FocusThai business confidence dips as PM resigns

02 December 2008 09:43  [Source: ICIS news]

By Chow Bee Lin


SINGAPORE (ICIS news)--Thailand’s political turmoil continued to weigh heavily on business confidence, local businesses and an Asian banker said on Tuesday, as the latest ruling by the Constitutional Court forced the resignation of Prime Minister Somchai Wongsawat and the dissolution of his People Power Party (PPP).


“For most Thai people, anything can happen now,” a Bangkok-based polyolefins trader said, referring to the uncertainty in the local political scene. Some protests have turned violent causing several fatalities as small explosions rocked protests in Bangkok – the country’s capital.


Deepening concerns that further violence could erupt between the anti-government People's Alliance for Democracy (PAD) supporters and pro-government forces could hurt business confidence further, sources in the petrochemical industry said.


“My friend has informed me via SMS that the pro-government protesters have blockaded the Constitutional Court following the ruling, and the military is trying to negotiate with them to let the court workers out,” the polyolefins trader said.


“The military is the middleman between the rival factions and it has the power to resolve the dispute because it has guns,” he added.


The tourism industry has already taken a direct hit with the continued shutdown of the country’s two main air-hubs. PAD supporters besieged the country’s two main airports - Suvarnabhumi Airport and the older Don Muang Airport since last Wednesday, leaving more than 300,000 travellers stranded, according to media reports.


Some local businesses were also worried that the protests might spread to other key infrastructures.


"Life will still go on in Thailand but we're worried that if the protestors carry out their threat to blockade (the) ports, we cannot export cargoes. Furthermore, we are also reconsidering expansion plans for (our) plant and may not go ahead," said a (PET) bottle chip maker in Rayong province.


Meanwhile, the political crisis has clearly taken a toll on Thailand’s business outlook, a corporate researcher at an Asian bank said.


“If things are put on the negative outlook, there’s quite a significant chance of other things being downgraded, but it depends on what actually transpires in the coming days,” he said.


International rating agency Standard and Poor's has revised Thailand’s sovereign risks to negative from stable - a warning that the country’s political troubles could have serious implications on its economy and its credit standing, the banker said.


Fitch Ratings also downgraded the credit ratings of nine Thai banks to negative from stable on Tuesday.


“It is still business as usual in Thailand for most areas, although the economy is getting from bad to worse,” said a source with a major Thai producer, adding he expects some government reshuffle, with another party from the ruling coalition to take over the reins of government.


Hong Chou Hui and Steve Tan contributed to this story.


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