Thailand. Country Profile 2004

Transcription

1 Country Profile 2004 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 15 Regent St, London SW1Y 4LR 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 over 50 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 its 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 15 Regent St London SW1Y 4LR 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) dantecantu@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, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2004 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.

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4 Country Profile The Economist Intelligence Unit Limited 2004

5 Thailand 1 Contents 3 Regional overview 3 Membership of organisations 6 Basic data 7 Politics 7 Political background 7 Recent political developments 10 Constitution, institutions and administration 13 Political forces 15 International relations and defence 19 Resources and infrastructure 19 Population 20 Education 21 Health 23 Natural resources and the environment 25 Transport, communications and the Internet 28 Energy provision 30 The economy 30 Economic structure 31 Economic policy 36 Economic performance 38 Regional trends 38 Economic sectors 38 Agriculture 41 Mining and semi-processing 42 Manufacturing 44 Construction 45 Financial services 47 Other services 48 The external sector 48 Trade in goods 50 Invisibles and the current account 51 Capital flows and foreign debt 52 Foreign reserves and the exchange rate 54 Appendices 54 Sources of information 55 Reference tables 55 Population 55 Labour force 56 National energy statistics 57 Central government finances 57 Money supply 58 Gross domestic product 58 Gross domestic product by expenditure, at constant 1988 prices 59 Gross domestic product by sector The Economist Intelligence Unit Limited Country Profile 2004

6 2 Thailand 59 Gross domestic product by expenditure, at current prices 59 Prices and earnings 60 Crop production 60 Minerals production 60 Manufacturing production 61 Construction statistics 61 Banking statistics 61 Stockmarket indicators 61 Main trading partners 62 Balance of payments, IMF series 62 External debt, World Bank series 63 Foreign reserves 63 Exchange rates Country Profile The Economist Intelligence Unit Limited 2004

7 Thailand 3 Regional overview Membership of organisations Association of South-East Asian Nations The Association of South-East Asian Nations (ASEAN) was established in The five original members were Indonesia, Malaysia, the Philippines, Singapore and Thailand. Subsequent joiners were Brunei (1984), Vietnam (1995), Laos and Myanmar (1997) and, most recently, Cambodia (1999). ASEAN summit meetings, which bring together the heads of government of member states, must now be held every three years. The most recent was in Indonesia in Informal summits of heads of governments are also held. In addition, the foreign and economic affairs ministers of member countries meet annually. Joint meetings of foreign and economic affairs ministers are held before each ASEAN summit. There is also a standing committee (consisting of the members' accredited ambassadors to the host country), which usually meets every two months. There is a permanent secretariat, based in Jakarta, and a number of committees. The organisation started with some grand objectives, but has generally failed to deliver. Early hopes that ASEAN could engineer a regional economic development strategy with particular countries concentrating on particular industries were soon dashed. In 1977 the Basic Agreement on the Establishment of ASEAN Preferential Tariffs was concluded, but a decade later only about 5% of trade between members was covered by this system. (Members had been permitted to exclude "sensitive" sectors, a let-out clause that a subsequent agreement in 1987 only slightly curtailed.) Plans for a proper ASEAN free-trade area (AFTA) were unveiled in 1992, with the aim of achieving this by A common effective preferential tariff (CEPT) scheme was applied in 1993, providing for the gradual reduction of tariffs on intra- ASEAN trade in certain goods over a number of years. Again, however, member states could exclude "sensitive" items, limiting progress. A new AFTA programme, with a wider spread of products covered, was launched in During the mid- 1990s the timescale for implementing the programme was steadily tightened, with the aim being to reduce tariffs on most goods to below 5% by A limited AFTA, between the original six members of ASEAN and involving a reduction on tariffs on intra-asean trade to between 0% and 5%, came into operation on January 1st (Recent joiners have been allowed more time.) The regional financial crisis exposed ASEAN's failings in a brutal fashion. The organisation was unable to stop the regional currency devaluations, or alleviate the subsequent economic hardship. A Statement on Bold Measures, released at end-1998, was exactly the opposite of what the title implied. Unfolding events in Indonesia then moved the focus on to the organisation's security plans. ASEAN members' commitment to the principle of non-interference in the internal affairs of other members complicated the response to East Timor. (Some members did eventually participate in the multinational force, but not under ASEAN auspices.) The Economist Intelligence Unit Limited Country Profile 2004

8 4 Thailand On the economic front, ASEAN's slow progress towards AFTA has encouraged some of its members, notably Singapore and Thailand, to opt instead for bilateral trade pacts. Singapore's free-trade agreement (FTA) with New Zealand in 2000 prompted protests from other ASEAN members, although they have become increasingly supportive of the idea in the last few years. ASEAN is now negotiating as a group on separate FTAs with China, Japan and South Korea, but progress is likely to be constrained by the vastly different levels of economic development and different export bases within ASEAN. A decision in 2001 by various ASEAN members to set up bilateral currency-swap arrangements to protect against currency volatility is limited in scope, and does not presage further ASEAN economic collaboration. The organisation's political hopes could be severely tested in the next few years. Changing governments in member countries could undermine any remaining pretence about political consensus in the region. On the security front, the ASEAN Regional Forums (ARFs which bring together the ASEAN ministers of foreign affairs with those of other countries, notably China) are likely to remain just talking shops, with little impact on changing geopolitical trends. Asia-Pacific Economic Co-operation (APEC) forum APEC started life as a forum for informal discussion between six members of the Association of South-East Asian Nations (ASEAN), Brunei, Indonesia, Malaysia, the Philippines, Thailand and Singapore, and their six dialogue partners in the Pacific, Australia, Canada, Japan, New Zealand, South Korea and the US. In 1991 China, Hong Kong and Taiwan became members, followed by Mexico and Papua New Guinea in 1993, and Chile in Peru, Russia and Vietnam joined in APEC describes itself as "the primary vehicle for promoting open trade and practical economic co-operation" in the region, with the goal of advancing "Asia-Pacific economic dynamism and sense of community". APEC has had a permanent secretariat since 1992, and also runs four permanent committees on budget and managerial issues, on trade and investment, on economic trends generally, and on economic and technical cooperation. In addition, there are 11 working groups on agricultural technical cooperation, energy, fisheries, human resources, industrial science and technology, marine resource co-operation, small and medium-sized enterprises, telecommunications, tourism, trade promotion and transport. There is also an APEC business advisory council (ABAC), which includes up to three senior private-sector representatives from each member country. APEC as a whole has its headquarters in Singapore, while ABAC is based in the Philippines. APEC's main business is done at annual meetings of member states' ministers of foreign affairs and economic affairs, which are followed by informal gatherings of members' heads of state. Every other ministerial meeting is held in a Southeast Asian country. The chairmanship of APEC rotates on a yearly basis. During the 1990s APEC's star first waxed brighter and then started to wane. The high point was probably reached in 1994, when members agreed a timetable for the liberalisation of trade across the region: the ambitious aim was to eliminate all trade barriers by 2020, and then to extend reciprocal concessions Country Profile The Economist Intelligence Unit Limited 2004

9 Thailand 5 to non-members. In 1995 and 1996 APEC debated how best to achieve this target, but discussions in 1997 and 1998 were driven off course by the regional financial crisis. APEC's response to the crisis generally worded exhortations to member states to develop financial and capital markets, and so on was far from convincing and signalled the inherent weaknesses of the organisation. Subsequent meetings also provided other distractions from the trade liberalisation theme: East Timor in 1999, information technology in 2000 and security (following the September 11th terrorist attacks on the US) in Discussion returned to trade relations in 2002, but was only very general in nature. The 2003 meeting in Bangkok made little further progress, concluding with broad commitments to multilateral trade and investment liberalisation, and to improving regional security arrangements. Thus APEC has in effect gone back to its roots and become an informal talking shop, giving up all aspirations to be a serious regional reformer. The Economist Intelligence Unit Limited Country Profile 2004

10 6 Thailand Basic data Total area Population Main provinces 514,000 sq km, of which 38% cultivated and 20% forest 62.94m (end-2001) Population in m (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 other Thai provinces have populations in excess of 1m Climate Weather in Bangkok (altitude 2 metres) Language Weights and measures Currency Time Fiscal year Public holidays 2004 Subtropical Hottest month, April, C; coldest month, December, C; driest months, January-March, no rain; wettest month in central and northern regions is September, 305 mm average rainfall, and in the south is December, 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 2003: Bt41.49:US$1; Bt64.5: 1; average exchange rates on May 16th 2003: Bt42.20:US$1; Bt68.4: 1 Seven hours ahead of GMT October 1st-September 30th January 1st; March 5th (Makhabuja regulated by Buddhist calendar); April 6th (Chakri Day); April 13th-15th (Songkran Festival); May 5th (Coronation Day); June 2nd (Visakhabuja); July 31st (Asalhabuja); August 1st (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 10th (Constitution Day); December 31st (New Year's Eve) Country Profile The Economist Intelligence Unit Limited 2004

11 Thailand 7 Politics Thaksin takes over with a large mandate Thailand is a parliamentary democracy with a constitutional monarchy. The king has ensured some political continuity, although there have been 17 military coups (the last in 1991) since the absolute monarchy was abolished in Civilian government was restored in 1973, but the administrations have tended to be shortlived and unstable. In January 2001 a general election was held with a new electoral system, under which the number of seats in the House of Representatives (the lower house) was increased and it was ruled that members of parliament (MPs) must resign their seats if they accept cabinet positions. An Election Commission was formed and empowered to oversee polling and prevent fraud. The election resulted in a resounding victory for the newly formed Thai Rak Thai (TRT), under the leadership of a former telecommunications tycoon, Thaksin Shinawatra. Political background A unified kingdom Military governments from 1932 to 1973 The first unified Thai kingdom emerged in the 13th century at Sukhothai in the northern part of the Chao Phraya river basin, at the foot of the Indochinese peninsula. 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. The capital was moved to its present site in Bangkok when the Burmese sacked Ayutthaya in 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 a constitutional monarchy until 1973, the country was ruled by a succession of military governments. During the second world war, the Thai government initially formed an alliance with Japan, but has subsequently been a close ally of the Western powers. 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 invariably ended in military takeovers, mostly bloodless. Throughout this turbulent period the civilian bureaucracy and the king lent an element of stability to the system. Recent political developments The last military coup was in 1991 After 1973 socioeconomic pressures built up in 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 The Economist Intelligence Unit Limited Country Profile 2004

12 8 Thailand minister, the junta installed the retiring army chief, General Suchinda Kraprayoon. Public opposition to the appointment of a non-elected military man ran deep, and thousands turned out in urban centres in protest. In May Suchinda's allies in the army and the police resorted to violence in an attempt to suppress the protests in the capital, Bangkok, resulting in many deaths. Unstable coalitions become the norm The Democrats are given another chance The TRT claims a resounding victory Through the king's intervention, Suchinda was forced to step down and a fresh election was held in September 1992, resulting in the formation of a coalition government of "pro-democracy" parties under the Democrat Party (DP) leader, Chuan Leekpai. The Chuan administration 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 in May The DP lost the subsequent election to the Chart Thai (CT) party under Banharn Silapa-archa. However, Banharn, a veteran rural power broker with a fortune made from public road concessions, was never a popular choice. In September 1996 he was forced to call an election 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 economic crisis. In November 1997 Chavalit was forced to step down. Chuan became prime minister for the second time in early 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 infighting among the coalition partners, there was progress on political and legislative reform under this second Chuan administration. 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. Thaksin and his TRT party won a historic victory on January 6th 2001 in the first general election under the 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 MPs who were disillusioned with their original parties, but who had cultivated political strongholds in their constituencies. The DP, the country's oldest political party and TRT's nearest rival, won only 128 seats. The medium-sized parties NAP, CT and Chart Pattana garnered only half of the seats that they had expected. The election was the first held under the auspices of the reformist 1997 constitution, which seems to discriminate against smaller parties. The small and medium-sized Thai parties are traditionally region-specific and thus found it difficult to find qualified people as the 100 candidates needed to satisfy the requirements of Country Profile The Economist Intelligence Unit Limited 2004

13 Thailand 9 the party list. (Parties need at least 5% of the national vote to be allocated a party-list MP). The Election Commission (EC) played an active role in attempting to reduce vote buying and other fraudulent activities, and the 2001 election marked considerable progress in Thailand's move towards more transparent democratic processes. This election also offered the Thai public a policy agenda for the first time and not just "personalities". It was also the first time that a single party had won an overwhelming mandate to govern in its own right. Thaksin is cleared of declaring false asset statement First cracks in Thaksin s armour appear in early 2004 Thaksin's first six months as prime minister were overshadowed by the possibility that he would be removed from office. He faced charges of making a false asset statement in 1997, when previously in government. On August 3rd 2001 the Constitution Court acquitted him, but the verdict proved controversial with only eight out of 15 judges voting in his favour. Despite this initial uncertainty, the Thaksin administration a mixture of veteran politicians and businessmen managed to tighten further its firm grip on power. After three years of apparent invincibility, Thaksin's defences were breached in early 2004 amid a series of events that raised questions about his administration's effectiveness. The government failed to shake off accusations of overseeing an initial cover up of a devastating outbreak of bird flu; it vacillated over a key privatisation in the face of intense labour movement protests; and it was been blamed for mishandling the breakdown in security in the Muslim-dominated southernmost provinces, which have been a source of sporadic unrest for decades. The latter issue remains the main source of instability and was far from being resolved by late April Concerns were further heightened by the March 27th bombing of a tourist town on the Thai- Malaysian border, the first major attack on a civilian target since the latest unrest began. Despite these problems, and a slight waning of popular support for Thaksin, he maintains a strong hold on power and remains well-placed to secure a second four-year term in the 2005 general election. Important recent events November 2000 Chuan Leekpai dissolves parliament and calls an election in early January/February 2001 A general election is held and the Thai Rak Thai (TRT) party scores an overwhelming victory over the incumbent Democrats. Thaksin Shinawatra, the leader of the TRT party, becomes prime minister at the head of a three-party coalition. May 2001 The government sacks the governor of the Bank of Thailand (central bank), Chatu Mongol Sonakul, and replaces him with Pridiyathorn Devakula. June 2001 The Seritham Party, with 14 seats in the lower house but no party-list seats, merges with the TRT, giving the coalition a total of 338 seats in the 500-member house. The Economist Intelligence Unit Limited Country Profile 2004

14 10 Thailand August 2001 Thaksin is acquitted by the Constitution Court for allegedly making a false asset statement in January 2002 The NAP votes to merge with the TRT and the TRT endorses its decision. May 2002 Key ministers survive a censure debate brought by the Democrats. October 2002 The government enacts bureaucratic reform bills in the first overhaul of the bureaucracy for decades. January 2003 Anti-Thai riots in Cambodia spark an angry response from the Thaksin government. Diplomatic relations are downgraded until the Cambodian government pays compensation for the damage to the Thai embassy. February 2003 Thaksin launches his controversial anti-drug campaign. Over 2,000 people are dead after three months, but while the policy is criticised internationally, the Thai public is supportive. April 2003 The veteran politician, Banyat Bantadan, is elected the leader of the DP, as Chain Leekpai retires. November 2003 Chart Pattana (CP) is ousted from the ruling coalition, partly because the party's leader, Suwat Litapanlop, apparently refused to consider merging his party into the TRT fold. December 2003 Thaksin declares victory in the anti-drug campaign, but the king is particularly critical of the high death toll and the lack of detailed facts surrounding the deaths of mostly civilians believed to be involved in the drug trade. January 2004 Violence erupts in the Muslim dominated southern-most provinces. Martial law is imposed, and the defence minister and the interior minister are both replaced for failing to contain the troubles. Constitution, institutions and administration A new constitution is enacted A new constitution, Thailand's 16th since 1932, was approved in September Its principal aims were to stamp out government corruption and ensure a clean and transparent electoral process. Under the new constitution, MPs must resign their parliamentary seats to take up a cabinet post, ministers are made to declare their assets before and after taking office, and the prime minister must be an elected MP. Candidates must now stand for election to the 200-member Senate instead of being appointed. Country Profile The Economist Intelligence Unit Limited 2004

15 Thailand 11 The constitution stipulates 500 lower house members, of which 400 are directly elected in single-seat constituencies nationwide and the remaining 100 seats are apportioned to each political party in direct relation to the popular votes they receive. These members are called party-list MPs. Any party receiving less than 5% of the popular vote loses its right to any party-list MPs. The aim is to ensure that MPs directly elected in constituencies concentrate on constituency and legislative work. Only MPs on the party list may be selected to join the cabinet. The anti-graft agencies lose credibility The new constitution created 11 constitutionally independent bodies in a bid to try to limit the scope for graft in politics and 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. In the March 2000 Senate election, the EC ordered a re-vote in nearly half of the constituencies and four additional rounds of voting, but the law was subsequently amended to prevent this long, drawn-out process. Despite this change, there were numerous re-votes after the January 2001 poll and 100 politicians were accused of fraud. The EC has subsequently appeared to have lost its nerve and only a handful of MPs have been disqualified. The main reason for this leniency seems to be that the election law requires the disqualification of alleged cheats by Commission members to be unanimous. The EC's reputation is not the only one to suffer. The fact that Thaksin was acquitted by the Constitution Court has raised questions about its impartiality, particularly as it was acting on a recommendation to prosecute from the National Counter Corruption Commission. Thaksin, unsurprisingly, has been heavily critical of the anti-graft agencies and has attempted to undermine their credibility. It had seemed likely that he would chose to amend the constitution when the five-year grace period was complete, but instead it appears that he has adopted a more subtle route and chosen to compromise the impartiality of the agencies by infiltrating them with his supporters. Although the Thaksin government has ushered in a period of relative political stability, it has been at the expense of political reform. Bureaucratic reform is enacted The 1997 constitution reduced the cabinet in size 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 (making a total of 20) and 35 new departments. The new ministries are 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 and a total of ten universities were detached from state control. The reforms appear to run contrary 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 government's numerical strength, which gives it the ability to push through controversial legislation without effective debate. The Economist Intelligence Unit Limited Country Profile 2004

16 12 Thailand The central government remains powerful The government s human rights record is questionable Extra-judicial killings rise in the war against drugs Thailand is a unitary state, and the situation is unlikely to change significantly, despite efforts under the new constitution to reduce Bangkok's authority. Following legal changes approved in early 1998, about 100 city and municipal councils were to get much of their revenue from sales and land taxes, instead of relying solely on central government grants. Until now, only the Bangkok Metropolitan Administration has had an adequate tax base. However, the Thaksin administration has since declared its reluctance to increase state funding of local administration organisations to 35% of the national budget by 2006 as required by the new law. It claims that allocations to local government would aggravate budgetary constraints and that, although it recognises its obligations to decentralise, the current priority is economic recovery. The legal system is based on a civil law system, with influences of common law. Thailand has not accepted the jurisdiction of the International Court of Justice. The judiciary is independent of the legislative and executive branches of government and Supreme Court judges are appointed by the king. Thailand's respect for human and civil rights has progressively improved since the political upheavals. Civil liberties are for the first time explicitly guaranteed under the new constitution. The lifting of a ban on state employees forming unions has improved the country's labour rights. However, child labour remains a concern. Criticism of political parties, public figures and the government was becoming increasingly widespread under the Chuan administration. The private-sector media are not officially controlled, although they practise some self-censorship, especially on issues related to the monarchy and national security. The Thaksin administration is attempting to curtail this freedom. Although segments of the printed press have retained their independence, the broadcasting media is now in effect under government control. Journalists have revealed repeated government interference in news reporting. Thaksin's powerful business connections enable him to threaten the removal of vital advertising if the media become too critical. In February 2003 the government attempted to enact a so-called media ethic bill that would have introduced greater state power over the media, but the barrage of criticism of the bill led to its withdrawal suggesting that some checks on the government's authoritarian tendencies still remain. International non-governmental organisations (NGOs), such as the UK-based Amnesty International, and local rights organisations have been severely critical of the government's anti-drug campaign, which was launched in February In November Amnesty International said in its report on human rights conditions in Thailand that the government had failed to investigate the deaths of more than 2,000 people during the most intense phase of the war on drugs, in February-April Thailand's national human rights commissioner, Wasant Panich, has also said that the war on drugs had compromised the justice system, with police acting upon hastily compiled and inaccurate lists of drug suspects. Human rights organisations have accused the government of sanctioning "a shoot first, think later" policy. Thaksin dismissed Country Profile The Economist Intelligence Unit Limited 2004

17 Thailand 13 these concerns, asking the public whether they wanted drug dealers to live to carry on selling drugs to their children. Political forces Parliamentary (House of Representatives) forces (no. of seats) Jan 2001 Apr 2004 Party lista Thai Rak Thai (TRT) Democrat Party (DP) Chart Thai (CT) New Aspiration Party (NAP)b Chart Pattana (CP) Serithamc 14 Party of the People 2 3 Social Action Party (SAP) 1 1 Rassadorn 1 a Elected by proportional representation. b The NAP is to merge with the TRT, but this has not yet been made official. c Seritham merged with the TRT in June Source: Election Commission. A TRT-dominated coalition is formed Even before the full 2001 election results were announced, Thaksin had formed a three-party coalition with the NAP and CT. In June 2001 the small Seritham Party merged with the TRT, giving the party an additional 14 seats. Early in 2002 the NAP also voted to merge with the TRT, raising the number of directly controlled TRT seats to 353. The TRT-led coalition therefore had enough seats to prevent no-confidence motions from succeeding. The majority also enables the government to legislate virtually unopposed. The Senate cannot block bills that receive more than 350 votes in the lower house. In November 2003 the extent of the TRT's dominance was demonstrated when the CP, which joined the government in early 2002, was ousted from governing coalition. Thaksin's initial choice of cabinet met with some public disapproval. During the election campaign he had pledged an end to "old-style" politics and politicians, but a number of familiar faces were assigned portfolios. Since January 2001 Thaksin has reshuffled the cabinet eight times, for the most part these changes have been designed to appease or reward various factions within the TRT, or to consolidate further his grip on power. Opposition parties are increasingly ineffectual The DP is the largest party in opposition and has traditionally been a force to contend with when out of office. However, the scale of the TRT's majority in the lower house and Thaksin's dominant and unifying role in the party mean there is little current scope for effective opposition. Throughout 2002 the DP was absorbed with its own leadership contest as the party leader, Chuan Leekpai, announced his retirement in April Banyat Bantadan, a veteran politician with a strong support base in the south of the country, was elected the new leader. He has proved unable to match the charisma and dynamism of Thaksin. The Economist Intelligence Unit Limited Country Profile 2004

18 14 Thailand Unionisation remains low The king is much revered There is a low rate of unionisation in Thailand, at only 2-5% of the workforce, compared with 10% in both Japan and South Korea. Civil servants are not allowed to become members of unions. The most vocal, and the only influential, labour unions are in state-owned enterprises, some of which are scheduled for partial privatisation. They have been criticised for an apparent lack of leadership and an inability to keep pace with modern economic changes. They are not a cohesive group, as most unions represent only the workers of one company; there are 1,063 unions in total. 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 rebuilding the monarchy from its low ebb in the wake of the 1932 revolution. However, the 75-year-old king 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. The king has become more outspoken on political matters in recent years and, in particular, since the Thaksin administration took power. In his annual birthday speeches, the king has shown subtle signs of displeasure at Thaksin's arrogance and growing abuse of power. The public's immense respect for the king makes him one of the few remaining institutions with the power to unseat the all-powerful TRT-led government. Main political figures Thaksin Shinawatra The current prime minister and the founder of Thai Rak Thai (TRT), Thaksin made a personal fortune from government telecommunications concessions and won respect for his business acumen. Thaksin's previous political record was not impressive. As deputy prime minister in Chavalit Yongchaiyudh's government, he promised to solve Bangkok's traffic problems in six months, but resigned shortly afterwards, having achieved nothing. He has continued to make populist promises since coming to power in January 2001 and has been criticised for failing to consult the cabinet and for his inability to accept criticism. However, his government has introduced most of the policies he promised at election time, with the exception of wiping out corruption. Since coming to power Thaksin has progressively tightened his grip on the domestic polity and has aspirations to become a regional figurehead. Snoh Thienthong Formerly a member of the New Aspiration Party (NAP), Snoh led a group that defected and is now TRT's advisory committee chairman and a chief adviser to Thaksin. Snoh heads the Wang Nam Yen faction of the TRT. The other prominent faction is led by Yaowapa Wongsawat, Thaksin's sister. Snoh is a provincial power broker based in the north-east of the country. He is one of the few survivors of the patriarchal type of politicians that dominated Thai politics from the 1980s and has little sympathy for democratic ideals he opposed the writing of the reformist 1997 constitution. He has the money, seniority and experience to continue to wield power under the Thaksin administration. In late 2002 and early 2003 Snoh appeared to be losing some of his direct influence over the prime minister, but Thaksin is unlikely to risk alienating the large Wang Nam Yen faction (about 50 members of parliament Country Profile The Economist Intelligence Unit Limited 2004

19 Thailand 15 MPs). Thus Snoh is expected to continue to play a critical role in defining the direction of the TRT. Uthai Pimchaichon The speaker of the House of Representatives (lower house), Uthai enjoys considerable political clout, public support and is an experienced politician. He rose to prominence in Thai politics as a democracy activist and has served as party leader (of Solidarity in the early 1990s) and a cabinet member in previous administrations. He played an instrumental role in drafting and passing the 1997 constitution. In July 2001 the Supreme Court upheld a previous conviction against him for malfeasance in office, which dented his credibility, although he remained in office. Banyat Bantadan Banyat was elected as the leader of the main opposition party, Democrat Party (DP), in April Although Banyat does not enjoy widespread popular support, he is well respected and has no enemies within the party. However, his leadership credentials remain untested and the full extent of the influence that Sanan has over Banyat is unclear. In 1975 Banyat was elected as an MP in the Surat Thani province under the banner and has remained a key party member ever since. Banyat, who is 61 years old and a law graduate from Thammasat University, was appointed deputy interior minister in 1980, science minister in 1988, and an adviser to the prime minister in His most senior position was as a deputy prime minister to Chuan Leekpai in He also took on the role of interior minister following the resignation of Sanan Kachornprasart owing to asset concealment charges. Abhisit Vejjajiva Abhisit, a deputy leader of the DP, narrowly lost the party's leadership election to Banyat in April He differs from the old school of Thai politicians in that he is Oxford-educated, young (38 years old) and professes a fondness for rock groups. He describes himself as a professional politician and believes that information technology is a key force for political reform (in that the more people know, the less politicians can hide from them). Abhisit probably represents the DP's best chance of dislodging Thaksin from power and is expected to remain in the wings, gaining more experience, perhaps with a view to contesting the 2009 parliamentary election. International relations and defence Military forces, 2003 Manpower (no.) 514,200 Active 314,200 Reserves 200,000 Defence budget (US$ bn) 1.7 Military aid from the US (US$ m) 2.8 Source: International Institute for Strategic Studies, The Military Balance, 2000/01. Modernisation of the military begins in 1992 The influence of the armed forces in Thai political affairs has decreased dramatically since their unpopular seizure of power in The new constitution has made them more accountable, and the cabinet must now approve all internal service budgets. However, a plan to make all three services come under the command of a civilian leader was scrapped after strong opposition from senior officers. Officially, the three services still report to the The Economist Intelligence Unit Limited Country Profile 2004

20 16 Thailand supreme commander but in practice, the army chief has influence over all services because of the numerical dominance of the army. Thaksin appoints close allies in the military reshuffle The defence budget is cut Thailand s alignment with the West has faltered at times Thailand attains non-nato ally status Chuan appointed General Surayud Chulanont chief of the army in This was the first time that an army chief was not chosen from the top five senior officers. Chuan believed that Surayud was the right man to carry out muchneeded reform of the services. Surayud progressed steadily towards meeting these objectives, linking the restructuring with wider efforts to create a professional, non-political defence force. The number of volunteers for the army started to rise and it was intended that future promotions be made on the basis of ability rather than connections. However, Surayud's reforming zeal and, in particular, his opposition to close ties with the Burmese junta, brought him into clashes with the Thaksin administration and in 2002 Thaksin orchestrated Surayud's promotion to the largely ceremonial role of commander-in-chief. In the controversial annual military reshuffle in 2002, which involved an unhealthy degree of political interference, General Chaisith Shinawatra, Thaksin's cousin and a former adviser to the supreme commander, was elevated to the position of army assistant commander. He later became the army chief. Budget constraints mean that most artillery and naval craft are now sourced cheaply from China, mixed with US supplies from the 1960s and earlier. The task of re-equipping the armed forces has absorbed over 20% of the annual military budget in recent years, with modern tanks, artillery and frigates being the priority items. In May 2001 Chavalit gave the army approval to spend Bt4bn (US$88bn) on ammunition and petrol to replace depleted reserves, but he also announced a policy of no new weapon procurement. Budget expenditure on defence as a percentage of total budget expenditure has dropped continuously in recent years. In calendar year 1996 defence expenditure was around Bt100bn (12.2% of total expenditure), and in 2003 it stood at Bt77bn (7.7% of total expenditure). Since the end of the second world war Thailand has been a staunch ally of the West, holding annual joint military exercises with the US and Australia. In the 1970s Thailand was in the front line of the ideological struggle in South-east Asia. After left-wing governments took power in all three countries of Indochina (Vietnam, Laos and Cambodia) in 1975, it was a base of support for Khmer factions opposed to the Vietnamese occupation of Cambodia. During the first US war against Iraq, Thailand allowed US forces the use of the U-Tapao air base. However, one of the cornerstones of the Thaksin administration's economic policy agenda is greater self-reliance and this appears to be creeping into foreign and diplomatic policy. In the run-up to the US-led campaign in Iraq in 2003, the Thai government offered its strong support to efforts by the UN to find a peaceful solution to the crisis. During the onset of the war, the government remained conspicuously quiet, but eventually announced its neutrality. This was in sharp contrast to its regional neighbours, Singapore and the Philippines, which gave their full backing to the US. Thailand, however, has since sent more than 440 troops to Country Profile The Economist Intelligence Unit Limited 2004

21 Thailand 17 Iraq as part of a humanitarian mission. Despite calls from some quarters for the troops to be withdrawn, Thaksin has refused to do so. The US has repaid Thailand's support for its rebuilding effort in Iraq, in addition to Thailand's cooperation in the war on terror, by designating Thailand a non-nato ally. The official announcement was made by the US president, George W Bush, in December Thailand will now benefit from greater access to US weaponry in addition to enhanced security co-operation. A new foreign policy focus has emerged Tensions with Cambodia reemerge Thaksin offers support for Burmese junta The focus of foreign policy, apart from overriding commercial interests, now appears to be directed towards strengthening regional links. This is not just limited to Thailand's immediate neighbours in the Association of South-east Asian Nations (ASEAN), but to deepening ties with India and China and the wider Asian region. It is within this framework that Thaksin now seems to be striving to become a regional figurehead. He has commented on the growing power vacuum in the region since the demise of Soeharto in Indonesia, the retirement of Lee Kwan Yew in Singapore and the approaching retirement of Malaysian prime minister, Mohamed Mahathir. Ties with Cambodia have been strained since the 1991 Indochina war peace settlement, with Phnom Penh accusing Thai security forces of backing an abortive coup in 1994 and until its collapse in supporting the Khmer Rouge through logging deals. However, in recent years bilateral relations have warmed and Thai businesses now have considerable investment and assets in Cambodia. This new rapport was shaken in January 2003 when violent anti- Thai riots led to the burning of the Thai embassy in the Cambodian capital, Phnom Penh, and considerable damage to Thai business concerns. The riots were reportedly sparked by unsubstantiated reports that a Thai actress had said that Cambodia's national symbol, Angkor Wat, should be returned to Thailand. The Thais responded angrily to the riots and diplomatic relations were downgraded. However, relations have since been normalised. Thailand and neighbouring Myanmar have a long history of strained relations. Under the Chuan administration, relations with Myanmar deteriorated as Chuan publicly condemned the Burmese regime and its human rights record. Thaksin promised to improve relations between the neighbours, switching the focus to mutually advantageous commercial deals. After a brief honeymoon period, tensions escalated in May 2002 when the Burmese authorities accused the Thai army of aiding the Shan rebels (who are waging a guerrilla war against the Burmese army), and the border was closed for about five months. The Thaksin administration has since attempted to strengthen relations, in part to protect Thailand's commercial interests in Myanmar in addition to gaining the military government's support in clamping down on crossborder drug smuggling. Thaksin has also been particularly supportive of the junta's plans to implement its own reforms at a self-determined pace. In December 2003 Thaksin hosted an international forum on Myanmar's planned reforms, dubbed the "Bangkok process", which was intended to give the junta an opportunity to gain wider support. The US, which has imposed trade sanctions on Myanmar, has criticised Thailand's stance towards the junta. The Economist Intelligence Unit Limited Country Profile 2004

22 18 Thailand Security risk in Thailand Armed conflict Historically there has been little serious risk of armed conflict in Thailand, but since the beginning of 2004 there has been mounting civil unrest in the southernmost provinces of Thailand, home to the minority Muslim population. Over the last 30 years there have been sporadic incidents of violence by members of the Muslim population, objecting to rule by the Buddhist-dominated Bangkok government. In early 2004 the security situation in the region again deteriorated, and martial law was declared on January 4th. Despite the imposition of martial law, the attacks on police, and state personnel and property escalated. In March a bomb attack outside a bar in Narathiwat resulted in 30 civilian injuries, including seven Malaysian tourists. This attack was the first to target civilians and tourists rather than officials. No one has yet claimed responsibility for the attacks, but the official view has been that the perpetrators were members of long-dormant separatist movements, possibly backed by regional Islamist terror groups. The latest attacks seem to suggest that regional terrorists are involved, given that historically the separatist movements have never targeted civilians. However, the violence, which had claimed nearly 200 lives by end-april, has been limited to the southern region. From time to time Thai and Burmese forces clash along the joint border with exchanges of mortar or shellfire. Although the chances of this escalating into a major conflict are small, tensions between the two governments and the armed forces increased considerably in mid The joint border was closed in May and a vitriolic anti-thai campaign was launched in the Burmese media. In October 2002 full diplomatic relations were restored and the border reopened. Unrest/demonstrations There are periodic demonstrations, but the focus of the unrest tends to be economic, rather than political, and directed at the government. Labour unrest has historically been limited, but there is a risk that this will become more of a problem as the government pushes ahead with the privatisation of state assets. Certain industries, such as power and the national airline, are widely perceived as important national assets and could cause a public outcry if sold to foreign strategic partners. In early 2004 the planned privatisation of the Electricity Generating Authority of Thailand (EGAT) drew mass demonstrations from labour unions. 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. In 2001 an auditor from Australia, auditing rice companies in the north of Thailand, was shot dead and in May 2002 a translator and aide to a US businessman was also killed. The businessman had asked for police protection. These killings are usually carried out under contract and the masterminds are rarely caught. In one month alone in early 2002, a Dutch investor with a small shrimp farm and an American running a private gibbon sanctuary were both shot dead. In such cases, disgruntled employees are the most likely perpetrators. Country Profile The Economist Intelligence Unit Limited 2004