Wed, May 21, 2014 - Page 15 News List

Thai ‘coup’ concerns investors

DEJA VU:Analysts said the economy is largely immune to shocks and that Thais are used to having tanks on the streets — a legacy of decades of political uncertainty

AFP, TOKYO

A woman takes a “selfie” with Royal Thai Army troops stationed at the Ratchaprasong intersection in central Bangkok, Thailand, yesterday.

Photo: Bloomberg

Thailand’s biggest investor Japan yesterday expressed “grave concerns” after the army imposed martial law, while the US said it must only be “temporary” as multinational firms monitored events nervously.

After almost seven weeks of anti-government protests, generals ordered forces onto the streets of Bangkok and troops were positioned at TV stations as the army said the media would be censored, but despite the crisis — which saw Southeast Asia’s second-biggest economy shrink 0.6 percent in the first quarter — analysts said the economy could bounce back.

Asian markets mostly rose yesterday following a second straight day of gains on Wall Street, while Thailand’s main index slipped.

“We have grave concerns about the situation in Thailand,” Japanese Chief Cabinet Secretary Yoshihide Suga told reporters in Tokyo. “We once again strongly urge all parties concerned to act in a self-restrained manner without using violence.”

Private-sector think tank Teikoku Databank said in February nearly 4,000 Japanese firms operated in Thailand, with investments the Bank of Thailand said were worth US$6.89 billion last year — half of the total inward investment.

That figure is more than the next three biggest investors combined — the US, the UK and ASEAN.

Thailand has become increasingly important for Japanese firms as they shift operations from home to counter high wages and an overvalued yen, and to mitigate the effects of natural disasters on the supply chain.

Car giant Honda Motor Co said political instability was leading it to reconsider a second assembly plant it was hoping to go online in April next year.

“We are watching the political situation in order to decide to go ahead with the plan [to start operations] or not. If the political situation improves, we may complete the factory and start production,” Honda spokesman Teruhiko Tatebe said.

Toyota Motor Corp, the world’s biggest automaker, also said it was watching events carefully, but added all three of its plants were operating normally.

“The morning shift started as per usual at all plants. A decision concerning the evening shift will be made based on the situation,” a Toyota spokesman said.

Washington urged “all parties to respect democratic principles, including respect for freedom of speech.”

“We understand the Royal Thai Army announced that this martial law declaration is not a coup,” US Department of State spokeswoman Jen Psaki said in a statement. “We expect the army to honor its commitment to make this a temporary action to prevent violence and to not undermine democratic institutions.”

Indonesia, Southeast Asia’s biggest economy and a key ASEAN partner, also expressed its fears and urged a return to normality.

“Indonesia has consistently called for respect of constitutional process and democratic principles, in order to promote national reconciliation and unity, reflecting the wishes of the Thai people,” Indonesian Minister of Foreign Affairs Marty Natalegawa said.

However, the reaction on the markets was tempered.

The Stock Exchange of Thailand sunk 1.58 percent on opening, before picking up slightly to sit 0.88 percent lower. The Thai baht dipped to 32.53 against the US dollar from 32.47 baht on Monday.

Analysts said the economy is largely immune to shocks — a legacy of decades of political uncertainty.

“Thais are so used to having tanks on the streets,” Invesco fund manager Jalil Rasheed told Dow Jones Newswires.

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