Last week’s Thai elections saw Yingluck Shinawatra sweep into the lead with her Puea Thai party – but despite the leadership change, tensions will remain, says Cris Sholto Heaton
Who is Thailand’s new leader?
Barring upsets, it will be Yingluck Shinawatra. She is set to become the country’s first female prime minister after a very strong showing in elections last week. Her Puea Thai (PT) party did even better than expected, winning 265 out of 500 seats in parliament, an outright majority. Meanwhile, the Democratic Party of Abhisit Vejjajiva, which heads the ruling coalition, saw its take slide from 170 to 159. This is by any standards a rapid rise for Yingluck, a political neophyte who has never before run for office and only became PT’s prime ministerial candidate in May.
So is she a political prodigy?
Not exactly. Yingluck has turned out to be an unexpectedly strong campaigner, easily outflanking Abhisit on hot issues such as inflation and inequality. She represents something very new in the male-dominated world of Thai politics. But the real foundations of her victory come from being the sister of exiled former prime minister Thaksin Shinawatra. PT is his political machine, growing out of the now-banned Thai Rak Thai party that propelled him to three consecutive victories in 2001-2006. It was Thaksin who appointed his sister to head PT’s campaign, in a move that seemed strange at the time, but now looks like an inspired decision. It was also Thaksin who funded and organised much of the campaign from his base in Dubai. And it’s Thaksin who will be the biggest issue for Yingluck’s government.
Why does Thaksin mean trouble?
Thaksin was a multi-millionaire businessman, who turned to politics in the 1990s and realised the value of reaching out to poor rural voters. The Bangkok elite had largely neglected the more populous rural voters; Thaksin promised them healthcare, education and cheap loans. Unsurprisingly, they voted for him in large numbers. But many powerful figures in politics, the military, business and the royal family were firmly opposed to him, accusing him of conflicts of interest and authoritarianism. These claims may well be true. However, his ousting in a coup in 2006 and subsequent conviction for corruption were clearly politically motivated. The same factions may well try to undermine the new government.
What can his rivals do?
After a Thaksin-supporting government won the first elections after the coup, its leaders were disqualified from office in increasingly ludicrous ways (one was ruled to have broken the constitution by hosting a cookery show on television). Ultimately, a series of protests by the anti-Thaksin ‘yellow shirt’ movement forced the government to resign in December 2008 and Abhisit formed a new government after much horse-trading. Pro-Thaksin ‘red shirt’ protests in central Bangkok were violently put down by the army in May 2010, in sharp contrast to the way similar yellow shirt disruptions had been tolerated. So anything from harassing PT politicians in the courts to another coup is plausible.
Is more turmoil likely?
The army has said that it will accept the results of the election. And Yingluck has indicated that she will attempt some form of compromise. To begin with, she has said she intends to form a coalition with smaller parties rather than going alone with her majority. Reportedly, PT will probably not include hardline red shirt leaders in the cabinet. Yingluck has also suggested that she will not consider granting an amnesty to Thaksin. But it’s too early to say whether there will be any real spirit of reconciliation. Thailand still has a very divisive figure in its politics: Thaksin will be exercising influence from abroad and obviously aspires to return home at some point. And even if he were out of the picture, other issues will remain.
What are the flashpoints?
The elite don’t appear to appreciate that poorer Thais want representation and a share of the country’s growing wealth. For all his faults, Thaksin was democratically elected and attempting to ignore this verdict threatens to create future problems. Abhisit’s government recognised this and tried to copy Thaksin’s populist approach. But the same is still not true for many unelected powerbrokers and these attitudes will have to change if more conflict is to be avoided.
To make matters worse, King Bhumibol Adulyadej is 83 and in poor health; he is almost universally revered and has acted as the crucial moderating influence during many past crisis. His son and heir is almost as strongly loathed by the public and so there is much doubt whether the royal family will be able to unify the country as they have during past crises once he takes the throne. The succession issue is probably the single biggest uncertainty in Thailand in the years ahead.
Is Thailand a good investment?
Markets certainly reacted well to the decisive election result, with the SET benchmark leaping 4.7% on Monday. Even now, Thailand is not expensive, on a trailing price/earnings ratio of 13.8 and a dividend yield of 3.55%. Despite its upheavals, the economy has made great strides over the last couple of decades and still has significant potential. The large-cap section of the market is not outstanding, but there are many good under-researched mid and small caps, offering huge potential for stock-pickers. But it’s very optimistic to assume Thailand’s fundamental problems have gone away. Investors should be cautious and treat this as a high-risk market.