Thailand’s Prime Minister, Abhisit Vejjajiva, talks to BusinessWeek about GDP, the emergence of China and India, and stamping out corruption
Thailand’s international reputation among investors and tourists has been much tarnished in recent months. Prime Minister Somchai Wongsawat was forced to step down by protesters (identified by yellow shirts) who blockaded the Bangkok airport last December. In April protesters (wearing red shirts) who oppose the government of the current Prime Minister, Abhisit Vejjajiva, shut down a high-level summit of Southeast Asian leaders in the Thai resort town of Phuket and clashed with government supporters, causing two deaths. Now Abhisit is on a charm offensive, visiting Hong Kong to convince the financial community that his country is still open for business. While there he spoke with BusinessWeek Asia Correspondent Frederik Balfour.
What is your prediction for Thai gross domestic product growth this year and next?
It’s difficult to make one, but we are looking for -3% or -4% this year. But we expect positive year-on-year growth in the last quarter and 1% to 2% growth next year. This is something we haven’t seen before, this drop in trade and global travel, and we are exposed to it and it’s not so easy to compensate for that loss.
So it’s frustrating in a way that we are in a crisis not of our own making, and we are not quite in control of the factors that would be the most important to our recovery. It’s a risk that comes with opening up your economy.
How much will your government spend to stimulate the economy?
We now run a deficit close to the legal limit, and we will spend $45 billion over the next three years, so we are looking at 5% to 6% of GDP per year.
How does Thailand stay relevant when dealing with the emergence of China and India?
You should see the emergence of growth of China and India also providing opportunities. The Southeast Asian nations have benefited enormously from the growth of the Chinese economy. Their emergence means a new set of investors, too. The clearest way to retain relevance is through ASEAN solidarity and integration. It makes the issue of integration more urgent.
How will you reassure tourists and investors that Thailand is safe?
We will show them that getting our house in order is a key priority. While there have been disruptions in April, we were quick to restore order and we are still serious about being a top tourist destination. Yes, there are still internal problems but foreigners are not the target.
Isn’t having former Prime Minister Thaksin Shinawatra out there pulling the strings from abroad, encouraging people to take to the streets, extremely distracting for your government?
We now begin to see a separation of issues to do with the public interest and the democratic system which claim to be driving the protests from [his] personal agenda.
What is wrong with the Thai model of democracy? Why do the Red Shirts [Thaksin supporters] and Yellow Shirts [royalists] have to take to the streets to resolve things?
Problems began when we had an elected government [of Thaksin] that overstepped the limits of power, and that’s why politics took to the streets. So we had a coup [in 2006] which set off a set of new grievances for another group. Now both groups feel justified in taking to the streets so we have to unwind that. It’s not that Thailand cannot evolve to a two-party system; it’s that the two parties or any political party must learn to play by the rules. But there is great misunderstanding that this is a problem of urban-rural divide, or a rich-poor divide.
What steps can you take to stamp out corruption?
Having laws and [anticorruption] commissions is fine but is not going to achieve the objective unless there are key changes, such as public-sector reform with less discretion and more rule-based decisions and cleaner politics, which is only going to come with reducing the influence of money. And we need a good public education campaign to fight corruption and recognize how it can affect the whole system like a cancer.
It seems that many Thais are concerned about the question of succession to the King.
It’s natural for people who have grown very attached to his majesty, who for over six decades has provided them with inspiration, guidance, wisdom, and there has been a tremendous growth of respect and reverence for his majesty, so that reaction is natural.
Business Week / China May 15, 2009