Rethinking investments in Thailand

Thai soldiers stand guard on military tanks in front of the Government House in Bangkok, late September 19, 2006. Heavily-armed troops backed by tanks took control of the Thai premier's office in Bangkok while Prime Minister Thaksin Shinawatra was out of the kingdom in an apparent coup.

BOB MOON: Back to Thailand today for a follow-up on last month's bloodless coup. The interim prime minister of the country's new military-backed government said today that he'll choose a cabinet by the end of the week, and they'll remain in office for a year, pending new elections.

The Bush administration would like to see a faster return to democratic rule. So would nervous foreign investors.

As Megan Cossey reports, they're already prospecting for other locations.

MEGAN COSSEY: In Bangkok's red-light district, Filipino businessman Abet Bao is sitting in the Japanese karaoke bar he owns. He's shaking his head at all the empty seats. Since the coup, most of his two dozen hostesses in matching peach gowns lounge around, with no one to entertain.
ABET BAO: Yesterday night was a ghost town. So, of course this is the effect of what's going on.

Abet makes his living catering to the more than 10,000 Japanese businessmen who live in Bangkok. So, he's worried about this sudden drop off in customers. The military junta that overthrew Prime Minister Thaksin is working hard to ensure that it is business as usual in Thailand, but Abet says many of his patrons are nervous.

ABET: Some of them are even thinking of transfering to Vietnam. Now [that] Thaksin is not the Prime Minister anymore, I think they will start planning what next move they will make.

Street protests against Thaksin erupted a year ago after he shut down a popular television talk show that was calling him corrupt. When he later sold his media and telecommunications conglomerate to a Singapore investment firm for nearly two billion, tax-free dollars, his critics called for his impeachment. They claimed he had taken advantage of a legal loophole that allowed him to sell a valuable national asset to a foreign government. He called a snap election, but opposition parties boycotted and the mass protests intensified.

Ami Biswas is an American who runs a consulting company that helps local and foreign investors build new businesses in Thailand.

AMI BISWAS: We are rethinking our business plans for domestic businesses even. So, we're looking at things like that on a case by case basis. And there are things we've canceled, things we've scaled back.

But not all investors, foreign or domestic, share Ami's pessimism. Aung Htun manages a private equity firm in Bangkok. His investors are mostly institutions and high net worth individuals from Europe and the United States. They're keeping their money in the country and he's still looking for good deals.

AUNG HTUN: If we had questions they would have been the same questions as we had six months ago: How is Thailand stacking up against other ASEAN countries? How is Thailand stacking up against China? Is the Western market slowing down and taking less Thai exports? . . . If we don't do investment, it's because of that. It's not the coup.

There are still tanks on the streets of Bangkok. There are no elections in sight, and yet Aung says the economy is moving forward.

AUNG: There will be bumps on the road, for sure, but Thai economic policy has by and large always been laissez faire. It's been a very open and very pro-business sets of policies. No government — be it democratic, military, whatever — has ever changed the economic direction of the country.

Aung believes the long-term prospects in Thailand are good. But the military coup and the uncertainty over the country's future direction could prove to be a bigger bump than many investors are willing to navigate.

In Bangkok, I'm Megan Cossey for Marketplace.


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