Investors fear politics yet again
Court manoeuvres dampen sentiment
Uncertainties about the shape of the next government are likely to further weigh on weak consumer and investment sentiment over the next several weeks, according to local businessmen and economists.
Many had hoped the Dec 23 election would bring a revival in confidence and economic activity. But the Election Commission has certified only 397 winning candidates to date, and the remaining 83 are under investigation for possible election fraud.
Of the 83, 65 are from the People Power Party, filled with allies of former prime minister Thaksin Shinawatra. PPP won the December poll, taking 233 out of 480 seats in the preliminary results.
Still, concern that the armed forces, which deposed Mr Thaksin in the September 2006 coup, and its appointed government could influence the election results to avoid a PPP-led coalition is a frightening prospect for many business executives.
''Nothing has been clear since the election. We are just waiting to see what will happen,'' said Adisak Rohitasune, a vice-chairman of the Federation of Thai Industries. ''In the worst-case scenario, the final results of the election could turn out to be something different from what we expected earlier.''
Pornsil Patcharintanakul, a deputy secretary-general for the Board of Trade, said any delays in forming the new government would only undermine public confidence.
''There are concerns by the public that what has happened to the poll results could upset the establishment of the new government and consequently delay the implementation of economic policies to boost the economy,'' Mr Pornsil said.
''The economy at this stage needs a real leader who can turn the situation around,'' he said, adding that he was uncertain about the economic team of the PPP.
FTI chairman Santi Vilassakdanont agreed that confidence would not improve until the composition of the new government was clear.
''I think it's still too early to see confidence improving. We are still waiting to see who would become the new economic ministers and what policies they might introduce,'' he said.
The decision this week by the Supreme Court to hear complaints filed by the Democrat Party, which ran second to PPP in the Dec 23 election, was another potentially alarming development.
PPP could possibly be dissolved if it was found guilty of the charges, which include an accusation that the party is a proxy for Mr Thaksin's banned Thai Rak Thai Party. The court will hear the case on Jan 15.
''[The court case] was certainly outside of our expectations, and could delay the process that we expected to see earlier,'' said Mr Adisak from the FTI.
''We now just have to wait and see how the court will rule. It's better at least that this is done now, so that the new government could be formed without any potential problems in the future.''
Charl Kengchon, a senior economist at the Kasikorn Research Center, said the delay in ratifying the election results could have a psychological impact on consumer and investor confidence.
''Both investors and consumers have put the stability of the new government as their top concern. Anything that could make the new government less stable would certainly have an impact on confidence,'' he said.