SUNS 4334 Monday 30 November 1998
THAILAND: UNLIKELY ALLIES BATTLE IMF-STYLE REFORMS
Bangkok, Nov 27 (IPS/Prangtip Daorueng) -- An unlikely mix of activists, politicians and businessmen are linking arms to protest the Thai government's pursuit of economic reforms that they say virtually puts the country up for sale.
These groups are normally on opposite sides of the political, even ideological, fence. But their interests have at least for the time being converged in opposing changes to long-time economic policies, like lifting limits to allow foreigner to own land, to attract foreign investment.
A group called the Alliance for National Salvation, which brings together businessmen, joined with the pro-democracy NGO the Confederation for Democracy to distribute leaflets asking people to
join a protest rally here this weekend.
Banners branding the government of Prime Minister Chuan Leekpai "traitor" are being spread across Bangkok.
Calls to patriotism are increasingly being used to resist such policy changes. Nationalistic sentiment has become the dominant atmosphere for Thai decision-making, though their opposition stems from different reasons.
The anger from various sectors of society underlines the deep changes that the recession, and the prescriptions of the International Monetary Fund (IMF), is causing in East Asian countries like Thailand desperate to lure foreign funds back.
"The government economic recovery plan has been created under the idea that the country won't survive without foreign money. This has led to several premature measures that rush the country in a disadvantage condition," said Kamol Kamoltrakul, programme director of the Bangkok-based Asian Forum for Human Rights and Development.
His views are not very far from those expressed by Thai politicians. Last week, Senate members led by speaker Meechai Ruchuphan, lambasted moves to pass laws quickly to "satisfy the IMF and foreigners". The group pointed out that proposed laws allowing greater foreign participation in the economy was risky because Thai people are not strong enough to compete financially.
A package of 13 "reform" bills, in line with the economic restructuring process demanded by the IMF, is pending in Parliament. They are expected to get easy approval from the House of Representatives, dominated by the government in the current session.
The draft laws have three main aims: to liberalise the economy by increasing foreign participation, to upgrade efficiency in debt settlement, and to liberalise land and condominium ownership in the
country.
These changes in Thailand's legal framework are part of the government plan to rebuild the economy, which collapsed after the baht devaluation in July 1997.
Since then Thailand has been struggling through a recession of 7 to 8 percent negative growth with a massive amount of bad debts. GDP expansion for 1999 is expected at zero growth or 1 to 2 percent.
Prior to pushing the 13 bills, the government had delivered a reform package for bank recapitalisation in August. "We can't give ourselves something special if we don't do something special for others," Chuan said in response to criticism that his government gives first priority
to foreigners instead of Thai citizens.
The government says the laws would create more transparency and reduce corruption, thus giving more opportunities for all Thais and not just a handful of business interest groups -- some of whose members are in the upper house.
Five of the 13 bills have had second and final readings in Parliament. They would reorganise procedures for bankruptcy proceedings, set up a bankruptcy court and sets new criteria for bankruptcy cases to update a mechanism set up in 1940. They would hasten privatisation of state
enterprises, extend property leases for foreigners and streamline civil and commercial proceedings.
But critics warn the government against being too hasty in opening areas of the economy.
Plans to extend land leases from 30 to 50 years with an option for renewal for another 50 years, and to allow foreign direct investors to own small plots of residential and 100 percent of units in condominium projects, have raised fears of land now owned by Thais falling into foreigners' hands.
But if activists fear that the reform laws would hand over control of strategic parts of the economy to foreigners, businessmen tend to have other concerns stemming from challenge to domestic business concerns.
They fear greater job competition from foreigners and the likelihood of more bankruptcies stemming from tighter bankruptcy and foreclosure laws under debate.
"A swift bankruptcy and foreclosure process at a time when most people are indebted will led to a disastrous collapse of asset prices, a situation which will benefit foreign investors only," said Sak
Korsaengruang, chairman of the Law Society.
Saying that Thailand was losing economic independence because the measure would put the assets of Thais in foreigners' hands at only 10 to 20 percent of their true worth, Sak's group wants a public hearing and referendum on the bills as allowed under the Constitution.
Added Kamol: "There are many loopholes in these bills. This convinces me that the measures will neither help create a better-off situation among ordinary people nor transparency in the country's economic system."
Despite these objections, many experts say it might be too late for Thailand to turn back from the type of free-market approach pushed by the IMF. So far, the government has taken a tough stand on the laws, with no clear alternative from opponents from different political views.
"A clear alternative needs to be provided by the opposition in order to fight the IMF framework, in another word, globalisation," said labour expert Lae Dilokvidayaratna of the economic department of Chulalongkorn University. "They will have to answer the question of the poor, that what would be the difference between losing their land to local capitalists and foreign investors. As long as the issue is limited to middle-class security, it is hard to gain enough support from the majority," Lae said.