Amnesty for junta wins full support
And new clause enables NLA to act as Senate until upper house picked
Article 299 - the controversial part of the draft charter which grants de-facto amnesty to the military junta for staging the coup - won unanimous backing from the Constitution Drafting Assembly (CDA) yesterday without debate.
The assembly also approved the Transitional Provision Article 288, which terminates the power of both the Council for National Security and the Surayud Chulanont government once a new Cabinet is formed after the election.
The assembly also approved in principle a contentious new clause in the Transitional Provisions.
It agreed to extend the life-span of the junta-appointed National Legislative Assembly (NLA) after the election - to allow it to become part of the ad-hoc Senate until a "real" Senate is selected and appointed under rules set by the new charter.
The decision means members of the ad-hoc Senate, appointed by the junta, will play a crucial role in selecting and approving some members of the so-called independent organisations under the constitution - and possibly even in selecting the future Constitution Court judges.
Details of the wording of the extension and transformation of NLA duties beyond the election will be adopted today.
Reacting to this, Sukhum Nualsakul, former rector of Ramkhamhaeng University, said it was normal to appoint a caretaker Senate during a transition period. The country could not function without legislation due to the lack of a Senate.
"It is only during a transition period. There should be no problem," he said.
But Campaign for Popular Democracy secretary-general Suriyasai Katasila felt the idea was "unacceptable". It could be seen as a power extension for the coup-makers, who appointed the NLA members.
"If we arrange a proper time for the election, we can form both the House of Representatives and the Senate around the same time," he said.
Article 299 was passed in a controversial manner - swiftly and without comment. This was despite the fact some concerned citizens said it would set a bad precedent, that it would make the draft charter undemocratic and spur future coups and the abolition of constitutions.
A few CDA members normally vocal on many issues, such as Chirmsak Pinthong, Karun Sai-ngam and Pichian Amnajvoraprasert, kept silent and gave the article a resounding nod.
Article 299 says: "All that is recognised in the Constitution of the Kingdom of Thailand 2006 (temporary version) is legitimate and constitutional; any associated act and action before or after this Constitution is promulgated shall be deemed constitutional."
Only about 10 articles are left to be approved, although all eyes will be on the issue of whether Buddhism will be recognised by the draft charter as the national religion or not. The reading on the issue is likely to take place today.
Pravit Rojanaphruk,
Kornchanok Raksaseri
The Nation
Thursday, June 28, 2007
Thursday, June 21, 2007
Can Thais Handle the Truth?
Another great article by Don Sambandaraksa (below).
Don, there is indeed something fundamentally wrong with Thai society. Remember the massacre on 6 October 1976, on the grounds of one of the top universities of Thailand? To this day, the murderers who lynched the students at Thammasat University have never been brought to justice. The police didn't even look for them, although their faces were clear enough in the photos taken by foreign journalists.
The Thai public has never come to terms with the events of that day, preferring to avert its eyes from an aspect of itself it would rather not recognize. Thai society has never done any soul-searching, never called for a truth-finding effort on that day of national shame. "Forget it and move on" seems to be the attitude.
All very well and good, except that it leaves open the possibility that the monstrous rage behind the Thai smile may yet again be unleashed should the necessary circumstances once again arise.
The problems with censorship
DON SAMBANDARAKSA
Bangkok Post Database, Wednesday June 20, 2007
A while back I sat down to talk with someone I respect who was actually pro-censorship - he felt that the situation justified the action. His reasoning was simple: if the ICT Ministry had allowed the video in question to be publicly available, it would lead to so much anger and hatred that people would try and attack, harm and quite probably kill those who created the video. Thus, the authorities had no choice but to try their best to maintain peace and stability in the country by doing what they did. It was not really a question of honour or propriety, but simply one aimed at keeping civil society from falling apart.
Strange. If society is so fragile that one video, no matter how insulting, can turn people into crazed, axe-wielding murderers, then something is fundamentally wrong. Pretending that everything is peaceful is akin to an alcoholic in denial.
The question is, did it work, or did it merely postpone the inevitable? Society seems pretty much in decline today if the antics of some people next to Thammasat university are anything to go by. Thailand is at war. Information warfare, and with lies, half-truths and accusations flying, trust is one of the most difficult items to find. The way governments (note the plural) have long tried to silence dissenting opinion and present the people with only happy thoughts has resulted in a breeding ground of mistrust and suspicion.
I remember one of the first web sites to be censored in Thailand was that of PULO, the terror group down south trying to set up a separate state. Back then, I voiced my opposition to it, not so much from a freedom of speech perspective, but from a pragmatic perspective. By leaving the site up and running, it would be much easier to quietly monitor the activities of the group as well as keep an eye on the nature of public reaction to it, essentially a barometer to gauge the public's opinion of the South. With these sites closed down, people and policy makers alike are left guessing.
The very act of trying to silence a group through heavy handed means gives them an air of credibility that they would not otherwise have. Better let their points of view be aired in public, so that they can be verified or disproved, than to pretend nothing is wrong.
After all, the British government silenced the leaders of the Irish Republican Army for years. Only when this veil was lifted and dialogue began were people able to make an informed decision for themselves and things moved on.
Had this government embarked on a mission of disclosure and truth from day zero, things would not have come to this. By trying to control information - and in a much more ham-fisted way than the previous government at that - the government has only themselves to blame for the lack of trust among the people of Thailand it faces today.
The reason often given, that is it a cultural thing that foreigners do not understand, is simply not good enough. Many Thais, born and bred here, do not understand it either. Why is being honest such a difficult thing? I myself am often left confused by the logic disconnect I face when interviewing individuals of power, and if I, someone with first hand access to these leaders, come away wondering what it was they meant, it is unsurprising that most of the people of Thailand do not have any idea which direction we are heading.
My most recent interview with our esteemed communications and IT leader and his comment on how we will focus on becoming a centre for open source was conspicuous in the silence it generated from the open source community. Not a peep. Not a single comment emailed to me on that, which probably means that nobody took that comment seriously.
Nor does anyone today seem to take the official stance on censorship seriously any more for that matter. The Freedom Against Censorship Thailand (FACT) group puts the number of censored websites at around 11,000 to 17,000 depending on how they are counted. They also claim that the previous government blocked only 2,400 sites prior to the September 19 coup. While this would not have been a disastrous figure in itself, the problem is compounded (or completed) by the way nobody seems to be responsible for it.
In my most recent interview, the ICT minister admitted to around 30 blocks and blamed the rest on either the previous regime or on censors doing censorship without proper authorisation. If anything, the answer was more worrying than the question. Being an authoritarian regime is bad enough, but being in one where nobody is at the helm is arguably even worse. After all, where would you rather live if forced to choose between Cuba and Iraq?
On a side note, FACT held a civil disobedience day recently at Pantip Plaza where activists gave out CDs with the latest MICT blocklist and 41 different programs that can be used to circumvent the Thai government's block. Most of the software can also be downloaded from FACT's web site and in itself should be perfectly legal.
It is also interesting to see security experts in denial when I point out that the censorship has made things much worse and harder to control. Some children I talked to recently told me that TOR (the onion router, a particularly popular and quite zippy way to hide one's identity and avoid censorship) is now everywhere and "everyone" has it installed. Perhaps by not censoring so much, censorship would still be effective, as nobody would have the reason to install this circumventing, anonymising software on their machines in the first place.
I am starting to wonder if things will actually begin to get better; if the next government we have will continue to control the flow of information or if they, like the government we are encumbered with today, continue on autopilot to block, control and censor, and blame everything on their predecessors.
Don, there is indeed something fundamentally wrong with Thai society. Remember the massacre on 6 October 1976, on the grounds of one of the top universities of Thailand? To this day, the murderers who lynched the students at Thammasat University have never been brought to justice. The police didn't even look for them, although their faces were clear enough in the photos taken by foreign journalists.
The Thai public has never come to terms with the events of that day, preferring to avert its eyes from an aspect of itself it would rather not recognize. Thai society has never done any soul-searching, never called for a truth-finding effort on that day of national shame. "Forget it and move on" seems to be the attitude.
All very well and good, except that it leaves open the possibility that the monstrous rage behind the Thai smile may yet again be unleashed should the necessary circumstances once again arise.
The problems with censorship
DON SAMBANDARAKSA
Bangkok Post Database, Wednesday June 20, 2007
A while back I sat down to talk with someone I respect who was actually pro-censorship - he felt that the situation justified the action. His reasoning was simple: if the ICT Ministry had allowed the video in question to be publicly available, it would lead to so much anger and hatred that people would try and attack, harm and quite probably kill those who created the video. Thus, the authorities had no choice but to try their best to maintain peace and stability in the country by doing what they did. It was not really a question of honour or propriety, but simply one aimed at keeping civil society from falling apart.
Strange. If society is so fragile that one video, no matter how insulting, can turn people into crazed, axe-wielding murderers, then something is fundamentally wrong. Pretending that everything is peaceful is akin to an alcoholic in denial.
The question is, did it work, or did it merely postpone the inevitable? Society seems pretty much in decline today if the antics of some people next to Thammasat university are anything to go by. Thailand is at war. Information warfare, and with lies, half-truths and accusations flying, trust is one of the most difficult items to find. The way governments (note the plural) have long tried to silence dissenting opinion and present the people with only happy thoughts has resulted in a breeding ground of mistrust and suspicion.
I remember one of the first web sites to be censored in Thailand was that of PULO, the terror group down south trying to set up a separate state. Back then, I voiced my opposition to it, not so much from a freedom of speech perspective, but from a pragmatic perspective. By leaving the site up and running, it would be much easier to quietly monitor the activities of the group as well as keep an eye on the nature of public reaction to it, essentially a barometer to gauge the public's opinion of the South. With these sites closed down, people and policy makers alike are left guessing.
The very act of trying to silence a group through heavy handed means gives them an air of credibility that they would not otherwise have. Better let their points of view be aired in public, so that they can be verified or disproved, than to pretend nothing is wrong.
After all, the British government silenced the leaders of the Irish Republican Army for years. Only when this veil was lifted and dialogue began were people able to make an informed decision for themselves and things moved on.
Had this government embarked on a mission of disclosure and truth from day zero, things would not have come to this. By trying to control information - and in a much more ham-fisted way than the previous government at that - the government has only themselves to blame for the lack of trust among the people of Thailand it faces today.
The reason often given, that is it a cultural thing that foreigners do not understand, is simply not good enough. Many Thais, born and bred here, do not understand it either. Why is being honest such a difficult thing? I myself am often left confused by the logic disconnect I face when interviewing individuals of power, and if I, someone with first hand access to these leaders, come away wondering what it was they meant, it is unsurprising that most of the people of Thailand do not have any idea which direction we are heading.
My most recent interview with our esteemed communications and IT leader and his comment on how we will focus on becoming a centre for open source was conspicuous in the silence it generated from the open source community. Not a peep. Not a single comment emailed to me on that, which probably means that nobody took that comment seriously.
Nor does anyone today seem to take the official stance on censorship seriously any more for that matter. The Freedom Against Censorship Thailand (FACT) group puts the number of censored websites at around 11,000 to 17,000 depending on how they are counted. They also claim that the previous government blocked only 2,400 sites prior to the September 19 coup. While this would not have been a disastrous figure in itself, the problem is compounded (or completed) by the way nobody seems to be responsible for it.
In my most recent interview, the ICT minister admitted to around 30 blocks and blamed the rest on either the previous regime or on censors doing censorship without proper authorisation. If anything, the answer was more worrying than the question. Being an authoritarian regime is bad enough, but being in one where nobody is at the helm is arguably even worse. After all, where would you rather live if forced to choose between Cuba and Iraq?
On a side note, FACT held a civil disobedience day recently at Pantip Plaza where activists gave out CDs with the latest MICT blocklist and 41 different programs that can be used to circumvent the Thai government's block. Most of the software can also be downloaded from FACT's web site and in itself should be perfectly legal.
It is also interesting to see security experts in denial when I point out that the censorship has made things much worse and harder to control. Some children I talked to recently told me that TOR (the onion router, a particularly popular and quite zippy way to hide one's identity and avoid censorship) is now everywhere and "everyone" has it installed. Perhaps by not censoring so much, censorship would still be effective, as nobody would have the reason to install this circumventing, anonymising software on their machines in the first place.
I am starting to wonder if things will actually begin to get better; if the next government we have will continue to control the flow of information or if they, like the government we are encumbered with today, continue on autopilot to block, control and censor, and blame everything on their predecessors.
Saturday, June 9, 2007
Thailand's economic outlook
Hardest hit will be the grassroots
The state of Thailand's economy appears rather worrisome and the near-term prospects do not look promising. The following is the first of a three-part article on the major economic problems and weaknesses
By CHET CHAOVISIDHA
Bangkok Post, 7-9 June 2007
On the face of it, the current situation pertaining to the economy of Thailand is not as severe as the 1997 financial meltdown and the economic collapse that followed. But the present predicament seems to be wider in scope. Why? Because in the 1997 crisis the real, financial and external sectors collapsed or were near collapse, and yet the public sector was reasonably strong and able to come to the rescue, pulling the whole economy back up on its feet, albeit with the financial assistance of a certain international financial institution. This time, all four sectors are simultaneously plagued with their own particular ills, some more serious than others, although the degree of severity in each individual sector may not be as great as those associated with the three troubled sectors in the previous 1997 crisis; yet some problems appear to be policy-resistant in nature (as will be elucidated).
Nevertheless, the situation has given rise to a great deal of concern, as it has already begun to affect the livelihood of a large portion of the Thai citizenry.
Of major significance is the political instability, manifest by incidents of rallies and protest demonstrations staged by various political and economically-affected groups, and the constant shaping of public opinion abroad against the present administration.
These destabilising activities undoubtedly contribute to the undermining of business and the general public's confidence. They give rise to the concomitant loss of investment incentives, which lead to deferrment of planned direct investment by foreign and domestic investors alike.
Adding to this, the impending general election, tentatively to be held at the end of the year, will bring with it probable changes in economic policy. The unknown factor, combined with the present government's misfiring of several policy actions, represents uncertainty and business risks which would prompt astute investors to put their long-term investment decisions on hold, at least for the time being.
Consequently, only a portion of replacement investment is being undertaken, along with the continuing investment committed earlier.
In the real sector, we are confronted with a number of difficulties. The farm sector is stricken with declining income and a corresponding fall in spending. In addition, it is saddled with a huge amount of household debt, a legacy from the consumption-driven growth policy of the previous administration which relied primarily on debt-creation, geared towards the farm sector and the lower middle class.
The platform was supported by government-owned banks and financial institutions in the form of debt-suspension, liberal lending and policy loans. It has led to the present situation, in which members of the farm sector are clamouring for higher prices for their produce, not only to cover their cost of production but also the burden of interest servicing and repayment of outstanding debts.
The previous government's free-spending and giveaway policy might have been appropriate at the beginning, during which time the economy required an exceptionally strong stimulative policy package to get it back on its feet. Unfortunately, overdoing it by continuing to pursue consumption-driven expansion in economic activities over the next several years of its tenure is the main reason for the farm sector's potential collapse of personal finance. And this will happen soon, as is generally expected, unless proper remedial policy actions are applied in time _ a task which, short of a vigorous support from the public sector's financial resources, cannot be accomplished simply by relying on income generated by current market-determined prices of farm products alone. On top of this, a number of local farm products have succumbed to intense competition from foreign farm imports, to the further detriment of farm income and spending and general economic activities in the farm sector. Saddled with huge debts coupled with declining earnings and slim prospects of future improvement in the economic conditions, the local farm sector will inevitably suffer severe economic hardship.
Aside from this, an increasing number of farm communities has been brought down to earth. They are becoming disillusioned; the realisation has gradually sunk in that they are being reduced to a poverty-stricken and debt-ridden class, in the wake of the departure of the previous administration along with its populist, giveaway policies. They are becoming distraught. All these factors can be seen as a potential incubator for widespread social unrest and political discontent, as already evidenced by the mounting incidence of protests by various local agriculture-related groups _ which can only add to foreign as well as local investment jitters.
The collateral damage associated with household debt has to do with salaried workers in the non-farm sectors, many of whom had previously overextended themselves financially by excessive borrowing and lavish spending.
This bad habit was made possible by the increasingly widespread use of bank and non-bank credit card facilities _ the number of credit cards jumped from 1.6 million to 8.2 million between 2000 and 2005 and to over 10 million in 2007.
These individuals are compelled to languish under constant pressure to meet their monthly interest servicing and partial loan repayments on time. The offshoot is that their workplace productivity and their employers' business performance suffers.
Some household debtors have turned to refinancing their outstanding debts by resorting to new sources of funds, usually at more restrictive terms. This practice is generally deemed undesirable and unsustainable, as there are limited sources of finance available and once these have become exhausted, refinancing must come to an end and the process will reverse itself, with legal proceedings and bankruptcies following suit.
In the manufacturing sector, numerous business units, especially the small and medium-sized, have already felt the impact of the declining overall economic activity and a sizeable number have gone belly up. Many more are expected to follow suit.
Only the large-scale industrial and commercial enterprises have so far managed to endure the currently unfavourable economic conditions and withstand the onslaught of foreign competition.
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OPINION / THAILAND'S ECONOMIC PROBLEMS _ PART II
The trouble with the strong baht phenomenon
This second of a three-part article on the Thai economy deals with the troubles in the financial system and the effects of a strong baht
By CHET CHAOVISIDHA
Bangkok Post, 7-9 June 2007
Continuing from the first instalment on the state of the Thai economy published yesterday, we carry on with our investigation of the causes for the current state of economic malaise: The large-scale industrial and commercial enterprises are primarily supported by their superior technical know-how, strong financial position and more efficient management and operations, in a spirit congruous with the modern, knowledge-based business world.
The local retailing sector has virtually been clobbered by the foreign retailing chainstore giants, as witnessed by the disapperance of countless traditional local mom-and-pop stores all over the country.
While long-term merits and defects of this continuing displacement of the local small shops by the foreign retailing chainstore giants are still being debated, and further evidence is required to substantiate the claim that this situation will eventually lead to a long-term increase in efficiency in the retailing sector as a whole, with net positive benefits ultimately accruing to the economy _ the short-term prospect is quite clear, as evidenced by the loss of business, jobs and livelihood of a substantial proportion of the local retailing community previously engaged in this sector.
The tourism industry is also suffering a setback, as growth in this sector has not met earlier expectations, partly as a consequence of insurgency in the South, arson activities against schools in the Northeast and the threat of sporadic bombings in the central region and the capital.
Besides, this sector has also been most acutely plagued by the ''expansion without employment'' phenomenon, which ascribes expansion in output and income to increased productivity attributed to an advancement in technology and the utlisation of modern, labour-saving machinery and telecommunications equipment, especially in the high-technology service activities.
Hence the past several years have witnessed the expansion in service activities with correspondingly little or much less than a proportionate increase in employment in this sector _ a troublesome tendency, considering that this sector has traditionally been the most progressive and dynamic in its employment-creation capacity and ability to absorb new entrants into the labour force.
On top of all this, the real sector is also inflicted with the so-called ''household debt'' problem. Over the past several years, induced by the previous government's populist policies, household debts have increased tremendously.
On average, they exceed household income earnings by a staggering margin. Since most of these indebted households belong to the lower- and middle-income class and the grassroots echelon of society _ and their income-earning potential is well below the level required to meet their debt obligations _ the situation presents a serious problem for policy-makers.
Why? Because by its nature, this kind of problem becomes increasingly more difficult to deal with under recessionary conditions, as the current economic downturn tends to further aggravate the debtors' situation by putting their job security, income and livelihood at risk.
As an increasing number of households falls into this category, and as their debt burden accumulates with no prospect of improvement of income in sight, they will be likely to start calling upon the authorities to come up with the necessary funds to bail them out.
Unfortunately, such a policy action is unlikely to materialise, on account of the government's precarious fiscal and financial position.
Finally, there is also a genuine concern relating to the long-term growth of the Thai economy.
The growth in GDP is largely attributable to the quantity and quality of labour input and investment or capital accumulation. In the case of Thailand, the investment in new plants and more productive machnery and equipment is the chief contributor to our GDP growth. As reported by a government agency, contribution by a rise in productivity remains rather limited. In this respect, an additional important statistic can give a broader and more relevant perspective: the average rate of economic growth of the past years since 1997 has been consistently below that of the similar interval leading up to the 1997 crisis.
This suggests that the Thai private sector has become more conservative and cautious about over-investing in the same reckless fashion as it did during the years prior to the 1997 crisis.
In this day and age, various countries strive for a high rate of growth and lower cost of production through an increase in productivity. Raise their competitive edge, to be precise. They recognise that the innovation and investment to raise productivity and competitiveness are today's only answer to tomorrow's sustainable growth.
Thailand is an open economy with exports making up roughly 60% of the GDP.
As our competitive edge used to lie in cheap labour, a factor which no longer holds true today, the country's relatively low rate of investment plus slow rise in productivity under the existing, competitive global conditions almost translates to dying a slow economic death. Other emerging countries will soon sweep past Thailand in the economic race to world markets.
The financial sector has, over the past several years, assumed a new complexion in its structure, organisation, and operation.
Since the 1997 financial crisis and the tragedy that followed, a number of local commercial banks and major non-bank financial institutions have fallen into foreign ownership. These foreign majority-owned financial institutions tend to follow modern banking principles and, more often than not, lend on the bases of project feasibility, management ability and good corporate governance, as opposed to traditional banking practices which tend to extend loans to borrowers on the basis of personal relationship and collateral-asset availability.
As a result, the existing financial system is characterised by a situation in which most large-scale enterprises with superior technical know-how, efficient and prudent financial management and operations, a strong financial position and accurate perception of the current and future economic and business outlook, generally find themselves needing less credit from financial institutions. This is despite the latter's willingness to lend to them as they are attracted by their appearance of efficiency and superior performance.
On the contrary, medium- and small-sized business find themselves less able to obtain additional credit for their cash-strapped operations. Potential lenders, with the exception of government-owned financial institutions, look unfavourably on their traditional-style management and operation and are unwilling to extend additional credit, be it asset-based or otherwise.
Another aspect of the financial system is that although technically these foreign majority-owned financial institutions are subject to the same regulation and supervision of the central bank, in practice, they are obligated to attain the objectives and follow the policy guidelines of their overseas parent banks.
Hence the existence of several foreign majority-owned financial institutions signifies a tacit understanding that the existing financial system has become less amenable to the central bank's control. As a result, monetary policy actions have been rendered less effective than previously.
The public sector is currently plagued with a wobbling fiscal position, an inevitable outcome of a weakening economy and declining tax revenues. Additionally, most of the state-owned banks and so-called semi-financial institutions have been seriously weakened by the financial burden imposed upon them by the previous government's free spending and giveaway campaigns.
The upshot is that fiscal policy is subject to a rigid constraint, as a severe limitation has been imposed upon them by the relative scarcity of fiscal and financial resources available.
Inflation has not been a serious threat over the past years, in spite of soaring energy prices and rises in transport and distribution costs. The situation could have been worse had it not been for the working of the strong exchange rate of the baht, which operates to prevent domestic energy prices from going up as high as they could, and would, have. Against the generally unpromising economic backdrop, this could almost be regarded as a bright spot.
Lately though, inflation has begun to rear its ugly head once again. The external sector is at present undergoing a painful experience of the strong-baht phenomenon.
The trouble with the strong baht is that it tends to make for a decline in our exports of goods and services and a rise in imports. This has the effect of depressing our domestic income, production, output and employment.
The reduction, in turn, leads to a fall in consumption and investment expenditure as a result of lower household income and business profitability, thus setting off further rounds of decline in income, production, output, employment, and consumption and investment, until the process finally comes to an end through the income-expenditure interacting mechanism.
This situation has been the outcome of many complex circumstances and an interplay of a host of variables. In the first place, we are being squeezed by a weak dollar as well as a weak yen. Historically, the dollar and the yen moved in opposite directions. As a result, the adverse effect of the former on the performance of our external sector, in terms of exports and imports, was usually and, to a large extent, negated by the latter, and vice versa.
Strangely, the current situation is one in which dollar is weak against the baht and the yen is weak against the dollar and also against the baht. So, conceptually, our exports are supposed to be discouraged while imports encouraged.
Fortunately, Japan's economy has been recovering from its lengthy doldrums. Its increasingly more robust economy has prevented the growth of our exports from decelerating as much as they would have.
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OPINION / THAILAND'S ECONOMIC PROBLEMS _ PART III
Like small fish in a big pond
Thailand will simply have to do its best to cope with a difficult situation, brought about by the actions of major players on the economic scene like China, Japan and the United States
By CHET CHAOVISIDHA
Bangkok Post, 7-9 June 2007
After the 1997 global financial conflagration, several countries have become fearful of the spectre of another financial meltdown _ memories of the pain and hardship their economies went through during that time remain vivid. Understandably, since then most countries have been accumulating foreign exchange reserves with almost reckless abandon. China, in particular, has amassed foreign exchange reserves to the tune of over US$1 trillion.
Such an exorbitant amount of dollars in the hands of a single country _ and many more with substantial amounts in their foreign reserve portfolios _ naturally makes every other country with substantial dollar holdings jittery.
They realise that sooner or later China, faced with the continued prospect of further increases in foreign exchange reserves over the next few years, will relinquish part of these reserves and invest them in other forms of income-earning assets abroad (China actually has already done so recently, though on a relatively small scale) instead of keeping them in non-earning assets at its central bank.
When that occurs, especially on a substantial scale, these other countries will be faced with potentially huge losses on their own dollar holdings.
Thus various dollar-holders are impelled to diversify, or to be ready to diversify, their foreign reserve portfolios into overseas real and financial investment.
Also, they must always be on the alert for potential dollar-unloading action by other foreign dollar holders. This set of circumstances will exert a continuing downward pressure on the dollar to remain weak, so long as the above conditions remain intact.
Additional complications arise because even though Thailand's physical volume and dollar values of exports have increased, the nominal baht values have decreased, a consequence of conversion from the weak dollar to strong domestic currency. The upshot is that a certain proportion of local exporters and producers suffer a fall in profits and others have actually incurred losses. This will invariably trigger off a depressive effect on our economy through an income-induced decline in investment and consumption spending, eventually giving rise to a negative effect on employment, especially in the export and industrial sectors in the longer run.
The strong baht can be expected to stay with us for some time to come. The United States' continuing trade and current account deficits and weak dollar, its sluggish economy, struggling automobile industry and slumping property development and housing activities will continue to exert a contractionary influence on the United States' demand for Thai exports.
This condition normally should have served to weaken the baht but that has not happened because it is more than counter-balanced by more telling influences which pull the baht in the upward direction, as outlined earlier.
Furthermore, the yen is also likely to remain weak as Japan continues to pour a huge volume of investment into China and proceeds to import products thus produced in China as well as other Chinese-produced merchandise for Japan's domestic consumers.
As the Japan-China trade volume has been surging continuously over time and is expected to outstrip the Japan-United States transactions soon, it works to the advantage of the Japanese private sector to maintain a weak yen because under such a circumstance its exports to both the United States and China will keep expanding.
Since expectation is generally self-realising, predictably the self-serving actions of Japan's private sector will continue to keep the yen weak for the foreseeable future.
The conclusion here is that a persistently weak dollar and a comparatively even weaker yen will continue to bode ill for Thailand's external balance sheet and income statement, and make for a sustained strong baht.
There is also a further disturbing prospect for the baht, which is associated with oil money.
The high and rising price of crude over the past few years has flushed the oil-producing and exporting countries with an enormous amount of cash. The Gulf states have spent close to US$1 trillion on investment projects at home and have been shopping around for the best bargains and mopping up assets in the United States, their primary investment destination.
Now they are looking to further diversify their portfilios in the European Community markets and emerging markets in the Southeast Asian region.
In the process, some portion of this money will likely find its way into the hands of the hedge funds and other financial institutions which are well known for their perceived investment skills and speculative expertise, and which are always looking out for opportunities to make profits in any kind of market conditions.
To them the emerging markets in Southeast Asia present an opportunity that cannot be passed up _ most of these countries have attained relatively high rates of economic growth in recent years, with strong foreign reserve positions built up after the recovery from the 1997 financial crisis.
These countries boast securities markets with relatively small market capitalisations, as well as relatively unrestricted foreign exchange market transactions _ a condition which can be influenced by the hedge funds and the like, to secure financial gain. Their operation needs to be more subtle these days though, as they have to make allowance for the spontaneous corrective adjustment inherent in the flexible exchange rate system now practised by most of these countries.
The combination of direct investment from the Middle East oil-rich states and financial investment and speculation by international institutional investors is expected to, in the main, further strengthen the baht and, in the process, create more volatility and wider amplitude of fluctuations in the foreign exchange market.
As long as crude prices stay high, this scenario will endure and the foreign cash inflow will intensify.
For the time being, the oil cash and oil cash-related inflows have been going on in trickles. When this inflow will hit us on a massive scale, with either investment or speculative motives, and how detrimental it will be to the Thai economy, remains to be seen. Meanwhile, we should be making plans to cope with this possible eventuality.
If one has to rank these weaknesses and problems according to their severity and intractability, the top three on the list would be the ''household debts'', ''strong baht'' and ''slow improvement in productivity in the agricultural and industrial sectors'', though not necessarily in that order.
The reason is that although the impact of each factor on the economy is different, all these factors possess important common characteristics with respect to policy actions.
The first two are relatively unamenable to corrective policy actions. In one case, the potentially effective remedial measure is constrained by insufficient fiscal and financial resources available, and the other is subject to an interplay of external circumstances, predominantly uncontrollable by us.
As for the third, it is a long-term imbalance which has to do with scores of structural and institutional factors, needing changes and reforms, such as improvement in education, logistics, communication, transportation, port facilities, beaureaucratic machinery, etc. In effect, these problems and imbalances are likely to persist over time.
And Thailand will just have to do its best to cope with such a difficult situation.
The Constitution Tribunal's recent verdict may have served to clear up political uncertainty and curb the perception of economic risks to a certain extent. Still, the basic economic weaknesses and problems remain and demand effective policy actions.
Chet Chaovisidha is an economist, a former MP for Bangkok, and an economics adviser to several past governments.
The state of Thailand's economy appears rather worrisome and the near-term prospects do not look promising. The following is the first of a three-part article on the major economic problems and weaknesses
By CHET CHAOVISIDHA
Bangkok Post, 7-9 June 2007
On the face of it, the current situation pertaining to the economy of Thailand is not as severe as the 1997 financial meltdown and the economic collapse that followed. But the present predicament seems to be wider in scope. Why? Because in the 1997 crisis the real, financial and external sectors collapsed or were near collapse, and yet the public sector was reasonably strong and able to come to the rescue, pulling the whole economy back up on its feet, albeit with the financial assistance of a certain international financial institution. This time, all four sectors are simultaneously plagued with their own particular ills, some more serious than others, although the degree of severity in each individual sector may not be as great as those associated with the three troubled sectors in the previous 1997 crisis; yet some problems appear to be policy-resistant in nature (as will be elucidated).
Nevertheless, the situation has given rise to a great deal of concern, as it has already begun to affect the livelihood of a large portion of the Thai citizenry.
Of major significance is the political instability, manifest by incidents of rallies and protest demonstrations staged by various political and economically-affected groups, and the constant shaping of public opinion abroad against the present administration.
These destabilising activities undoubtedly contribute to the undermining of business and the general public's confidence. They give rise to the concomitant loss of investment incentives, which lead to deferrment of planned direct investment by foreign and domestic investors alike.
Adding to this, the impending general election, tentatively to be held at the end of the year, will bring with it probable changes in economic policy. The unknown factor, combined with the present government's misfiring of several policy actions, represents uncertainty and business risks which would prompt astute investors to put their long-term investment decisions on hold, at least for the time being.
Consequently, only a portion of replacement investment is being undertaken, along with the continuing investment committed earlier.
In the real sector, we are confronted with a number of difficulties. The farm sector is stricken with declining income and a corresponding fall in spending. In addition, it is saddled with a huge amount of household debt, a legacy from the consumption-driven growth policy of the previous administration which relied primarily on debt-creation, geared towards the farm sector and the lower middle class.
The platform was supported by government-owned banks and financial institutions in the form of debt-suspension, liberal lending and policy loans. It has led to the present situation, in which members of the farm sector are clamouring for higher prices for their produce, not only to cover their cost of production but also the burden of interest servicing and repayment of outstanding debts.
The previous government's free-spending and giveaway policy might have been appropriate at the beginning, during which time the economy required an exceptionally strong stimulative policy package to get it back on its feet. Unfortunately, overdoing it by continuing to pursue consumption-driven expansion in economic activities over the next several years of its tenure is the main reason for the farm sector's potential collapse of personal finance. And this will happen soon, as is generally expected, unless proper remedial policy actions are applied in time _ a task which, short of a vigorous support from the public sector's financial resources, cannot be accomplished simply by relying on income generated by current market-determined prices of farm products alone. On top of this, a number of local farm products have succumbed to intense competition from foreign farm imports, to the further detriment of farm income and spending and general economic activities in the farm sector. Saddled with huge debts coupled with declining earnings and slim prospects of future improvement in the economic conditions, the local farm sector will inevitably suffer severe economic hardship.
Aside from this, an increasing number of farm communities has been brought down to earth. They are becoming disillusioned; the realisation has gradually sunk in that they are being reduced to a poverty-stricken and debt-ridden class, in the wake of the departure of the previous administration along with its populist, giveaway policies. They are becoming distraught. All these factors can be seen as a potential incubator for widespread social unrest and political discontent, as already evidenced by the mounting incidence of protests by various local agriculture-related groups _ which can only add to foreign as well as local investment jitters.
The collateral damage associated with household debt has to do with salaried workers in the non-farm sectors, many of whom had previously overextended themselves financially by excessive borrowing and lavish spending.
This bad habit was made possible by the increasingly widespread use of bank and non-bank credit card facilities _ the number of credit cards jumped from 1.6 million to 8.2 million between 2000 and 2005 and to over 10 million in 2007.
These individuals are compelled to languish under constant pressure to meet their monthly interest servicing and partial loan repayments on time. The offshoot is that their workplace productivity and their employers' business performance suffers.
Some household debtors have turned to refinancing their outstanding debts by resorting to new sources of funds, usually at more restrictive terms. This practice is generally deemed undesirable and unsustainable, as there are limited sources of finance available and once these have become exhausted, refinancing must come to an end and the process will reverse itself, with legal proceedings and bankruptcies following suit.
In the manufacturing sector, numerous business units, especially the small and medium-sized, have already felt the impact of the declining overall economic activity and a sizeable number have gone belly up. Many more are expected to follow suit.
Only the large-scale industrial and commercial enterprises have so far managed to endure the currently unfavourable economic conditions and withstand the onslaught of foreign competition.
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OPINION / THAILAND'S ECONOMIC PROBLEMS _ PART II
The trouble with the strong baht phenomenon
This second of a three-part article on the Thai economy deals with the troubles in the financial system and the effects of a strong baht
By CHET CHAOVISIDHA
Bangkok Post, 7-9 June 2007
Continuing from the first instalment on the state of the Thai economy published yesterday, we carry on with our investigation of the causes for the current state of economic malaise: The large-scale industrial and commercial enterprises are primarily supported by their superior technical know-how, strong financial position and more efficient management and operations, in a spirit congruous with the modern, knowledge-based business world.
The local retailing sector has virtually been clobbered by the foreign retailing chainstore giants, as witnessed by the disapperance of countless traditional local mom-and-pop stores all over the country.
While long-term merits and defects of this continuing displacement of the local small shops by the foreign retailing chainstore giants are still being debated, and further evidence is required to substantiate the claim that this situation will eventually lead to a long-term increase in efficiency in the retailing sector as a whole, with net positive benefits ultimately accruing to the economy _ the short-term prospect is quite clear, as evidenced by the loss of business, jobs and livelihood of a substantial proportion of the local retailing community previously engaged in this sector.
The tourism industry is also suffering a setback, as growth in this sector has not met earlier expectations, partly as a consequence of insurgency in the South, arson activities against schools in the Northeast and the threat of sporadic bombings in the central region and the capital.
Besides, this sector has also been most acutely plagued by the ''expansion without employment'' phenomenon, which ascribes expansion in output and income to increased productivity attributed to an advancement in technology and the utlisation of modern, labour-saving machinery and telecommunications equipment, especially in the high-technology service activities.
Hence the past several years have witnessed the expansion in service activities with correspondingly little or much less than a proportionate increase in employment in this sector _ a troublesome tendency, considering that this sector has traditionally been the most progressive and dynamic in its employment-creation capacity and ability to absorb new entrants into the labour force.
On top of all this, the real sector is also inflicted with the so-called ''household debt'' problem. Over the past several years, induced by the previous government's populist policies, household debts have increased tremendously.
On average, they exceed household income earnings by a staggering margin. Since most of these indebted households belong to the lower- and middle-income class and the grassroots echelon of society _ and their income-earning potential is well below the level required to meet their debt obligations _ the situation presents a serious problem for policy-makers.
Why? Because by its nature, this kind of problem becomes increasingly more difficult to deal with under recessionary conditions, as the current economic downturn tends to further aggravate the debtors' situation by putting their job security, income and livelihood at risk.
As an increasing number of households falls into this category, and as their debt burden accumulates with no prospect of improvement of income in sight, they will be likely to start calling upon the authorities to come up with the necessary funds to bail them out.
Unfortunately, such a policy action is unlikely to materialise, on account of the government's precarious fiscal and financial position.
Finally, there is also a genuine concern relating to the long-term growth of the Thai economy.
The growth in GDP is largely attributable to the quantity and quality of labour input and investment or capital accumulation. In the case of Thailand, the investment in new plants and more productive machnery and equipment is the chief contributor to our GDP growth. As reported by a government agency, contribution by a rise in productivity remains rather limited. In this respect, an additional important statistic can give a broader and more relevant perspective: the average rate of economic growth of the past years since 1997 has been consistently below that of the similar interval leading up to the 1997 crisis.
This suggests that the Thai private sector has become more conservative and cautious about over-investing in the same reckless fashion as it did during the years prior to the 1997 crisis.
In this day and age, various countries strive for a high rate of growth and lower cost of production through an increase in productivity. Raise their competitive edge, to be precise. They recognise that the innovation and investment to raise productivity and competitiveness are today's only answer to tomorrow's sustainable growth.
Thailand is an open economy with exports making up roughly 60% of the GDP.
As our competitive edge used to lie in cheap labour, a factor which no longer holds true today, the country's relatively low rate of investment plus slow rise in productivity under the existing, competitive global conditions almost translates to dying a slow economic death. Other emerging countries will soon sweep past Thailand in the economic race to world markets.
The financial sector has, over the past several years, assumed a new complexion in its structure, organisation, and operation.
Since the 1997 financial crisis and the tragedy that followed, a number of local commercial banks and major non-bank financial institutions have fallen into foreign ownership. These foreign majority-owned financial institutions tend to follow modern banking principles and, more often than not, lend on the bases of project feasibility, management ability and good corporate governance, as opposed to traditional banking practices which tend to extend loans to borrowers on the basis of personal relationship and collateral-asset availability.
As a result, the existing financial system is characterised by a situation in which most large-scale enterprises with superior technical know-how, efficient and prudent financial management and operations, a strong financial position and accurate perception of the current and future economic and business outlook, generally find themselves needing less credit from financial institutions. This is despite the latter's willingness to lend to them as they are attracted by their appearance of efficiency and superior performance.
On the contrary, medium- and small-sized business find themselves less able to obtain additional credit for their cash-strapped operations. Potential lenders, with the exception of government-owned financial institutions, look unfavourably on their traditional-style management and operation and are unwilling to extend additional credit, be it asset-based or otherwise.
Another aspect of the financial system is that although technically these foreign majority-owned financial institutions are subject to the same regulation and supervision of the central bank, in practice, they are obligated to attain the objectives and follow the policy guidelines of their overseas parent banks.
Hence the existence of several foreign majority-owned financial institutions signifies a tacit understanding that the existing financial system has become less amenable to the central bank's control. As a result, monetary policy actions have been rendered less effective than previously.
The public sector is currently plagued with a wobbling fiscal position, an inevitable outcome of a weakening economy and declining tax revenues. Additionally, most of the state-owned banks and so-called semi-financial institutions have been seriously weakened by the financial burden imposed upon them by the previous government's free spending and giveaway campaigns.
The upshot is that fiscal policy is subject to a rigid constraint, as a severe limitation has been imposed upon them by the relative scarcity of fiscal and financial resources available.
Inflation has not been a serious threat over the past years, in spite of soaring energy prices and rises in transport and distribution costs. The situation could have been worse had it not been for the working of the strong exchange rate of the baht, which operates to prevent domestic energy prices from going up as high as they could, and would, have. Against the generally unpromising economic backdrop, this could almost be regarded as a bright spot.
Lately though, inflation has begun to rear its ugly head once again. The external sector is at present undergoing a painful experience of the strong-baht phenomenon.
The trouble with the strong baht is that it tends to make for a decline in our exports of goods and services and a rise in imports. This has the effect of depressing our domestic income, production, output and employment.
The reduction, in turn, leads to a fall in consumption and investment expenditure as a result of lower household income and business profitability, thus setting off further rounds of decline in income, production, output, employment, and consumption and investment, until the process finally comes to an end through the income-expenditure interacting mechanism.
This situation has been the outcome of many complex circumstances and an interplay of a host of variables. In the first place, we are being squeezed by a weak dollar as well as a weak yen. Historically, the dollar and the yen moved in opposite directions. As a result, the adverse effect of the former on the performance of our external sector, in terms of exports and imports, was usually and, to a large extent, negated by the latter, and vice versa.
Strangely, the current situation is one in which dollar is weak against the baht and the yen is weak against the dollar and also against the baht. So, conceptually, our exports are supposed to be discouraged while imports encouraged.
Fortunately, Japan's economy has been recovering from its lengthy doldrums. Its increasingly more robust economy has prevented the growth of our exports from decelerating as much as they would have.
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OPINION / THAILAND'S ECONOMIC PROBLEMS _ PART III
Like small fish in a big pond
Thailand will simply have to do its best to cope with a difficult situation, brought about by the actions of major players on the economic scene like China, Japan and the United States
By CHET CHAOVISIDHA
Bangkok Post, 7-9 June 2007
After the 1997 global financial conflagration, several countries have become fearful of the spectre of another financial meltdown _ memories of the pain and hardship their economies went through during that time remain vivid. Understandably, since then most countries have been accumulating foreign exchange reserves with almost reckless abandon. China, in particular, has amassed foreign exchange reserves to the tune of over US$1 trillion.
Such an exorbitant amount of dollars in the hands of a single country _ and many more with substantial amounts in their foreign reserve portfolios _ naturally makes every other country with substantial dollar holdings jittery.
They realise that sooner or later China, faced with the continued prospect of further increases in foreign exchange reserves over the next few years, will relinquish part of these reserves and invest them in other forms of income-earning assets abroad (China actually has already done so recently, though on a relatively small scale) instead of keeping them in non-earning assets at its central bank.
When that occurs, especially on a substantial scale, these other countries will be faced with potentially huge losses on their own dollar holdings.
Thus various dollar-holders are impelled to diversify, or to be ready to diversify, their foreign reserve portfolios into overseas real and financial investment.
Also, they must always be on the alert for potential dollar-unloading action by other foreign dollar holders. This set of circumstances will exert a continuing downward pressure on the dollar to remain weak, so long as the above conditions remain intact.
Additional complications arise because even though Thailand's physical volume and dollar values of exports have increased, the nominal baht values have decreased, a consequence of conversion from the weak dollar to strong domestic currency. The upshot is that a certain proportion of local exporters and producers suffer a fall in profits and others have actually incurred losses. This will invariably trigger off a depressive effect on our economy through an income-induced decline in investment and consumption spending, eventually giving rise to a negative effect on employment, especially in the export and industrial sectors in the longer run.
The strong baht can be expected to stay with us for some time to come. The United States' continuing trade and current account deficits and weak dollar, its sluggish economy, struggling automobile industry and slumping property development and housing activities will continue to exert a contractionary influence on the United States' demand for Thai exports.
This condition normally should have served to weaken the baht but that has not happened because it is more than counter-balanced by more telling influences which pull the baht in the upward direction, as outlined earlier.
Furthermore, the yen is also likely to remain weak as Japan continues to pour a huge volume of investment into China and proceeds to import products thus produced in China as well as other Chinese-produced merchandise for Japan's domestic consumers.
As the Japan-China trade volume has been surging continuously over time and is expected to outstrip the Japan-United States transactions soon, it works to the advantage of the Japanese private sector to maintain a weak yen because under such a circumstance its exports to both the United States and China will keep expanding.
Since expectation is generally self-realising, predictably the self-serving actions of Japan's private sector will continue to keep the yen weak for the foreseeable future.
The conclusion here is that a persistently weak dollar and a comparatively even weaker yen will continue to bode ill for Thailand's external balance sheet and income statement, and make for a sustained strong baht.
There is also a further disturbing prospect for the baht, which is associated with oil money.
The high and rising price of crude over the past few years has flushed the oil-producing and exporting countries with an enormous amount of cash. The Gulf states have spent close to US$1 trillion on investment projects at home and have been shopping around for the best bargains and mopping up assets in the United States, their primary investment destination.
Now they are looking to further diversify their portfilios in the European Community markets and emerging markets in the Southeast Asian region.
In the process, some portion of this money will likely find its way into the hands of the hedge funds and other financial institutions which are well known for their perceived investment skills and speculative expertise, and which are always looking out for opportunities to make profits in any kind of market conditions.
To them the emerging markets in Southeast Asia present an opportunity that cannot be passed up _ most of these countries have attained relatively high rates of economic growth in recent years, with strong foreign reserve positions built up after the recovery from the 1997 financial crisis.
These countries boast securities markets with relatively small market capitalisations, as well as relatively unrestricted foreign exchange market transactions _ a condition which can be influenced by the hedge funds and the like, to secure financial gain. Their operation needs to be more subtle these days though, as they have to make allowance for the spontaneous corrective adjustment inherent in the flexible exchange rate system now practised by most of these countries.
The combination of direct investment from the Middle East oil-rich states and financial investment and speculation by international institutional investors is expected to, in the main, further strengthen the baht and, in the process, create more volatility and wider amplitude of fluctuations in the foreign exchange market.
As long as crude prices stay high, this scenario will endure and the foreign cash inflow will intensify.
For the time being, the oil cash and oil cash-related inflows have been going on in trickles. When this inflow will hit us on a massive scale, with either investment or speculative motives, and how detrimental it will be to the Thai economy, remains to be seen. Meanwhile, we should be making plans to cope with this possible eventuality.
If one has to rank these weaknesses and problems according to their severity and intractability, the top three on the list would be the ''household debts'', ''strong baht'' and ''slow improvement in productivity in the agricultural and industrial sectors'', though not necessarily in that order.
The reason is that although the impact of each factor on the economy is different, all these factors possess important common characteristics with respect to policy actions.
The first two are relatively unamenable to corrective policy actions. In one case, the potentially effective remedial measure is constrained by insufficient fiscal and financial resources available, and the other is subject to an interplay of external circumstances, predominantly uncontrollable by us.
As for the third, it is a long-term imbalance which has to do with scores of structural and institutional factors, needing changes and reforms, such as improvement in education, logistics, communication, transportation, port facilities, beaureaucratic machinery, etc. In effect, these problems and imbalances are likely to persist over time.
And Thailand will just have to do its best to cope with such a difficult situation.
The Constitution Tribunal's recent verdict may have served to clear up political uncertainty and curb the perception of economic risks to a certain extent. Still, the basic economic weaknesses and problems remain and demand effective policy actions.
Chet Chaovisidha is an economist, a former MP for Bangkok, and an economics adviser to several past governments.
Destroying democracy to save it?
Verdict sets a dangerous precedent
Critics fear the court verdict paves the way for generals to 'save democracy' with tanks again in the future
By DANIEL TEN KATE
Bangkok Post, 9 June 2007
Although coup leader Sonthi Boonyaratkalin's amnesty idea was shot down faster than his tanks secured Bangkok last September, the general can be forgiven for thinking that anything he uttered would become law. After all, a few days earlier a court he set up after a coup he ordered punished Thai Rak Thai executives using a law he decreed. In one fell swoop, six of the nine justices who said party executives should be banned for five years for ''undermining democracy'' effectively gave legal legitimacy to Gen Sonthi for overthrowing democracy altogether.
So to him amnesty wasn't a huge leap. To legal experts and most of the general public who opposed deposed premier Thaksin Shinawatra, however, it didn't make much sense. How could the general simply change the punishment for a crime that was deemed so devastating to democracy?
Well, probably the same way he did so when he issued Announcement No. 27 on Sept 30, 2006 which stripped the voting rights from executives of dissolved parties for five years, making them ineligible to stand for office.
It was the Constitution Tribunal's endorsement of this decree that particularly has verdict critics up in arms. In validating the junta's Announcement No. 27, as well as blasting Mr Thaksin's decision to call an election in February 2006 and calling Thai Rak Thai ''dangerous to democracy'', critics say the judges essentially set a legal precedent for staging a coup.
''The verdicts seemed to justify the coup d'etat and also Announcement 27 of the coup group, which has ruined the judicial system,'' said Kanin Boonsuwan, a constitutional law expert who has written several books on the Constitution Tribunal.
''In the verdicts, the judges referred to power from coups d'etat so many times and justified the legitimacy of coup d'etats many times,'' he added. ''In past times, the coup groups used power to tackle everything _ executive, legislative and judicial. They could order people in prison or hand a suspect a life punishment. But that also meant they were responsible for everything. They didn't let the court do the job.
''But this time they used the court to execute an order of the military. Now when they return the power to a democratic system, there will be lots of confusion and the people will not accept the legitimacy of the court anymore.''
After the 1991 coup led by Gen Suchinda Kraprayoon, the military set up a court to indict members of the deposed Chatichai Choonhavan administration with the aim of confiscating their assets. But when the case reached the Supreme Court, the justices tossed it out.
The Constitution Tribunal, by contrast, is stacked with eight Supreme Court judges and one from the Supreme Administrative Court.
This makes it even more troubling that the court decided to enforce an ex post facto law, which flies in the face of accepted international legal principles and the spirit of both the 1997 Constitution and the new one being drafted.
Many countries explicitly ban retroactive laws, including the United States, Canada, the European Union, Indonesia, Iran, Japan, Turkey and others.
Indeed, Article 32 of the 1997 Constitution says ''a punishment to be inflicted on such person shall not be heavier than that provided by the law in force at the time of the commission of the offence''.
This clause is repeated in Article 39 of the draft constitution that will be put to a referendum in September.
The legal argument in favour of the five-year ban, espoused by National Legislative Assembly chairman Meechai Ruchupan and others, is that Announcement No. 27 involves a political case. Article 32 only mentions specifically that retroactive punishments apply to criminal cases, and the Constitution doesn't specifically mention that administrative and political punishments should not be retroactive. Therefore, they argue, the punishments in non-criminal cases can be applied retroactively.
Even so, many in the legal community oppose this interpretation. To impose the rule of law_something the coup leaders said was among their main goals _ citizens must be confident that laws are transparent and binding unless everyone agrees to change them.
''In the past, the Supreme Court sometimes ruled that retroactive laws were prohibited for criminal penalties but not administrative or political penalties, but many lawyers oppose this,'' said Vorajet Pakirat, a law lecturer at Thammasat University. ''I think it's unreasonable that we continue to walk in the way of the Supreme Court, because sometimes the administrative penalty can be harsher than the criminal penalty. It's unjust.''
Three judges who voted against the five-year ban agreed. The old punishment under the 1998 Organic Act on Political Parties said executives of dissolved parties cannot form a new party or sit on an executive board for five years, but they could still run in elections.
Panya Thanomrod, president of both the Tribunal and the Supreme Court, argued that post-coup law could not take retroactive effect under any circumstances in voting against the five-year ban. But he could not convince his fellow judges.
The legal justification supporting the five-year ban is one in a large number of examples of how this case misses the forest through the trees. It's as if the whole trial took place in a bubble world in which the election boycott and the Sept 19 coup never took place. Thai Rak Thai was held to the strictest and most draconian interpretations of the law, while Gen Sonthi's sweeping announcements gave the Constitution Tribunal broad legal leeway to bring down the hammer.
''The Constitution Tribunal ruled that the junta's decrees were legitimate but said dissolving parliament in times of crisis was not legitimate, even though that's an international standard for democracy,'' said Giles Ungpakorn, an anti-coup activist and political scientist at Chulalongkorn University. ''What's more worrying is that the Constitution Tribunal talked about previous precedents and the tradition of Thai governance, and mentioned the coups in October 1976 and February 1991 as though they were legal standards. This is a real step backwards. Those were standards for dictatorships.''
Besides stripping the voting rights from executives of dissolved parties for five years, Announcement No. 27 also gave the Constitution Tribunal authority to dissolve parties on behalf of the Constitution Court, which the coup-makers tossed out after seizing power. However, the court itself never received royal endorsement and the judges never resigned from their Supreme Court positions as the disposed constitution required.
''Judges in the Constitution Court under the 1997 Constitution had to resign from active posts in judicial courts so they would be free to consider all cases concerning political problems and conflicts,'' said Mr Kanin. ''But this never happened. Many Supreme Court justices are not happy with that, because they feel that the courts are not free any more. The whole judicial system is being used to tackle the executive's problems, to destroy its enemies.''
From the moment the coup-makers threw out the old Constitution Court and issued Announcement No. 27, it appeared clear that Thai Rak Thai was targeted for execution. Certainly many party members saw the writing on the wall and quickly jumped ship in a last-ditch effort to save themselves.
Moving forward, the legal intricacies of the Constitution Tribunal verdicts will disappear as the big picture comes into focus. The court severely punished Thai Rak Thai for breaking a law under the 1997 Constitution while upholding the military's right to rip that constitution to shreds.
In the long term, tribunal critics fear that the court verdict will diminish respect for the judiciary and pave the way for military leaders like Gen Sonthi to ''save democracy'' with tanks again in the future.
''If the state can enact a law and apply it retrospectively, how can the people trust the law?'' said Mr Vorajet. ''What's worse is that the court verdict supported the coup indirectly. If we take the verdict of the Constitution Tribunal as precedent, then a coup d'etat in Thailand can happen again and again.''
Critics fear the court verdict paves the way for generals to 'save democracy' with tanks again in the future
By DANIEL TEN KATE
Bangkok Post, 9 June 2007
Although coup leader Sonthi Boonyaratkalin's amnesty idea was shot down faster than his tanks secured Bangkok last September, the general can be forgiven for thinking that anything he uttered would become law. After all, a few days earlier a court he set up after a coup he ordered punished Thai Rak Thai executives using a law he decreed. In one fell swoop, six of the nine justices who said party executives should be banned for five years for ''undermining democracy'' effectively gave legal legitimacy to Gen Sonthi for overthrowing democracy altogether.
So to him amnesty wasn't a huge leap. To legal experts and most of the general public who opposed deposed premier Thaksin Shinawatra, however, it didn't make much sense. How could the general simply change the punishment for a crime that was deemed so devastating to democracy?
Well, probably the same way he did so when he issued Announcement No. 27 on Sept 30, 2006 which stripped the voting rights from executives of dissolved parties for five years, making them ineligible to stand for office.
It was the Constitution Tribunal's endorsement of this decree that particularly has verdict critics up in arms. In validating the junta's Announcement No. 27, as well as blasting Mr Thaksin's decision to call an election in February 2006 and calling Thai Rak Thai ''dangerous to democracy'', critics say the judges essentially set a legal precedent for staging a coup.
''The verdicts seemed to justify the coup d'etat and also Announcement 27 of the coup group, which has ruined the judicial system,'' said Kanin Boonsuwan, a constitutional law expert who has written several books on the Constitution Tribunal.
''In the verdicts, the judges referred to power from coups d'etat so many times and justified the legitimacy of coup d'etats many times,'' he added. ''In past times, the coup groups used power to tackle everything _ executive, legislative and judicial. They could order people in prison or hand a suspect a life punishment. But that also meant they were responsible for everything. They didn't let the court do the job.
''But this time they used the court to execute an order of the military. Now when they return the power to a democratic system, there will be lots of confusion and the people will not accept the legitimacy of the court anymore.''
After the 1991 coup led by Gen Suchinda Kraprayoon, the military set up a court to indict members of the deposed Chatichai Choonhavan administration with the aim of confiscating their assets. But when the case reached the Supreme Court, the justices tossed it out.
The Constitution Tribunal, by contrast, is stacked with eight Supreme Court judges and one from the Supreme Administrative Court.
This makes it even more troubling that the court decided to enforce an ex post facto law, which flies in the face of accepted international legal principles and the spirit of both the 1997 Constitution and the new one being drafted.
Many countries explicitly ban retroactive laws, including the United States, Canada, the European Union, Indonesia, Iran, Japan, Turkey and others.
Indeed, Article 32 of the 1997 Constitution says ''a punishment to be inflicted on such person shall not be heavier than that provided by the law in force at the time of the commission of the offence''.
This clause is repeated in Article 39 of the draft constitution that will be put to a referendum in September.
The legal argument in favour of the five-year ban, espoused by National Legislative Assembly chairman Meechai Ruchupan and others, is that Announcement No. 27 involves a political case. Article 32 only mentions specifically that retroactive punishments apply to criminal cases, and the Constitution doesn't specifically mention that administrative and political punishments should not be retroactive. Therefore, they argue, the punishments in non-criminal cases can be applied retroactively.
Even so, many in the legal community oppose this interpretation. To impose the rule of law_something the coup leaders said was among their main goals _ citizens must be confident that laws are transparent and binding unless everyone agrees to change them.
''In the past, the Supreme Court sometimes ruled that retroactive laws were prohibited for criminal penalties but not administrative or political penalties, but many lawyers oppose this,'' said Vorajet Pakirat, a law lecturer at Thammasat University. ''I think it's unreasonable that we continue to walk in the way of the Supreme Court, because sometimes the administrative penalty can be harsher than the criminal penalty. It's unjust.''
Three judges who voted against the five-year ban agreed. The old punishment under the 1998 Organic Act on Political Parties said executives of dissolved parties cannot form a new party or sit on an executive board for five years, but they could still run in elections.
Panya Thanomrod, president of both the Tribunal and the Supreme Court, argued that post-coup law could not take retroactive effect under any circumstances in voting against the five-year ban. But he could not convince his fellow judges.
The legal justification supporting the five-year ban is one in a large number of examples of how this case misses the forest through the trees. It's as if the whole trial took place in a bubble world in which the election boycott and the Sept 19 coup never took place. Thai Rak Thai was held to the strictest and most draconian interpretations of the law, while Gen Sonthi's sweeping announcements gave the Constitution Tribunal broad legal leeway to bring down the hammer.
''The Constitution Tribunal ruled that the junta's decrees were legitimate but said dissolving parliament in times of crisis was not legitimate, even though that's an international standard for democracy,'' said Giles Ungpakorn, an anti-coup activist and political scientist at Chulalongkorn University. ''What's more worrying is that the Constitution Tribunal talked about previous precedents and the tradition of Thai governance, and mentioned the coups in October 1976 and February 1991 as though they were legal standards. This is a real step backwards. Those were standards for dictatorships.''
Besides stripping the voting rights from executives of dissolved parties for five years, Announcement No. 27 also gave the Constitution Tribunal authority to dissolve parties on behalf of the Constitution Court, which the coup-makers tossed out after seizing power. However, the court itself never received royal endorsement and the judges never resigned from their Supreme Court positions as the disposed constitution required.
''Judges in the Constitution Court under the 1997 Constitution had to resign from active posts in judicial courts so they would be free to consider all cases concerning political problems and conflicts,'' said Mr Kanin. ''But this never happened. Many Supreme Court justices are not happy with that, because they feel that the courts are not free any more. The whole judicial system is being used to tackle the executive's problems, to destroy its enemies.''
From the moment the coup-makers threw out the old Constitution Court and issued Announcement No. 27, it appeared clear that Thai Rak Thai was targeted for execution. Certainly many party members saw the writing on the wall and quickly jumped ship in a last-ditch effort to save themselves.
Moving forward, the legal intricacies of the Constitution Tribunal verdicts will disappear as the big picture comes into focus. The court severely punished Thai Rak Thai for breaking a law under the 1997 Constitution while upholding the military's right to rip that constitution to shreds.
In the long term, tribunal critics fear that the court verdict will diminish respect for the judiciary and pave the way for military leaders like Gen Sonthi to ''save democracy'' with tanks again in the future.
''If the state can enact a law and apply it retrospectively, how can the people trust the law?'' said Mr Vorajet. ''What's worse is that the court verdict supported the coup indirectly. If we take the verdict of the Constitution Tribunal as precedent, then a coup d'etat in Thailand can happen again and again.''
Fool's Paradise
I was expecting a bigger turnout. Maybe Thais don't care that much about freedom, or maybe they're just unaware of the extent of censorship committed by this government. From this news report, the sense of outrage one would expect seems oddly absent except among members of FACT.
Activists call for cyber-freedom, say 50,000 sites shut
The Nation, June 10, 2007
Free-Internet activists yesterday afternoon gathered in front of Bangkok's Panthip Plaza, the country's largest computer mall, to denounce the growing threat of Internet censorship that they claim now covers some 50,000 websites.
The dozen or so members of Freedom Against Censorship Thailand (Fact) also distributed CDs containing a programme to circumvent the authorities' suppression of websites and also a secret list of the 50,000 that have been blacked out.
The software will give access to any proxy site, said CJ Hinke, a leading member of the group.
"So we're distributing thousands of CDs before the cyberlaw is passed, making it illegal," he said.
Dozens of people came forward to take the free material as well as anti-censorship stickers as Sombat Boonngamanong, another Fact member, explained to curious bystanders what the fuss was all about.
"It is well known that these days the Information Communications and Technology Ministry spends most of its time blocking websites that express political views not to its liking. We all know what the political climate is, though it's the people who should decide what they ought to believe or not believe. People can think for themselves!
"It's natural in any society to have differing views, and cyberspace is a free space of the people. Yet they block sites such as saturdayvoice.com and PTV: does that mean this country doesn't need to have political discussion any more?"
Sombat condemned the ICT Ministry through loudspeakers, as some 50 listeners stood transfixed by the messages conveyed.
"It's good that they're talking about it so we know," said May, a university student who happened to drop by. She refused to give her full name or where she was studying for fear of state reprisals.
"They are blocking people's views. Sometimes information simply disappears," said a woman named Saifon, who works at Panthip.
Signs with slogans including "We Can Think for Ourselves!" and "Internet Does Not Belong to CNS" were held by protesters under the watchful eyes of Special Branch police.
"Denizens of the Internet must together try to free themselves from the lid of dictatorship. Take this software and install it so you can open your eyes and ears. What the ICT Ministry is doing is a violation of human rights, against the right to know, the right to communicate, which are basic rights.
"The banned sites are not a threat to national security but the security of the military junta, and [the ministry's] bureaucrats are now acting like ghosts in cyberspace blocking any site at whim, not adhering to any law or principle," Sombat said, adding that his experience was that in some cases the ICT Ministry simply denied doing it, even though his own cyber-investigation had proved otherwise.
Pravit Rojanaphruk
Activists call for cyber-freedom, say 50,000 sites shut
The Nation, June 10, 2007
Free-Internet activists yesterday afternoon gathered in front of Bangkok's Panthip Plaza, the country's largest computer mall, to denounce the growing threat of Internet censorship that they claim now covers some 50,000 websites.
The dozen or so members of Freedom Against Censorship Thailand (Fact) also distributed CDs containing a programme to circumvent the authorities' suppression of websites and also a secret list of the 50,000 that have been blacked out.
The software will give access to any proxy site, said CJ Hinke, a leading member of the group.
"So we're distributing thousands of CDs before the cyberlaw is passed, making it illegal," he said.
Dozens of people came forward to take the free material as well as anti-censorship stickers as Sombat Boonngamanong, another Fact member, explained to curious bystanders what the fuss was all about.
"It is well known that these days the Information Communications and Technology Ministry spends most of its time blocking websites that express political views not to its liking. We all know what the political climate is, though it's the people who should decide what they ought to believe or not believe. People can think for themselves!
"It's natural in any society to have differing views, and cyberspace is a free space of the people. Yet they block sites such as saturdayvoice.com and PTV: does that mean this country doesn't need to have political discussion any more?"
Sombat condemned the ICT Ministry through loudspeakers, as some 50 listeners stood transfixed by the messages conveyed.
"It's good that they're talking about it so we know," said May, a university student who happened to drop by. She refused to give her full name or where she was studying for fear of state reprisals.
"They are blocking people's views. Sometimes information simply disappears," said a woman named Saifon, who works at Panthip.
Signs with slogans including "We Can Think for Ourselves!" and "Internet Does Not Belong to CNS" were held by protesters under the watchful eyes of Special Branch police.
"Denizens of the Internet must together try to free themselves from the lid of dictatorship. Take this software and install it so you can open your eyes and ears. What the ICT Ministry is doing is a violation of human rights, against the right to know, the right to communicate, which are basic rights.
"The banned sites are not a threat to national security but the security of the military junta, and [the ministry's] bureaucrats are now acting like ghosts in cyberspace blocking any site at whim, not adhering to any law or principle," Sombat said, adding that his experience was that in some cases the ICT Ministry simply denied doing it, even though his own cyber-investigation had proved otherwise.
Pravit Rojanaphruk
Derailing Thailand's travel and tourism?
Would the so-called civilian junta be so stupid as to destroy the country's future in order to root out the vestiges of Thaksin? Let's hope that they are smarter than they seem. But why else would the SRT deputy governor come out with such a politically foolhardy statement?
'Politics could kill airport line'
The Nation, June 10, 2007
Authorities fear political instability will derail critical funding for the airport express-train project.
Nakorn Chanthasorn, deputy governor of the State Railway of Thailand, said yesterday the financing negotiations were reaching a sensitive stage and could be easily upset by political factors.
"My biggest worry is that the ongoing political banter [between the former and current government] will make the project grind to a halt, intentionally or unintentionally. This project was strongly pushed by the previous government, but this government has to make a decision on a crucial financing solution," he said.
"The best I can do is to do my job the best way and pray for no political revenge to be taken, because this project could be used as a tool for reprisal," he said.
If Nakorn's fear proves justified, the hunt for project financing could end, even though construction is more than half complete.
"That means the trains we have ordered and already paid more than 71 per cent for will not be sent to us and what is built of the railway will be left standing like a monument to mistakes, like the Hopewell [transit] project," he said.
The rail agency has formed a committee to address its long-standing financial crisis. Three options have been discussed, and a solution is expected by next month.
'Politics could kill airport line'
The Nation, June 10, 2007
Authorities fear political instability will derail critical funding for the airport express-train project.
Nakorn Chanthasorn, deputy governor of the State Railway of Thailand, said yesterday the financing negotiations were reaching a sensitive stage and could be easily upset by political factors.
"My biggest worry is that the ongoing political banter [between the former and current government] will make the project grind to a halt, intentionally or unintentionally. This project was strongly pushed by the previous government, but this government has to make a decision on a crucial financing solution," he said.
"The best I can do is to do my job the best way and pray for no political revenge to be taken, because this project could be used as a tool for reprisal," he said.
If Nakorn's fear proves justified, the hunt for project financing could end, even though construction is more than half complete.
"That means the trains we have ordered and already paid more than 71 per cent for will not be sent to us and what is built of the railway will be left standing like a monument to mistakes, like the Hopewell [transit] project," he said.
The rail agency has formed a committee to address its long-standing financial crisis. Three options have been discussed, and a solution is expected by next month.
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