Testing times: Despite political uncertainty, the nation remains open for business

Inheritors of an ancient land and a complex culture, today’s Thais once again face some difficult social and political challenges. Yet, despite the confrontation that has resulted from these tensions during much of late 2013 and early 2014, the country continues to grow and develop, with much of it unaffected by the turmoil in certain high-profile districts of Bangkok.

Thais are a resilient people, with a business sector that knows well how to carry on – and even flourish – during times of political upheaval. At the same time, despite strong disagreements between rival domestic factions over who should govern, there is widespread agreement among all camps that foreign investment is something to encourage. Foreigners continue to be welcome, both as visitors and as participants in one of South-east Asia’s strongest and most dynamic economies. Businesses can therefore still engage with a country that, its citizens are proud to point out, has never been colonised. Instead, it has long charted its own destiny among the community of nations. That unique path looks set to continue too, whatever the outcome of the present political unrest.

A Constitutional Monarchy

The current monarch and head of state, His Majesty King Bhumibol Adulyadej (Rama IX), has reigned since June 9, 1946 – making him the world’s longest-ruling monarch. He is the head of the Royal House of Chakri, with the monarchy itself dating back to the Sukhothai kingdom of 1238. While historically Thailand was ruled by absolute monarchs, since 1932 a constitutional monarchy has been in place. Its role and powers have been subsequently redefined at times, with the latest, 2007 constitution, reaffirming the monarch’s central role. The king, a Buddhist and defender of all faiths, is also head of the armed forces and can confer titles and decorations at his own discretion. He can also confer pardons and give royal assent.

His Majesty appoints the Privy Council to provide him with advice. A lèse-majesté law also exists to protect the king and the royal family. Succession is governed by the 1924 Palace Law, with the reigning king given sole prerogative to amend this law. The current heir apparent is Crown Prince Vajiralonkorn, the eldest and only son of the king.

The 2007 constitution – Thailand’s 18th – establishes a system of parliamentary democracy for the country, modelled on that of the UK. Thus, the head of the executive branch is the prime minister, which is currently Yingluck Shinawatra in a caretaker capacity, who appoints and heads the Cabinet. The prime minister is elected by the lower house of the bi-cameral parliament, the National Assembly of Thailand. This means that the office holder is customarily the leader of the largest party, or group of parties, in the National Assembly, with his or her appointment then confirmed by the monarch. The prime minister can also be removed by a vote of no confidence requiring a simple majority, although no-confidence votes are limited to one per parliamentary session.

Main Agencies

A number of key agencies also come directly under the Office of the Prime Minister (OPM). These include the National Security Council (NSC), at which government, police and military chiefs meet. While presided over by the prime minister, Paradorn Pattanathabutr was the day-to-day NSC chief at the time of writing. Other key agencies under the OPM include the National Intelligence Agency, Internal Security Operations Command, and the Office of the National Economic and Social Development Board.

Prior to the February 2, 2014 election, the Cabinet had 35 members, including heads of ministries, state ministers and deputy prime ministers. The prime minister then appointed a caretaker Cabinet after the elections. Cabinet members can be appointed from both the lower and upper houses.

The prime minister and Cabinet create government policy and oversee its implementation. Bills generated by the government are presented to parliament for debate and approval, while the Cabinet can also call a referendum. Cabinet members, like the prime minister, are also sworn in by the monarch. In addition, the Cabinet has the power to call an emergency session of the National Assembly.

Legislative Powers

The National Assembly consists of a Senate, or upper house, and a House of Representatives, or lower house. The House of Representatives is composed of 500 deputies, elected for four-year terms, who are a mixture of 375 deputies elected from single-member constituencies and 125 from party lists. The latter deputies are elected via a parallel voting system. Under this, seats are attributed to each party according to their proportion of the overall popular vote in a second ballot, held simultaneously with the constituency vote. In this second ballot, electors vote for a party, rather than a particular candidate. Voting is compulsory for all those over 18 who are registered and Thai nationals. Members of the Buddhist clergy, or sangha, may not vote.

The House is the first port of a call for a proposed bill from the Cabinet. Bills may also be introduced by a group of at least 20 deputies, the courts, or via a popular petition with at least 10,000 signatures. Proposed bills are debated, and if they secure a majority vote, they are then passed on to the Senate. In the case of the proposal failing in the Senate, it is returned to the House for re-consideration. Joint committees of deputies from both houses may also be convened to study and debate a bill if it continues to be rejected.

If the bill is passed by both chambers, it then proceeds to the monarch for final assent. The monarch does have the power to withhold assent, but the bill may still pass into law if it can secure a two-thirds majority in the National Assembly.

The upper house consists of 150 members, all serving six-year terms, 76 of whom are directly elected from Thailand’s 75 provinces, as well as Bangkok, while the remainder are appointed by the Senate Selection Committee (SSC). These appointees are selected from the public, private, academic and professional spheres, as well as from the wider public. Under the constitution, they must have displayed outstanding “knowledge, expertise or experience” in their areas, and they must be non-partisan, with no links to political groupings. The SSC, meanwhile, is composed of the president of the Constitutional Court (CC), the chairs of the Electoral Commission (EC) and State Audit Commission, and judges from the Supreme Court of Justice (SCJ) and the Supreme Administrative Court (SAC).

The Senate scrutinises proposed legislation, and also has certain powers over appointments, particularly in the judicial sphere.

Electoral Uncertainty

The last undisputed general elections in Thailand, held for the House of Representatives on July 3, 2011, saw victory for the Pheu Thai Party (PTP), led by Yingluck Shinawatra, the younger sister of Thaksin Shinawatra, the controversial former prime minister. Turnout was 75.03%, with the PTP winning 265 seats, with 48.41% of the popular vote – a gain of 76 seats on the previous National Assembly. The Democrat Party (DP), led by Abhisit Vejjajiva, won 159 seats, with 35.15% of the votes, and formed the main opposition. Abhisit then stepped down as leader of the DP, but was subsequently re-elected leader at the following DP congress.

The PTP formed a coalition government with the Chartthaipattana Party, Chart Pattana Puea Pandin Party, Phalang Chon Party and Mahachon Party. This gave the government a 299-seat majority in the House.

On February 2, 2014, an early general election was held in response to the ongoing political turmoil in the country. This had seen anti-government demonstrations and occupations in Bangkok, organised by the People’s Democratic Reform Committee (PDRC), led by Suthep Thaugsuban, a former DP deputy. The election was officially boycotted by the DP, while the PDRC also called for a boycott and advocated the establishment of an unelected “people’s council”.

A campaign by the opposition to prevent candidates from registering and to protest at polling stations resulted in voting being unable to proceed in 42 constituencies, according to the EC. These were mainly in opposition strongholds in the south and in parts of Bangkok. The outcome of this was that not enough deputies were elected for a new National Assembly to take office, while the compulsory nature of voting meant that re-run elections had to be held in all the constituencies where voting was disrupted.

In late March 2014 the Constitutional Court declared the elections invalid, saying that the vote did not take place on the same day across the country and that violated a clause in the constitution. As of early April 2014 Thailand was being headed by a caretaker government, led by Yingluck Shinawatra. A series of legal challenges to the government was under way, and the future shape of the executive and legislature thus continued to be in doubt as of April 2014. Also, since the parliament was dissolved in late 2013, all infrastructure projects were on hold.

The Third Estate

The Thai judicial system is made up of three components – the courts of justice, courts of administration and the CC. The first component has a three-tier hierarchy headed by the SCJ, under which lies the Court of Appeals, and then finally the courts of first instance. The courts of administration are twotier – headed by the SAC, under which lie the administrative courts of first instance. The CC, meanwhile, has nine member judges, including the court’s president, currently Charoon Intachan, who is elected by the other members.

Judges serve for terms of nine years and are appointed by the monarch on advice from the Senate. The length of the term means that, barring resignations and retirements, the CC is largely composed of judges who took office in 2008.

Back then, the CC took the politically charged decision to dissolve the ruling People’s Power Party, a forerunner of the PTP, and its coalition parties – a ruling that led to the opposition DP gaining office. The CC is therefore a powerful force in Thai politics.

There are a number of other important agencies with legal powers that have a place within the constitution and are independent of the government. The EC is one, for example, while the SAC and the National AntiCorruption Commission (NACC) are others. All these have been called upon during times of political crisis to make important rulings.

As of early April 2014 Caretaker Prime Minister Yingluck as well as six other people, including Boonsong Teriyapirom, the former commerce minister, as well as his then deputy, Poom Sarapol, were being investigated by the NACC for graft charges relating to a rice pledging scheme. A key 2011 election promise, the rice pledging scheme set a price of BT15,000 ($491) per tonne of white paddy rice and BR20,000 ($654) for jasmine rice, around 35-50% above international prices (see Economy chapter).

Defending the Nation

Another key institution in Thailand is the Royal Thai Armed Forces, which has long defended the country from its enemies, both external and internal, while last briefly governing the country in 2006. The military is divided into three service branches – the army, the air force and the navy – which report to the Royal Thai Armed Forces Headquarters. There is also the Permanent Secretariat of Defence under the Ministry of Defence.

Military chiefs are subject to a rotation in their appointments, customarily every three years, with each class that graduates from military academy gradually moving up through the ranks. The last rotation was in September 2013, when Class 14 of the Chualachomklao Royal Academy ascended to more senior positions. General Nipat Thonglek was appointed permanent secretary, and Admiral Narong Pipattanasai commander-in-chief of the navy, amongst other promotions. The army remained commanded by General Prayuth Chan-ocha, the air force by Chief Marshal Prajin Jantong. In July 2013 the minister of defence portfolio was taken over by Prime Minister Yingluck.

The military has remained neutral throughout the current political tension.

Local Government

Thailand is divided into 76 provinces (75 plus Bangkok), with each province headed by a governor, who is appointed by the Ministry of the Interior, except in the case of Bangkok, where he or she is elected. Provinces further divide into districts, with these breaking down in rural areas into tambon, or communes, which group a number of villages. District chiefs are also centrally appointed, though the tambon have elected officials. The villages can also elect a headman or woman. Much authority remains centrally controlled in local government, through ministry and provincial appointed figures.

There has, however, been a gradual move towards decentralisation of some authority, with the system now both top-down and bottom-up in some of its practices, such as environmental monitoring and control.

Outlook

In early April 2014 much of the country’s political future remained uncertain. After an ease in tensions following the CC’s announcement declaring the February 2014 election invalid, anti-government protests were resumed. Caretaker Prime Minister Yingluck was facing charges of negligence over a government rice subsidy scheme, while the economic effects of protracted turmoil were beginning to slow growth. After the court decision, Kasikorn Research downgraded its growth forecast for 2014 to 2.5-2.6%.

Yet for all this crisis and tension, Thailand remains a remarkably vibrant place, with the vast majority of the country unaffected. Tensions have a long pedigree, with the country frequently weathering the political storms present on a few Bangkok streets.

The nation has shown remarkable resiliency during previous testing times over the past decade, including coups, major floods and the outbreak of bird flu. All parties remain committed to a Thailand that is open to the world and to international investment, with Thais anxious to carry on with business as usual, despite the times. That they will succeed in doing so seems highly likely, given the history of resilience in the country. The year ahead may be a challenging one then, but it may also be one that will open up many new possibilities, for both domestic and foreign investors.