Thailand’s economic landscape faces uncertainty after Prime Minister Srettha Thavisin was ousted in a contentious ethics case involving his cabinet appointment of a convicted lawyer. The dismissal brings considerable risk to the government’s economic revival initiatives, most notably the planned digital wallet scheme aimed at injecting approximately 450 billion baht into the economy.
This initiative was projected to boost economic growth by 1.2 to 1.8 percentage points; however, the instability following Srettha’s removal poses a significant threat to its implementation.
INDUSTRY REACTION
The Federation of Thai Industries (FTI) described the verdict as a “real shock,” expressing deep concern about potential gaps in government policy continuity that could adversely affect investment in Thailand.
FTI Chairman Kriengkrai Thiennukul noted that the uncertainty surrounding ongoing economic policies could lead some investors to postpone or abandon their plans for new projects in Thailand. He emphasized that this could result in a shift of investments to neighboring countries.
Investors had previously sought insights from the FTI regarding Thailand’s political Future to guide their investment strategies. Following the court’s decision, many are now in a position to make more informed choices.
The FTI is advocating for a stable governmental framework that promotes both domestic and foreign investment to foster business growth.
Acting Deputy Finance Minister Julapun Amornvivat concurred, indicating that the premier’s dismissal could dent investor confidence and disrupt the execution of key government initiatives.
Concerning the digital wallet scheme, Mr. Julapun stated that its rollout is now contingent on the formation of a new government, though there are assurances from the Pheu Thai Party, which is leading this process, to advance their key policies, including the digital wallet initiative.
MARKET IMPACT
Independent political and economic analyst Somjai Phagaphasvivat suggested that Srettha’s removal may create short-term psychological challenges for the Stock Exchange of Thailand, potentially causing foreign investors to hesitate.
Nevertheless, he believes that this impact will be temporary, as the coalition government structure is likely to remain stable. Regardless of the next prime minister, the continuation of essential policies such as the digital wallet handout is expected to be maintained.
Chaichan Chareonsuk, chairman of the Thai National Shippers’ Council, viewed the Constitutional Court’s dismissal as an opportunity for governmental reset. He emphasized the importance of a swift leadership selection process to prevent adverse effects on exports and foreign direct investment.
Mr. Chaichan urged the caretaker government to formulate and execute a cohesive policy plan immediately to restore business confidence and ensure economic growth persists amid the political turbulence.
TOURISM SUSTAINABILITY
Aswin Yangkirativorn, CEO of Thai Lion Air, stated that the incoming prime minister and cabinet should sustain tourism and aviation policies from the previous administration, including the Ignite Tourism Thailand initiative. Over the past year, the government has bolstered tourism efforts with measures like visa-free entry for travelers from 93 countries and promotion of Thailand as a sought-after venue for concerts and events.
Mr. Aswin affirmed that despite the political upheaval, visitor interest in Thailand will remain strong, and the importance of maintaining ongoing airport development projects cannot be understated.
