Thaksinomics - Thaksinomics in Practice

Thaksinomics in Practice

By 2001, the currency had appreciated to an export-friendly level, and the economy had fully recovered from the 1997 Asian Financial Crisis. The strong performance of the Thai economy beginning in 2002 was the immediate impact of Thaksinomics. In 2002, Thailand posted GDP growth of 5.3%, the fastest rate since 1996. The economy grew by another 7.1% in 2003. In 2004, in spite of a volatile external environment and rising oil prices, Thailand still managed a GDP growth rate of 6.3%.

Since 2005, however, there has been considerable controversy concerning Thaksinomics. Although the reelection of Thaksin and his Thai Rak Thai party in an unprecedented landslide in February demonstrated the widespread popularity of his policies, slower economic growth (4.5% in 2005), has given ammunition to critics of Thaksinomics. Thaksin's supporters argue that the economic slowdown is largely a result of the Great Indian Ocean Tsunami of December 26, 2004 and rising oil prices and inflation. But others point out that consumer indebtedness and trade deficits plagued the Thai economy in 2005, as a direct result of Thaksin's policies. Thaksin was forced into an embarrassing retreat in July 2005 when the trade deficit and public debt caused the government to abandon its transportation vehicle fuel price subsidy. Corruption allegations stemming from public contracts in the construction of Suvarnabhumi Airport also threatened to cloud the future of Thaksin's public infrastructure projects that formed the core of his second-term economic policies.

Another important feature of Thaksinomics, is free trade. From 2002 - 2007, the Thaksin government signed free trade agreements (FTA) with China, New Zealand, Australia, India and United Arab Emirates. Prior to being overthrown by a military coup, FTA negotiations were being made with the United States and Japan. Supporters claimed that there was an overall positive benefit from the trade agreements, especially given Thailand's historical reliance on exports. However, critics argued that FTA agreements were unconstitutional for not having been approved by the parliament, and subsequent governments attempted constitutional reforms that would make parliamentary approval necessary. Critics also claimed that no detailed studies and analysis on the losses and gains have been made public. Officials in charge were instructed to present one-sided "win win" analysis to questions about the FTAs. The military government's Senate Committee on Foreign Affairs found that the Thai-Chinese free trade agreement on agriculture products resulted in an overall decline in local production. The study reported in 2005 a 70% decline in the production of red onion, garlic and other vegetables due to their inability to compete with cheaper products from Yunan Province; Chinese garlic sells for 3 to 5 baht per kilogram and opposed to 30 to 35 baht per kilogram for the Thai garlic. King Bhumibol's Royal Agriculture Projects for the hill tribes reported a decline in sales their products since the trade agreement with China. In 2007 the UN on Crime and Drugs (Bangkok office) reported that Thailand is now listed as a country of 'illegal drug producer' (involving some 3,000 families growing mostly opium) in five provinces - all in the North. In the 1990s Thailand was an exemplary country for its total eradication of opium production, despite rising levels of addiction and trade.

Even after the 2006 coup, the Thai government yearly reports give an overtly positive picture of free trade agreements only showing increase trade volumes with the 'partners'. Export gains by and large benefit agricultural co-operates like the giant Charoen Pokaphan, multi-nationals like Toyota, Mitsubishi, Nissan, Nike and others. FTAs also gave Thaksin's family business a big boost. After years of negotiating, the Chinese government finally allowed iPSTAR of the Shin Corporation to operate its broad band satellite telecommunication. The Australian Ministry of Foreign Affairs and Commerce made one announcement after the FTA - 'Australians will now have access to broad band telecommunication with the investment of $280 million from Thailand's iPSTAR'.