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The Thai business community is anxiously watching the political developments after the Move Forward Party emerged as the biggest winner in the general election on Sunday.
The progressive party, which campaigned on a platform of democratic reforms and social welfare, secured 120 seats in the 500-member lower house, but fell short of a majority. It now faces the challenge of forming a coalition with other parties that share its vision for Thailand’s future.
- Thai private sector is concerned about political instability and the continuity of economic policies following the recent elections.
- The private sector is particularly keen on the Eastern Economic Corridor infrastructure project and the Bio-Circular-Green concept.
- Some business executives and analysts are wary of populist promises such as cash handouts and a higher minimum wage, which could negatively impact the economy.
Potential political void
Thailand’s private sector is concerned about political stability following Sunday’s elections, which resulted in a potential political void. Some businesses are hoping for the Move Forward Party to form a government quickly and ensure continuity of key economic projects, such as the Eastern Economic Corridor.
There are concerns that the party’s promises of raising the minimum wage and offering cash handouts could harm the economy. The Office of the National Economic and Social Development Council has warned that fiscal discipline is necessary in drafting any new budget, as rising wages could push up costs and adversely affect foreign direct investment.
The Move Forward Party is seen as a successor to the disbanded Future Forward Party, which was popular among young and urban voters who opposed the military-backed government of Prime Minister Prayuth Chan-ocha. The party’s leader, Pita Limjaroenrat, has vowed to push for constitutional amendments that would reduce the power of the military and the monarchy, and to tackle inequality and corruption.
Populist policies and fiscal discipline
However, some business leaders are worried that a Move Forward-led government might jeopardize Thailand’s economic stability and growth. They fear that the party might scrap or delay some of the infrastructure projects that Prayuth’s government had initiated, such as the Eastern Economic Corridor and the high-speed rail network. They also worry that the party might raise taxes, increase the minimum wage, and implement populist policies that could undermine fiscal discipline and investor confidence.
Move Forward vowed to increase the minimum daily salary from its present level of 354 baht to 450 baht during the campaign. Also, the party proposed paying 3,000 baht to the elderly and 1,200 baht to new parents.
The Thai economy has been struggling to recover from the impact of the COVID-19 pandemic, which has hit hard its key sectors of tourism and exports. The country’s gross domestic product contracted by 6.2% in 2020, and grew only 1.5% in 2021, according to the World Bank. In 2022 Thailand’s growth lagged behind its Asean neighbours with 2.6% and is expected to increase by 3.3% in 20203.
But the political uncertainty could further dampen consumer and business sentiment, and delay the recovery process.
The Move Forward Party has tried to reassure the business sector that it will pursue policies that are conducive to economic development and innovation.
But the outcome of the election reflects the deep divisions and frustrations in Thai society, which has been plagued by political turmoil and coups for decades. The Move Forward Party has a historic opportunity to lead Thailand toward a more democratic and inclusive future, but it also faces formidable challenges and resistance from the conservative forces that still wield significant influence.
The Thai business community will be closely monitoring how the party navigates these challenges and balances its reform agenda with economic pragmatism.
There is still a significant risk that a political deadlock would lead to protests, as we have seen in the past, threatening the country’s economy recovery.