Monday, October 31, 2011

Update: Thailand's New PM Has Learned a Great Deal from the Floods of 2011

Facing the worst and longest flooding in over 50 years, Thais, expats and travelers alike have been flooded since July and some have grown tired of the Thai government's many missteps to get ahead of the curve in the handling of the flooding. In particular, those who don't live in Bangkok's central business district are the angriest because they believe that outlying areas have suffered the most, while all the stops have been pulled out to predominantly protect the capital from the very conditions that have brought life in some 20 provinces to a standstill.

Since July, 400 people have died from the unprecedented flooding. Worse, the situation may not be alleviated for at least another couple of months, if then. The floods have also ravaged the country with the end result being that Thailand's gdp will be reduced by at least 1% and maybe even 2%. Earlier in the year, economists projected to see growth of at least 3.7%, but a more practical estimate may be no greater than 2%. Additionally, some 10,000 factories have had to close, suspending well over 500,000 jobs.

Thailand is also among the world’s foremost exporters of rice, if not the first, but now more than a million and a half hectares of paddies are swamped. As a result, Thailand may have to import rice from Malaysia.

The massive flooding and the lack of emergency preparedness, particularly outside of central Bangkok, has hit Thailand's robust automotive industry particularly hard. As a result, flooding has forced all nine Japanese automakers to halt manufacturing, cutting production by a total of 6,000 units a day. Japanese automobile companies produced about 1.6 million units in Thailand last year. As it stands now, it could take six months for these companies to return to previous levels of productivity.

COMMENT: Prime Minister Yingluck Shinawatra, 44, who after 15 years as a successful businesswoman, was catapulted into the prime minister's office. Her brother, Thaksin Shinawatra, 62, served as prime minister from 2001 to 2006, but was removed by the military in a coup while he was attending the United Nations Summit in New York City. So, in May 2011, the Pheu Thai Party, closely linked to Thaksin, nominated Yingluck as the party's PM candidate. Subsequently, in a landslide victory, Yingluck became not only the first female PM in Thai history, but the youngest PM in over 60 years.

Although a bright and astute businesswoman who holds an MPA from Kentucky State University, Yingluck not only was inexperienced in running a country, but was unfamiliar in dealing with Thailand's powerful military and police structure and ran into major power struggles after she took office in July 2011, when the national flood crisis was well underway. Not only had Thailand not experienced such massive flooding in fifty years, but she was very new at building trust and confidence within the country's countless power players, many of whom she had never met.

In her defense, though, local and national officials were not speaking with one voice. As a result, politics drove operational decisions as they related to flood gate management and the issuance of a state of emergency, which was decided on too late in the game. Further, flood gates should have been opened when they remained closed. To make matters worse, Yingluck, being new to government, was forced to negotiate and play politics with the powerful governor of Bangkok at the expense of country-wide priorities, who also happened to be a member of the opposition party.

Indeed, Yingluck has learned a great deal from the floods of 2011 and no doubt will govern in the future much, much differently than she did during the summer . She has worthwhile objectives that she wishes to fulfill, providing she can keep Thaksin from exercising political pressure. As is well known, he is one of the wealthiest people in Thailand, a billionaire in his own right, but will have to walk softly to avoid trouble in high places.

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