the Thaksin administration. It appears that a majority of people (even including Thaksin's supporters) felt an initial sense of relief rather than anxiety, believing that the military, with the king's support, would quickly restore political stability and move the country forward. The military suffers a drop in public support The military made some progress in resolving the problems that it claimed had justified its intervention, but the pace of change did not meet the public's high expectations. Similarly, the military-appointed prime minister, Surayud Chulanont, a retired general, was struggling to retain the high popularity rating he had scored soon after taking office in October 2006, with his government being viewed as ineffective. In an effort to play down growing public suspicion that the military would hold on to power beyond the end of the pledged yearlong transition period, in March General Sonthi insisted that elections would be held by the end of Surayud later announced that an election would be held on either December 16th or December 23rd. The Economist Intelligence Unit Limited Country Profile 2007

12 8 Thailand Although still relatively small-scale, opposition to the military's grip on power intensified in the first half of 2007, with both pro- and anti-thaksin groups coming together to call for the military to step aside. In March around 1,000 people took part in an anti-coup demonstration in the centre of Bangkok as well as outside Prem's residence. The military leaders were also frustrated by Thaksin, who effectively utilised foreign media to protest his innocence with regard to alleged corruption. By mid-2007, although it remained firmly in control, the CNS was still struggling to fulfil its objectives and suffered a downturn in popular support. The TRT is dissolved and its leaders banned from politics Following his ouster, and while remaining abroad, Thaksin reiterated that he did not intend to return to the country to play a role in politics. There was some scepticism as to whether he would keep his word, but the decision was taken out of his hands on May 30th 2007, when the TRT was dissolved after being found guilty of electoral fraud. Thaksin and his 110 fellow executive members of the TRT were subsequently banned from playing a political role for five years. The case against the TRT related to its tactics during the April 2006 parliamentary election and the following by-elections. The TRT was accused of paying two smaller parties, Pattana Chart Thai and Phaendin Thai, to run in the elections in constituencies in which it was unlikely that a TRT candidate running alone would gain sufficient votes for the poll result to be valid. (Thai electoral law requires candidates in uncontested seats to win at least 20% of the vote.) On these charges the Constitution Tribunal, which had been set up by the military, found the TRT guilty, with the judges remarking that the party's crimes were "very dangerous to democracy". The two smaller parties were also dissolved. The DP faced a number of charges, including those of paying two small parties to claim that they were bankrolled by the TRT to contest the election. The tribunal acquitted the DP of all charges. The decision to dissolve the TRT and ban its executives from politics for five years dramatically alters Thailand's political landscape. Although the TRT had partly disintegrated in the wake of the coup, with some large factions leaving the party with the intention of re-establishing themselves as political entities in their own right, the party was still the most popular in the country, with a registered membership base of 14m. Important recent events January 2004 Violence erupts in the Muslim-dominated southernmost provinces, and martial law is imposed. January 2005 After the tsunami disaster on December 26th 2004 the prime minister, Thaksin Shinawatra, reiterates that the country does not need international financial aid. His leadership in the immediate aftermath of the tsunami receives widespread praise. February 2005 The Thai Rak Thai (TRT) records a resounding victory in the general election and forms a single-party government. Country Profile The Economist Intelligence Unit Limited 2007

13 Thailand 9 March 2005 The general assembly of the Democratic Party (DP) unanimously votes for Abhisit Vejjajiva as the party's new leader. September 2005 Sondhi Limthongkul, a media tycoon, embarks on a campaign to oust Thaksin from office, hosting his TV show live in public after it was taken off the air and attracting audiences in their tens of thousands. January 2006 Thaksin's family sells its controlling stake in Shin Corp to Temasek of Singapore. The US$1.9bn sale proves highly controversial it was free from capital gains tax and questions were raised about the details of tax-free share transfers. February-March 2006 Anti-Thaksin demonstrations take place in the capital, Bangkok. Thaksin dissolves parliament and calls a snap election. The opposition parties decide to boycott the poll. April 2006 The TRT secures the majority of votes in the snap poll, but not all seats in the House of Representatives (lower house) are filled. The election results are later annulled. September 2006 The military takes power in a bloodless coup while Thaksin is out of the country. October 2006 A retired general, Surayud Chulanont, is appointed prime minister and selects his own cabinet. December 2006 Eight small bombs explode in Bangkok on New Year's Eve, killing three people and injuring around 40. It remains unclear who is behind the bombings. February 2007 Surayud suffers a major setback with the resignation of his finance minister, Pridiyathorn Devakula, who was also a deputy prime minister. March 2007 Former executive members of the TRT launch a new satellite television station, People's Television (PTV). After failing to get its programmes aired, the channel's operators stage rallies in Bangkok to criticise the military authorities and call for a return to democracy. April 2007 The first draft of a new constitution is completed and distributed for comment. May 2007 The TRT is ordered to be dissolved after being found guilty of electoral fraud. The 111 members of the party's executive committee, including Thaksin, are banned from politics for five years. The Economist Intelligence Unit Limited Country Profile 2007

14 10 Thailand Constitution, institutions and administration The military drafts a new constitution Soon after taking power in September 2006 the coup leaders abrogated the 1997 constitution and set about drafting a new one. (An interim charter came into effect in October 2006, granting the military sweeping powers.) Although in the first half of 2007 the CNS had made good progress in overseeing the drafting of a new constitution, it attracted criticism for its decision to discard the 1997 constitution, which was widely regarded as the country's best ever. There were also concerns that the CNS had excessive influence on the drafting process. The new constitution, the first draft of which was completed in April 2007, will impose greater controls on future prime ministers and will reduce the role of elected lawmakers in the political system. This is unsurprising, given that the coup in September 2006 was largely a reaction to the perceived excessive power of Thaksin and his alleged abuses of it. Although the most controversial constitutional change proposed to make the prime minister an appointee, not an elected lawmaker has been scrapped, the draft has been widely criticised for lacking the spirit of democracy and for placing excessive power in the hands of the judiciary. The military-backed administration wants to prevent Thai politics from becoming as one-sided as it did under Thaksin's dominance, but its plans for achieving this seem to suggest that stronger "checks and balances" on the executive may come at the expense of Thailand's democracy Independent institutions lose credibility in the Thaksin era The 1997 constitution created 11 constitutionally independent bodies in a bid to try to limit the scope for graft in politics and to create a democratic system of checks and balances. One of these bodies, the Election Commission (EC), was established to monitor elections to both the upper and lower houses. Although the 2001 election was still subject to fraud and vote-buying, the EC played an active role in attempting to reduce such activities, marking considerable progress in Thailand's move towards more transparent democratic processes. However, the EC came under intense criticism for its handling of the April 2006 snap election, most notably for its alleged favouritism towards the ruling TRT. The EC is not the only body whose reputation has suffered. The fact that in 2001 the Constitutional Court acquitted Thaksin of charges of making a false asset statement raised questions about its impartiality, particularly as it was acting on a recommendation to prosecute from the National Counter Corruption Commission (NCCC). After taking office in 2001 Thaksin successfully compromised the impartiality of the agencies by appointing a number of his supporters to them. The NCCC's reputation, however, was severely damaged in May 2005, not because of a lack of independence, but because all NCCC members were forced to resign after being found guilty of wilful self-serving. The Constitutional Court regained some of its credibility when ruling in favour of nullifying the results of the controversial April 2006 election. The judiciary is independent of the legislative and executive branches of government, and supreme court judges are appointed by the king. The legal system is based on a civil law system, with elements of common law. Country Profile The Economist Intelligence Unit Limited 2007

15 Thailand 11 Bureaucratic reform is enacted in 2002 The 1997 constitution reduced the size of the cabinet from 48 members to 36 in a bid to increase efficiency. However, the Thaksin government's bureaucratic reform bills, enacted on October 3rd 2002, involved the creation of five new ministries (bringing the total to 20) and 35 new departments. The new ministries cover natural resources and the environment, tourism and sport, information and communications technology, culture, and social development and human security. The public debt office and the state enterprise department now come under the Ministry of Finance. The reforms appear to run counter to the decentralisation initiative outlined in the 1997 constitution and are instead increasing the power of the state sector. They were rushed through the legislature, raising questions about adequate preparation and research and about the Thaksin government's numerical strength, which allowed it to push through controversial legislation without full debate. Political forces Last five election results (winning parties) Jul 1995 Nov 1996 Jan 2001 Feb 2005 Apr 2006a a Election results later nullified. Chart Thai-led coalition New Aspiration Party-led coalition Thai Rak Thai-led coalition Thai Rak Thai Thai Rak Thai Source: Economist Intelligence Unit. The once mighty TRT disintegrates During its first term in office the TRT's parliamentary strength was bolstered by mergers with a number of other parties. In June 2001 the small Seritham Party merged with the TRT, giving it an additional 14 seats. In 2002 the National Aspiration Party, which had won 35 seats in the 2001 election, merged with the TRT, and later, in 2004, Chart Pattana also dissolved and merged with the TRT, bringing in 31 deputies. Following the 2005 election the TRT controlled 377 seats in the lower house, enabling it to govern alone, rather than merely being the dominant force in a government coalition, as during the previous parliamentary term. However, the party suffered factional infighting during its second term, and there were some notable splits, particularly in the wake of the political instability in early Members of the most vocal renegade faction, Wan Nam Yen, led by Sanoh Thienthong, resigned from the party in February The situation worsened dramatically in the wake of the September 2006 coup, when Thaksin stepped down as leader and a number of leading factions left the party with the aim of re-establishing themselves as political entities in their own right. During the first half of 2007 the party's acting leader, Chaturon Chaisang, had some success in promoting the TRT's interests and generally being a nuisance to the military. However, his efforts to defend the party against charges of electoral fraud were unsuccessful, and on May 30th 2007 the TRT was ordered to be dissolved and the members of its executive board were banned from holding political office for five years. There was perhaps a sense of inevitability that the TRT would be found guilty. Since ousting Thaksin in the coup in September The Economist Intelligence Unit Limited Country Profile 2007

16 12 Thailand 2006, the military had made no effort to disguise its intention to dismantle the Thaksin regime. The DP has lacked effectiveness Before the coup the DP had been the largest party in opposition to the TRT, and it has traditionally been a force to contend with when out of office. However, it failed to compete with the TRT and suffered the distraction of changes at the top of the party from 2002 to 2005, after the party's long-standing leader, Chuan Leekpai, announced his retirement. In March 2005 the party's general assembly unanimously voted for Abhisit Vejjajiva as the party's new head. Soon after receiving the party's backing in March, Abhisit pledged to overhaul the DP, to enable it to shed its dour image and present itself as a more potent force to counter the TRT. Although the party's decision to boycott the April 2006 snap election proved effective in limiting the legitimacy of the poll, by not standing head-to-head with the TRT in the election the DP opened itself to criticism that it had failed to adhere to democratic principles and was simply avoiding another potential dismal election performance. The DP initially placed the blame for the coup on Thaksin, but it soon adopted a more critical approach, with Abhisit stating that his party did not support any kind of extra-constitutional change. Soon after the coup Abhisit called on the coup's leaders to return power to the people as quickly as possible. He also criticised the military's decision to draft a new constitution from scratch rather than revising the 1997 constitution. The DP's chances of returning to government were given a major boost on May 30th 2007, when it was acquitted of all charges of electoral fraud, while its main rival, the TRT, was found guilty and dissolved. The king is greatly revered and is a stabilising force Main political figures Bhumibol Adulyadej, the revered king, is the ninth monarch of the 215-year-old Chakri dynasty. With the help of Queen Sirikit he has spent much of the last half-century restoring the monarchy from its low ebb in the wake of the 1932 revolution. The king has become more outspoken on political matters in recent years, particularly during Thaksin's term in office. It remains unclear whether the king gave his tacit support to the military coup in September 2006, but after the coup had taken place he did give his full backing to the military's efforts to resolve the country's political crisis. The public's immense respect for the king makes the monarchy one of the few remaining institutions that enjoys the complete respect of all people and all political parties. However, the king, who was born in 1927, has been undergoing treatment for heart and other health problems since the late 1980s, and his designated heir, Crown Prince Maha Vajiralongkorn, is considerably less popular than his father. General Sonthi Boonyaratkalin The army commander in chief, General Sonthi, was the foremost figure leading the military coup on September 19th 2006 and assumed the position of chairman of the Council for National Security, the ruling military council. Although claiming the coup was necessary to restore national unity, General Sonthi's frustration with the ousted prime minister, Thaksin Shinawatra, was evident in the months preceding the coup. Although earlier in the year General Sonthi had been given full authority to tackle the violent insurgency in Thailand's southernmost provinces, in early September 2006 he complained of Country Profile The Economist Intelligence Unit Limited 2007

17 Thailand 13 excessive political interference, calling on the caretaker government to "free the military and let it do the job". General Sonthi was also likely to have been frustrated by Thaksin's efforts to promote his close allies in the annual military reshuffle. Surayud Chulanont Surayud Chulanont, a retired general, appeared to take on the role of a military-appointed prime minister somewhat reluctantly in October 2006, having been an outspoken critic of the military's involvement in politics in the aftermath of the violent military crackdown on civilian protestors in However, he has since stuck fast to his task, despite growing criticism over the ineffectiveness of his administration. Surayud was widely viewed as being an ideal leader to oversee a process of national reconciliation, having built a reputation for strong leadership and integrity during his military career. He served as the army's commander in chief from October 1998 to September 2002, after which he was "promoted" to the largely ceremonial post of Supreme Commander in one of many military reshuffles under the Thaksin administration that were tainted by an unhealthy degree of nepotism. During his final years in the military Surayud regularly clashed with Thaksin over dealings with the ruling military junta in neighbouring Myanmar. After finally retiring from the army in 2003, Surayud served as a member of the Privy Council, suggesting that he has earned the trust of King Bhumibol Adulyadej. Thaksin Shinawatra Since being ousted in the military coup, the founder of the Thai Rak Thai (TRT) had yet to return to the country by mid Thaksin made a personal fortune from government telecommunications concessions and won respect for his business acumen. He led the TRT to an impressive win in the 2001 election and became the first prime minister to see out a full term in office and be re-elected. However, his time in office was controversial. His populist polices endeared him to the rural poor in the north and north-east, but there was also widespread antipathy to his government in the capital, Bangkok, and the south. Since being ousted he has been under investigation for alleged conflict of interest and abuse of power during his term in office. On May 30th 2007, after his party was found guilty of electoral fraud, Thaksin was barred from holding political office for five years. Abhisit Vejjajiva After narrowly losing the Democrat Party (DP) leadership election to Banyat Bantadan in April 2003, Abhisit finally took control of the party in March 2005, following Banyat's resignation. He describes himself as a professional politician, and when he became opposition leader in 2005 the 43-year-old, Oxford-educated DP leader generated much public optimism that Thailand would one day be governed by a new generation spearheaded by him. This optimism has proved misplaced. Abhisit was unable to rise to the occasion in the 2006 political crisis, even though the task of attempting to replace Thaksin was made easier for him by mass demonstrations in the streets of Bangkok. Under Abhisit the DP failed to come up with a viable policy agenda with which to compete against the TRT. Sondhi Limthongkul Thaksin's foremost critic and one who managed to do the most damage to his reputation, Sondhi Limthongkul is a media tycoon who was once a close ally of Thaksin. However, after a spate of defamation suits was filed against him by Thaksin and his Muang Thai Rai Sapda (Thailand Weekly) TV programme was taken off air, Sondhi embarked on a campaign to oust Thaksin from office in late He began by hosting his TV show live in public, generally focusing on allegations of Thaksin's abuse of power and the government's attempts to suppress media freedom. He is a leading voice in the People's Alliance for Democracy (PAD), which was formed in February 2006 and led mass anti-thaksin demonstrations in Bangkok. Prem Tinsulanonda The former prime minister ( ) is a powerful figure owing to his closeness to the king he serves as chairman of the Privy Council, the king's advisers. Despite the military's denials of such suggestions, Prem is widely thought to have played a central role in ousting the Thaksin government in the September 2006 coup. He is also likely to have had great influence over some key decisions and appointments made by the military junta, including the appointment of Surayud as interim prime minister. The Economist Intelligence Unit Limited Country Profile 2007

18 14 Thailand International relations and defence Thailand's alignment with the West is still intact Regional ties are generally strong Although bloodless and seemingly welcomed domestically, the military coup in September 2006 was heavily criticised abroad, with a number of Western government leaders calling for the swift return of an elected civilian government and suggesting that the coup was a step backwards for the country. The US has so far been the only government to take any action in response to the coup, suspending US$24m in budgeted military aid, a move that reflects the US's stated position of refusing to assist a foreign government that has taken power by deposing an elected leader. Nevertheless, Thailand's ties with the West remain reasonably strong, and the assurances of the military that it will return power to a democratically elected government in the near future has so far limited the diplomatic fallout from the coup. Thailand has traditionally been a staunch ally of the West, holding annual joint military exercises with the US and Australia. In 2003, at the start of the US-led invasion of Iraq, the Thai government remained conspicuously quiet, but eventually announced its neutrality. This was in contrast to its regional neighbours, Singapore and the Philippines, which gave their full backing to the US. However, later in 2003 Thailand sent more than 440 troops to Iraq to fulfil a largely humanitarian role in the conflict. The US later designated Thailand a non-nato ally, meaning that Thailand will now benefit from greater access to US weaponry, in addition to enhanced security co-operation. The focus of foreign policy (other than overriding commercial interests) under the Thaksin administration appeared to be that of strengthening links within the region. This was not limited merely to Thailand's immediate neighbours in the Association of South-East Asian Nations (ASEAN), but also included deepening ties with India and China and the wider Asian region. It was within this framework that Thaksin sought to become a regional figurehead, and he based his statesmanship on a clutch of assertive policy initiatives, led by the Asia Co-operation Dialogue (ACD) and the Ayeyawady-Chao Pharaya-Mekong Economic Co-operation Strategy (ACMECS). The ACD, a Thaksin initiative, grew from 18 to 25 members in just three years in the early 2000s alongside a host of programmes to promote intra-asian co-operation. Launched in November 2003, the ACMECS provided an assistance package of Bt10bn (US$247m) to Myanmar, Laos, Cambodia and Vietnam for economic development. Thailand's relations with most fellow ASEAN members have not been seriously affected by the coup, with the group maintaining its principle of noninterference in the domestic affairs of member states. Surayud paid courtesy calls to all the other ASEAN members in the first few months of his term in office. However, Thailand's relations with Singapore have soured following a controversial meeting between Singapore's deputy prime minister, Shunmugan Jayakumar, and Thaksin in January The interim government has since pressed other governments in the region to refrain from having any dealings with the ousted prime minister. Country Profile The Economist Intelligence Unit Limited 2007

19 Thailand 15 Relations with military junta in Myanmar become strained Thailand and neighbouring Myanmar have a long history of strained relations. When he came to office, Thaksin promised to improve relations between the two countries, switching the focus to mutually advantageous commercial deals. Following a brief escalation of tensions in 2002, when the border was closed for around five months, the Thaksin administration attempted to strengthen relations, in part to protect Thailand's commercial interests in Myanmar, and also to gain the military government's support in clamping down on crossborder drug smuggling. After failing to make any progress with his own "Bangkok Process" initiative, Thaksin became supportive of the plans of the State Peace and Development Council (SPDC, Myanmar's ruling military junta) to implement its own reforms at a self-determined pace. Diplomatic ties between the two countries have cooled somewhat since Surayud's appointment as Thailand's interim prime minister. While serving as head of Thailand's armed forces in the late 1990s, Surayud gained a reputation for taking a relatively tough stance towards the SPDC. Two incidents in March 2007 have also created greater tension along the long Thai-Myanmar border, resulting in the closure of a number of border checkpoints. A Thai ranger was killed, apparently in error, during a skirmish between the Myanmar military and troops supporting the ethnic Karenni National Progressive Party (KNPP), and a few days later, further south along the border, two Thai border patrol policemen were briefly held hostage by members of the Democratic Karen Buddhist Army, a small group aligned with the military junta in Myanmar. In response, Thailand closed several border crossings until the two men were returned safely some days later. The SPDC then ordered the closure of the busy Myawaddy-Mae Sot border crossing, apparently in retaliation against the earlier closures, while Thailand again closed several border crossings in late March. The military reasserts its authority internally Before the September 2006 military coup the influence of the armed forces in Thai political affairs had decreased dramatically, primarily in response to the unpopular seizure of power in The 1997 constitution made the military more accountable, and the cabinet had the power to approve all internal service budgets. However, the situation has changed dramatically in the wake of the coup. Despite his public denials in May 2006 that the military would not again get involved in politics, General Sonthi's decision to oust the democratically elected government and place power in this hands of the military has set the country back in terms of its progress in cementing the separation of powers between the civilian government and the armed forces. There are also questions over the transparency of the military's budget, with the CNS refusing to provide details of a "secret budget" used to finance the coup. The military is also now more involved in business, after the CNS placed high-ranking military officers on the boards of a number of state-owned enterprises in late Military forces, 2007 Personnel (no.) 506,600 Active 306,600 Reserves 200,000 Source: International Institute for Strategic Studies, The Military Balance, The Economist Intelligence Unit Limited Country Profile 2007

20 16 Thailand Security risk in Thailand Armed conflict Since 2004 there has been mounting civil unrest in the southernmost provinces of Thailand, home to the minority Muslim population. The death toll has risen to more than 2,000, comprising militants, members of the security force, government officials, teachers and Buddhist monks. The outbreaks of violence in the region continue to be a mix of the ongoing Muslim insurgency, emanating from demands for the predominantly Muslim Malay provinces to be split from Buddhist-majority Thailand, and local personal conflicts. Attacks on government and police property and personnel occur frequently. In the past two years the insurgents have shown their intent to attack economic targets in addition to government and military ones, and they have also demonstrated their capacity to launch large-scale attacks over a wide area. In February 2007 around 30 targets across the four southernmost provinces Yala, Pattani, Narawathiwat and Songkhla were hit almost simultaneously by bombings and arson attacks. The greater sophistication demonstrated in the recent attacks may indicate increased support from forces outside the conflict zone itself, and perhaps from regional Islamist groups, such as Jemaah Islamiah. Unrest/demonstrations Politically motivated demonstrations are being held on a fairly regular basis. By mid they were still relatively small-scale compared with the mass anti-thaksin demonstrations that took place in early 2006, which attracted around 100,000 people. However, if the military's patience wears thin, there is the potential for heavy-handed crackdowns and violence. Labour unrest has historically been limited, but the planned privatisation of the state electricity utility Egat in 2005 triggered mass demonstrations by labour unions. Certain industries, such as energy and the national airline, are widely perceived as important national assets, and their sale to foreign strategic partners could cause a public outcry. Violent crime Street and petty crime exists at a relatively high level, and travellers outside the capital, Bangkok, in particular, need to take precautions. Violence is unlikely to be used against foreigners unless they become involved with the local business mafia. However, in recent years there have been a number of widely reported murders of foreign tourists. Organised crime There is a high level of organised crime, but this is primarily a domestic phenomenon. Crime rings, many of them involved in the drug industry, use violence against rival gangs. However, foreign companies are unlikely to come into contact with such groups. Kidnapping and extortion Kidnapping is not a threat to foreign businesspeople. Extortion is rampant. The security forces, particularly the police and customs departments, can be expected to demand additional remuneration for services. Country Profile The Economist Intelligence Unit Limited 2007