SINGAPORE (Mar 25): To vote is to exist — reads a banner at Chulalongkorn University in Bangkok, as Thais head for the polls on March 24. The general election in Thailand is the country’s first since a 2014 military coup that ousted former prime minister Yingluck Shinawatra. Almost 90% of those who registered for advanced voting on March 17 had turned up at the ballot box, compared with a 55% turnout for early voting in the 2011 election.

Thailand has grappled with crippling political turmoil since Yingluck’s brother, Thaksin Shinawatra, was toppled in an earlier military coup, in 2006, after winning his second term as prime minister. But even in self-exile, Thaksin remains an influential and divisive figure in Thai politics. Pro-Thaksin rural farmers credit him and his allies for boosting income for the poor, while the anti-Thaksin royalist and military establishment accuse the group of corruption.

To up the ante, the Kingdom will this year see its first royal succession in seven decades. The new king, Maha Vajiralongkorn, will be crowned in a coronation ceremony in early May — just days before the results of the general election are scheduled to be announced on May 9.

For Thailand, the stakes are high amid a political divide that has robbed the country of years of economic growth. Since the junta seized power in 2014, leader Prayut Chan-o-cha has repeatedly postponed elections, while cracking down on dissent and political debate.

The election results are also expected to be closely watched by Thailand’s neighbours. The new Cabinet is expected to take office by mid-June, just in time to host the Asean Summit meeting on June 22 and 23. Thailand is chair of the regional bloc this year.

Grappling with uncertainties in a country divided

“It will be business as usual for the Thai economy if Prayut is re-elected as prime minister,” says OCBC Bank Treasury research analyst Howie Lee in a report on March 21.

But Kasamapon Hamnilrat, an analyst at RHB Group, believes the election could lead to a stalemate, with no outright winner among the individual parties in gaining control of the Senate and Parliament. “This could lead to uncertainties during the ‘vacuum period’ in May before the emergence of a new coalition government and voting for a new prime minister,” Kasamapon cautions. He adds that a weak coalition could lead to an unstable government that lacks support from both houses to pass policies and laws.

In terms of driving the economy, Radhika Rao, an economist at DBS Group Research, believes the vote could have a greater impact than even the rate review by the Bank of Thailand on March 20. “Stability will lend itself to better growth prospects,” Rao says. “As seen in the past, private and public investment spending improve after elections as uncertainty lifts.”

The way she sees it, the various political parties’ economic policy promises have largely been along similar lines. “During the campaigning period, most contesting parties have outlined similar economic priorities,” Rao adds. These include a focus on improving growth in the provinces, lifting Thailand’s economic and trade competitiveness, bridging social inequality and boosting purchasing power through various state welfare schemes, such as subsidies, higher minimum wages and cash handouts.

For now, DBS is maintaining its 2019 GDP growth estimate at 3.8% y-o-y, down from 4.1% last year. However, Rao warns that any potential surprise outcomes at the polls and resultant uncertainty will raise downside risks to the growth outlook.

Chanpen Sirithanarattanakul, head of research at DBS Vickers in Thailand, says macro data has pointed to gradual improvement in nominal farm income, which benefits consumer companies such as Thai Beverage.

“As long as the situation stays [stable] and with a smooth transition, coupled with follow-through in terms of investment by the new government and return of foreign direct investment, this should bode well for consumer companies,” Chanpen says.

Indeed, investors will be watchful of the impact of the polls for Singapore-listed ThaiBev, the leading beverage producer in Thailand with business segments spanning spirits, beer, non-alcoholic beverages and food.

Other Singapore Exchange-listed companies to watch include rubber products manufacturer Sri Trang Agro-Industry, which owns more than 8,000ha of rubber plantations across Thailand, and upstream oil and gas firm KrisEnergy, which holds working interests in two O&G fields in the Gulf of Thailand. Others, such as Singapore Telecommunications and Frasers Property, are expected to be impacted on a much lesser extent despite having some exposure to the country through their Thai-based associates and subsidiaries.

But the way Cédomir Nestorovic, a professor of international marketing and geopolitics at ESSEC Business School explains it, the impact of the Thai general election will not be great as far as the economy is concerned.

“The GDP rise is unaffected at around 4%, as it has been since the coup in 2014,” says Nestorovic. “The results [of the election] will not have a big impact on business because a pro-establishment victory is expected. Business will continue as usual and the Eastern Economic Corridor (EEC) is too big to fail.”

Thailand’s EEC, along the eastern seaboard of Thailand, is the Kingdom’s centre for export-oriented industries and plays a key role in the country’s economy. Nestorovic says the economic project is on track in attracting foreign investors.

“The only problem from the business perspective is the persistence of corruption and graft,” he tells The Edge Singapore. Citing data reported from the Thai Chamber of Commerce, Nestorovic says bribes represent around 25% of a given contract in Thailand — and can go up to 40% for the most lucrative projects.

“This is really a heavy burden and even if this amount is factored in business plans and profit and loss statements, it will become more and more difficult for foreign firms to justify it because they will have to address questions in their home countries [about such] corruption practices,” he adds.

No political unrest expected — at least for now

On the political front, analysts say a stable Thailand will be crucial for the country — and the region.

“Since this year is a coronation year, we do not expect any political unrest throughout the year,” says DBS Vickers’ Chanpen.

Harrison Cheng, associate director and lead analyst for Thailand at Control Risks, agrees that any risk of unrest will remain largely contained ahead of the King’s coronation in early May. “Political parties, even Pheu Thai, would not want to be seen as disrespecting the monarchy by protesting on the streets,” Cheng says. “But all bets are off after that milestone.”

“The botched nomination of Princess Ubolratana Rajakanya as a prime ministerial candidate in February, which was easily the most surprising political development this year, only underscores the unpredictability of Thai politics,” Cheng adds.

The way he sees it, large-scale protests in Bangkok will escalate incidental security risks and the likelihood of operational disruption for businesses with a physical presence there or that rely on supply chains passing through the capital.

“Any excessive military interference with politics — such as the formation of a military-backed government without the popular vote, or another military coup — will elevate the risks of Western sanctions,” he says.

Already, there have been 13 successful military coups in Thailand since democracy took root in 1932. In this time, the country has seen 29 prime ministers.

“Despite the apparent calm, Thailand has a history fraught with military coups and a divided political scene split between the Red and Yellow shirts. In addition, the voting results may be announced as late as May 9 despite the country hitting the polling booth on March 24 — the long wait may prove unsettling for some,” says OCBC’s Lee.

While Lee believes the general election presents a fat-tail political risk, he says greater economic challenges await Thailand, such as a slowdown in global growth, the ongoing US-China trade tensions and the country’s high domestic household debt.

Indeed, Thailand is plagued by the same problem as much of Southeast Asia: slowing growth, ageing populations, wobbly democracies, inadequate social safety nets and endemic corruption. “Thailand’s growth in the short to medium term is likely to be influenced more by external economic conditions than its domestic political environment,” Lee says.

But Termsak Chalermpalanupap, a lead researcher at the Asean Studies Centre and a member of the Thailand Studies Programme of the Iseas-Yusof Ishak Institute in Singapore, cautions in a commentary in TODAY on March 19 that an inconclusive election outcome will lead to protracted political chaos and even instability.

“Should this be the case, I will not be surprised if the army seizes government power and once again resets Thai politics back to zero,” he says.

And, it will once again be an existential battle for the Kingdom — between the democratic forces that have won every election since 2001 for the political movement loyal to ousted former prime minister Thaksin, and the alliance of the palace, military and big business that has dominated Thailand for most of its modern history.

Not all business as usual as Thailand finally heads to the polls

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