Thailand’s parliament selected property tycoon Srettha Thavisin as the country’s new prime minister, paving the way for the establishment of new government after months of political deadlock.
Srettha, 61, was proposed by the Pheu Thai Party, which has links to the billionaire and ex-Prime Minister Thaksin Shinawatra, who had returned to Bangkok earlier in the day after more than a decade of living overseas in self-exile. Srettha secured 482 votes during a joint session of the 500-seat House of Representatives and 250-seat Senate. His nomination still requires royal endorsement from the Thai king before it becomes official.
“This is positive progress that has yet to be fully priced in, and investors are now anticipating pro-growth policies from Pheu Thai-led government. The stock market is still in an early stage of a decent rally, and the SET should at least hit the 1,600 mark fairly soon,” said Sukit Udomsirikul, Chief Research Officer at InnovestX Securities.
Thailand’s benchmark SET Index rose 1.3% on Tuesday to close at 1,545.60, boosted by prospect of a successful nomination of a new prime minister. However, the index is still down 8.6% for the year so far amid rising interest rates and concerns over the country’s political uncertainty.
Since the general election in May, Thailand has been stuck in political limbo as it struggled to appoint a new prime minister. Last month, Pita Limjaroenrat, the leader of the Move Forward Party, failed in his bid to secure enough votes to become the next premier. The progressive leader was blocked by conservative lawmakers and senators who don’t support his party’s pledge to amend a law that criminalizes criticism of Thailand’s monarchy.
Pita’s failure to win parliamentary approval despite his party winning the most seats in May’s general election stirred public discontent and triggered a series of small-scale, non-violent flash mobs by his supporters. Move Forward is popular among young Thais craving change after nine years of rule under military rule. Many Thais believe the country is stagnating due to its political paralysis.
The Thai economy grew 2.2% in the first half of this year, driven mainly by tourism and private consumption following the country’s reopening after the pandemic. On Monday, the government’s think tank National Economic and Social Development Council trimmed its economic growth forecast to 2.5%-3.0% from 2.7%-3.7%.
“It remains unclear on who will take charge of key economic portfolios, how their policies will be, and the funding scheme…It will also be a challenging task for the new government to sustain domestic political stability and at the same time dealing with external difficulties both in terms of geopolitics and economic,” said Kobsidthi Silpachai, Head of Capital Markets Research at Kasikornbank.
After Thaksin’s arrival this morning at Don Muang airport on the outskirts of Bangkok, he was taken to the Supreme Court where he was ordered to serve eight years in jail for three convictions handed down in his absence. The 74-year-old former leader was later brought to a Bangkok prison to start serving his time.
Thaksin was ousted from power in a bloodless military coup in 2006. Two years later, he fled the country to avoid jail term on multiple charges of corruption and abuse of power.
Despite his absence, Thaksin’s family has continued to have a strong influence on Thai politics. His sister Yingluck also served as prime minister before fleeing the country in 2017 to escape arrest over a rice subsidy scheme. Thaksin’s youngest daughter Paetongtarn currently holds a senior position in the Pheu Thai Party, which was the second-biggest winner in May’s national election.
Update: August 22, 2023
This story’s first four paragraphs were updated with details of the Thai parliament’s election results, Thaksin’s prison sentence and the market’s reaction to the news.