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Thailand's government approves referendum on constitution
Source: AP
BANGKOK (AP) — Thailand's military government on Tuesday approved holding a referendum on the newly drafted constitution, the prime minister said, but he indicated that the decision could delay a general election.
Before a referendum can be held, an amendment to an existing interim charter will have to be made to insert a clause making a public vote possible.
The move to amend the interim charter comes after calls by several sides, including the new charter's drafters, to allow the public to have their say on whether they approve of it.
The details of the draft constitution, currently under review by the junta-appointed National Reform Council, have already been made public.
Critics say the newly drafted constitution is aimed at preventing a political comeback by former Prime Minister Thaksin Shinawatra, who was deposed in a 2006 coup after being accused of corruption and disrespect for the king. Thailand has remained divided since, with Thaksin's supporters and opponents struggling for power at the ballot box and in the streets, sometimes violently.
The military abolished an earlier constitution after it took over power in a May 2014 coup, when it deposed Thaksin's sister Yingluck Shinawatra as prime minister, and the government operates under a temporary charter. The junta later picked the drafters and the 250-member National Reform Council to help write a new constitution.
The Cabinet and the National Council for Peace and Order, the junta's official name, agreed unanimously at a meeting Tuesday that the interim charter should be amended to pave the way for the referendum, Prime Minister Prayuth Chan-ocha told reporters.
"We will have to wait to see if they will pass it or not, or will amend or not amend the (interim) charter," Prayuth said.
He said that if a referendum is held, the process would take about three months and would affect the political road map laid out by the junta after the coup.
The government has said elections could take place early next year, but Prayuth declined to comment Tuesday on a date for the polls.
BANGKOK (AP) — Thailand's military government on Tuesday approved holding a referendum on the newly drafted constitution, the prime minister said, but he indicated that the decision could delay a general election.
Before a referendum can be held, an amendment to an existing interim charter will have to be made to insert a clause making a public vote possible.
The move to amend the interim charter comes after calls by several sides, including the new charter's drafters, to allow the public to have their say on whether they approve of it.
The details of the draft constitution, currently under review by the junta-appointed National Reform Council, have already been made public.
Critics say the newly drafted constitution is aimed at preventing a political comeback by former Prime Minister Thaksin Shinawatra, who was deposed in a 2006 coup after being accused of corruption and disrespect for the king. Thailand has remained divided since, with Thaksin's supporters and opponents struggling for power at the ballot box and in the streets, sometimes violently.
The military abolished an earlier constitution after it took over power in a May 2014 coup, when it deposed Thaksin's sister Yingluck Shinawatra as prime minister, and the government operates under a temporary charter. The junta later picked the drafters and the 250-member National Reform Council to help write a new constitution.
The Cabinet and the National Council for Peace and Order, the junta's official name, agreed unanimously at a meeting Tuesday that the interim charter should be amended to pave the way for the referendum, Prime Minister Prayuth Chan-ocha told reporters.
"We will have to wait to see if they will pass it or not, or will amend or not amend the (interim) charter," Prayuth said.
He said that if a referendum is held, the process would take about three months and would affect the political road map laid out by the junta after the coup.
The government has said elections could take place early next year, but Prayuth declined to comment Tuesday on a date for the polls.
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BY JAMES PEARSON AND SOHEE KIM
Source: Reuter
Thailand's fugitive former prime minister, Thaksin Shinawatra, said on Tuesday he had no plans to mobilize his "Red Shirt" supporters but called the first year of the junta government which came to power in a coup "not so impressive".
Thailand's fugitive former prime minister, Thaksin Shinawatra, said on Tuesday he had no plans to mobilize his "Red Shirt" supporters but called the first year of the junta government which came to power in a coup "not so impressive".
Thaksin, who lives abroad to avoid a jail sentence handed down for graft in 2008, has rarely spoken about Thai politics since the military toppled the remnants of the government of his sister, Yingluck Shinawatra, a year ago.
Yingluck was removed from office days before the army staged the 2014 coup after months of protests in Bangkok. She has since been banned from politics for five years, and faces a possible jail term over her role in a money losing rice subsidy scheme.
Thaksin, who was in the South Korean capital to speak at a conference, told Reuters there was no plan for his son, Oak, to take over leadership of the Puea Thai Party.
He called on the Thai people not to resort to violence.
"No, we want to see the government be a success, but it's difficult, as you can imagine," Thaksin said on the sidelines of the conference, when asked if there were any plans to mobilize his "Red Shirt" supporters.
"It's not so impressive yet," he said of the first year of the military government. "They have to work harder. They have to understand the world, and the mentality of the people who have been in democracy for many years.
"I think democracy will prevail sooner or later, but we have to be patient, and we have to be peaceful," he said. "Don’t resort to any kind of violence."
Thai junta leader and Prime Minister Prayuth Chan-ocha said last week that he was not worried about Thaksin's public appearance or whatever comments he might make.
The military ousted Thaksin in 2006, exacerbating a sharp divide between his supporters in the poorer north and northeast and the traditional royalist-military establishment in the capital and the south.
More than a decade of political strife has seen at times violent street protests from both Thaksin supporters and their opponents.
With bases in Dubai and London, Thaksin travels frequently in Asia.
(Writing by Jack Kim; Editing by Paul Tait and Jeremy Laurence)
Yingluck was removed from office days before the army staged the 2014 coup after months of protests in Bangkok. She has since been banned from politics for five years, and faces a possible jail term over her role in a money losing rice subsidy scheme.
Thaksin, who was in the South Korean capital to speak at a conference, told Reuters there was no plan for his son, Oak, to take over leadership of the Puea Thai Party.
He called on the Thai people not to resort to violence.
"No, we want to see the government be a success, but it's difficult, as you can imagine," Thaksin said on the sidelines of the conference, when asked if there were any plans to mobilize his "Red Shirt" supporters.
"It's not so impressive yet," he said of the first year of the military government. "They have to work harder. They have to understand the world, and the mentality of the people who have been in democracy for many years.
"I think democracy will prevail sooner or later, but we have to be patient, and we have to be peaceful," he said. "Don’t resort to any kind of violence."
Thai junta leader and Prime Minister Prayuth Chan-ocha said last week that he was not worried about Thaksin's public appearance or whatever comments he might make.
The military ousted Thaksin in 2006, exacerbating a sharp divide between his supporters in the poorer north and northeast and the traditional royalist-military establishment in the capital and the south.
More than a decade of political strife has seen at times violent street protests from both Thaksin supporters and their opponents.
With bases in Dubai and London, Thaksin travels frequently in Asia.
(Writing by Jack Kim; Editing by Paul Tait and Jeremy Laurence)
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Yingluck Will Not Get a Fair Trial: Chambersby Bloomberg Video
May 19 -- Institute of South East Asian Affairs Director of Research Paul Chambers discusses the trial of former Thailand Prime Minister Yingluck Shinawatra with Bloomberg’s Rishaad Salamat on “Asia Edge.”
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| Thailand isn’t trying to weaken the baht, central bank Deputy Governor Pongpen Ruengvirayudh told reporters Monday. Photographer: Brent Lewin/Bloomberg |
Source: Bloomberg
The most-accurate forecaster for Thailand’s baht said the nation has entered the global currency war as the central bank seeks to revive ailing exports.
The baht has gone from being Asia’s best-performing currency to its worst this quarter, falling 2.5 percent. While the Bank of Thailand denies it is trying to weaken the baht, it has lowered borrowing costs and loosened capital controls in the past two weeks. Interest-rate swaps signal further easing as the Thai junta, led by former military leader Prime Minister Prayuth Chan-Ocha, struggles to boost growth and domestic confidence after taking power in a coup on May 22 last year.
“With a decelerating economy and a government not ready, or unable to make critical structural adjustments, a devaluation is an easy way to steal export growth from its neighbors,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA in Gland, Switzerland. “Traders should anticipate the regional race to the bottom to accelerate, with central banks taking a proactive easing stance.”
Bank of Thailand Governor Prasarn Trairatvorakul said on May 7 that a weaker baht will help spur an economic recovery after exports contracted for a third month and the government downgraded its growth forecast. The currency, which gained 1.1 percent in the three months to March, has depreciated 9.4 percent versus the greenback in the past four years as opposition to former Prime Minister Yingluck Shinawatra mounted, sparking street protests that caused the army to seize power.
The most-accurate forecaster for Thailand’s baht said the nation has entered the global currency war as the central bank seeks to revive ailing exports.
The baht has gone from being Asia’s best-performing currency to its worst this quarter, falling 2.5 percent. While the Bank of Thailand denies it is trying to weaken the baht, it has lowered borrowing costs and loosened capital controls in the past two weeks. Interest-rate swaps signal further easing as the Thai junta, led by former military leader Prime Minister Prayuth Chan-Ocha, struggles to boost growth and domestic confidence after taking power in a coup on May 22 last year.
“With a decelerating economy and a government not ready, or unable to make critical structural adjustments, a devaluation is an easy way to steal export growth from its neighbors,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA in Gland, Switzerland. “Traders should anticipate the regional race to the bottom to accelerate, with central banks taking a proactive easing stance.”
Bank of Thailand Governor Prasarn Trairatvorakul said on May 7 that a weaker baht will help spur an economic recovery after exports contracted for a third month and the government downgraded its growth forecast. The currency, which gained 1.1 percent in the three months to March, has depreciated 9.4 percent versus the greenback in the past four years as opposition to former Prime Minister Yingluck Shinawatra mounted, sparking street protests that caused the army to seize power.
External Factors
Thailand isn’t trying to weaken the baht, central bank Deputy Governor Pongpen Ruengvirayudh told reporters Monday. Central bank spokesman Chirathep Senivongs Na Ayudhya didn’t provide additional comment when contacted by phone Monday.
“It’s not that we have tried to weaken the baht,” Pongpen said in Bangkok. “The baht has weakened because of a number of factors, such as capital flows, which come from external factors. Part of it is also because of our recent measures.”
The Bank of Thailand announced on April 30 that residents will be allowed to hold foreign-currency deposits of as much as $5 million and purchase properties abroad for up to $50 million a year.
Central bankers from Australia to Canada to Sweden are among those undertaking monetary easing to boost growth. That stimulus has weakened their exchange rates, which helps make their economies more competitive, a knock-on effect that analysts have called a currency war. South Korea’s Finance Ministry denied it was deliberately seeking a weaker won in April after the U.S. Treasury criticized its intervention.
Growth Estimate
Swissquote, ranked by Bloomberg as the most-accurate forecaster for the baht last quarter, lowered its year-end estimate to 34.5 a dollar. The baht will depreciate further as it’s only reversed a third of the rally in trade-weighted terms over the past 12 months, according to Morgan Stanley analysts, who’ve had a sell recommendation on the baht since January.
Thailand’s economy expanded 3 percent last quarter from a year earlier, the government reported Monday, below the 3.4 percent forecast in a Bloomberg survey. Growth for the previous three months was revised to 2.1 percent from 2.3 percent.
The National Economic & Social Development Board cut its full-year gross domestic product estimate on Monday to 3 percent to 4 percent from a high of 4.5 percent and reduced its export target to 0.2 percent from 3.5 percent.
The swaps market is anticipating further easing to head off the worst bout of deflation since 2009, when the economy shrank 2.3 percent. The one-year contract has dropped 12 basis points to 1.45 percent since the central bank last lowered its benchmark overnight policy rate to 1.5 percent on April 29.
Carry Trade
In a strategy where investors borrow at low interest rates in favor of higher yields elsewhere, the baht has lost 3 percent in the past month, the worst performance in Asia after Indonesia’s rupiah.
“What essentially has happened is the Bank of Thailand has joined the currency war,” said Jonathan Cavenagh, senior Asia foreign-exchange strategist in Singapore at Westpac Banking Corp. The central bank has reduced “the appeal of the baht from the carry perspective.”
Bond investors are reacting too, as global funds pulled a net $912 million from the Thai debt market this month, albeit as concerns over higher U.S. interest rates triggered a global selloff.
Even the best real yields among Southeast Asia’s five biggest economies after accounting for consumer prices aren’t quelling the outflows. The 10-year note offers 3.92 percent when adjusted for April’s 1.04 percent drop in living costs. Only Malaysia and Singapore come close, at 2.98 percent and 2.58 percent, respectively.
Fund Outflows
“The outlook for a weaker baht will continue to put pressure on further foreign fund outflows from domestic bonds,” said Ariya Tiranaprakij, executive vice-president at the Thai Bond Market Association. “This will be multiplied by the surge in U.S. Treasury yields and expected rise in the Federal Reserve’s benchmark rate.”
The currency sank to a five-year low of 33.899 a dollar on May 12 and was at 33.38 Tuesday. A Bloomberg survey of analysts predicts it will end 2015 at 33.80.
Credit Agricole SA, the second-best forecaster last quarter, isn’t likely to revise its December estimate of 33.60 for 2015 because foreign-exchange reserves of $160.8 billion are at a six-month high. While TMB Bank Pcl in Bangkok doesn’t see any more surprise moves by the central bank, it expects the currency to weaken to 34 by year-end, the lender’s economist Benjarong Suwankiri said.
Heightened Risk
“We believe that there is already weakness in the price,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole. “There’s enough currency reserves in Thailand to allow the central bank to manage the depreciation in a smooth way.”
Export data for April are due on May 29 and the Bank of Thailand’s next scheduled meeting is on June 10. Overseas shipments contracted in 17 of the 27 months through March, while consumer prices fell for a fourth month in April. Even so, the current account has remained in surplus for two straight quarters and stands at $2.2 billion.
The finance ministry cut its 2015 economic growth forecast to 3.7 percent from 3.9 percent last month and lowered its prediction for exports to 0.2 percent from 1.4 percent.
“We continue to see a heightened risk of further near-term cuts by the BOT,” said Bill Diviney, an economist in Singapore at Barclays Plc. “The protracted sluggishness in domestic demand has led us to lower our 2015 growth” forecast to 3.7 percent from 5 percent, he said.
