Thai Cabinet reshuffle could impact economy and foreign investment

The Thai Cabinet, currently conducting mobile meetings in Nong Bua Lam Phu – the country’s poorest province, is speculated to face potential reshuffles in leadership or dissolution in the coming year, intensifying the political activities across various Thai provinces.

Such changes could pose a risk to the country’s economy, given the current administration is only a few months old. The Federation of Thai Industries (FTI) warns against such political changes hampering investment, particularly in regards to new foreign business projects, as it could threaten the country’s economic stability, said Kriengkrai Thiennukul, chairman of the FTI.

“The country cannot lose more opportunities to attract new investment projects after seeing Vietnam become more attractive to many foreign investors over the past several years.”

Kriengkrai’s comments come amidst political predictions that the country’s Prime Minister, Srettha Thavisin, is likely to reshuffle the Cabinet next year. The Move Forward Party, which won the largest number of parliamentary seats, could face dissolution if found guilty by the Constitutional Court of attempting to overthrow the constitutional monarchy.

Despite these potential changes, Kriengkrai insists that entrepreneurs will continue to navigate the situation. However, the country does face various economic problems, including a high level of household debt, elevated interest rates and costly electricity bills.

“The government must deal with these factors carefully to avoid unpleasant impacts and drive up economic growth.”

Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce (UTCC), believes the level of political risk to be relatively mild. He suggests that even if the government’s loan bill to finance the digital wallet scheme is deemed invalid, the premier could use the fiscal budget to fund it, labelling this a manageable risk.

In case of a potential political shift leading to the Bhumjaithai Party leading the government, Thanavath assures it would not result in severe disruption. However, if the loan bill fails to pass the House of Representatives, it could become a political risk, possibly leading to the dissolution of the parliament and new elections.

This scenario could impede the economy, causing it to lose the impetus that would have been generated by the 500-billion-baht economic stimulus of the digital wallet scheme.

The tourism sector is also expected to miss the government’s revenue target of 2.38 trillion baht for 2023. Sisdivachr Cheewarattanaporn, president of the Association of Thai Travel Agents, suggests that political upheaval has been an obstacle for decades, causing Thailand to lag behind rivals due to inconsistent tourism policies.

“Any change in the current administration will have an impact on the tourism recovery, which is now at a critical point.”

Sisdivachr believes that the current government should be given more time to address the existing issues.

“Any abrupt change in Thai politics in a very short period would not be good for the perception of Thailand.”