September 23, 2011

Questioning the legacy of Thaksin’s economic policies


Thaksin Shinawatra’s recent arrival in Cambodia held all the pomp and flair of an official state visit, with much of the Kingdom not-iceably enthralled by the fugitive former prime minister.

He was mobbed by the press, praised by Cambodian premier Hun Sen and swarmed by hundreds of Red Shirts who crossed the border to catch a glimpse of their de facto leader.

Indeed, Thaksin himself described Cambodia as “like my home”, the Post reported, returning the gushing adoration he’d received since his private jet touched down.

Most interesting about his visit, though, was the heavy focus on economics. Indeed, the Cambodian government insisted Thaksin was here only to talk business – in the truest sense of the word – and not politics, as everyone assumed.

“Thaksin has nothing do with state [issues], only business,” Council of Ministers spokesman Phay Siphan said yesterday.

“We don’t have any interest in Thaksin other than his ideas on economics.’’

Phay Siphan described Thaksin, the deposed billionaire accused of bending the Thai government to the benefit of his company, Shin Corp, as “just a lecturer”.

“We see him as an economist. We could say he’s an ASEAN economics guru.”

Thaksin’s visit was largely held behind closed doors, with his two “economics lectures” at the Asian Economic Forum at the Council of Ministers and the Ministry of Economy and Finance for the most part closed to the press.

As a result, very little is known of his outlook for Thailand, Cambodia or the region except for what was heard at the very beginning of his talks, to which the media was allowed access.

Regardless, it is worth considering Thaksin’s economic bona fides given the emphasis placed on his supposed expertise in this area.

Of course, he was known in Thailand for populist initiatives that enjoyed wide regard among the country’s rural class. But the question is whether or not those policies succeeded in ways that benefited Thailand as a whole.

Johannes Lund, Southeast Asia analyst at the Singapore consultancy Control Risks, says Thaksin’s results were “mixed”.

Lund claims the then-prime minister sought to strengthen the domestic economy and reduce Thailand’s heavy reliance on exports, but that did not happen.

“The country remains highly exposed to reduced demand among its primary export partners: the US, Japan, China and the EU,” he says.

Lund also notes that Thaksin failed to address long-term problems “that will be core to Thailand’s future success”, such as education reform and increased productivity in the agriculture sector.

He points to the price guarantee for rice presently being reintroduced by sister and new Prime Minister Yingluck Shinawatra, saying it was largely a failure that led to huge surpluses of rice and cost the government an estimated US$1.5 billion.

However, Thaksin was able to turn Thailand’s long-standing feud with Cambodia into a market opportunity, just as Yingluck is doing now. That business-centric policy no doubt created opportunities for both countries.

But the Cambodian economy is small, and any opportunities going forward are in the long-term future, Lund says.

In fact, he reckons Thailand views its eastern neighbour as, at best, a “potential long-term consumer”.

It’s for these reasons one might second- guess the notion that Thaksin is “an ASEAN economics guru”.

As Lund says in response to that idea, “His credentials as an economic wiz are pretty much self-fabricated.”

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