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The Big Story

Thailand reaches a turning point as the Bhumibol era ends

After a year of mourning, how will the country confront its political and economic problems?

YUKAKO ONO, Nikkei staff writer | Thailand

BANGKOK -- On Sunday, Oct. 29, King Bhumibol Adulyadej's bones were placed in an ossuary in the throne hall of Bangkok's Grand Palace along with those of his ancestors, and his ashes were enshrined at two of the city's most important temples. Then, at the stroke of midnight, Thailand's long period of national mourning was over. It had been an extraordinary display of grief: In the year since his death, well over 12 million people had queued patiently at the palace to pay their respects to a long-serving and much-loved king.

The country wasted no time returning to life. The black and white bunting that had been draped across the kingdom's buildings started to come down. On the streets, somber attire gave way to more colorful clothing, and the darkened electric billboards and TV channels recovered their sparkle. The stock market ticked up as hotels got busy preparing for the weddings and other social events that had been delayed.

The military government of Prime Minister Prayuth Chan-ocha, in power since a coup in May 2014, can justifiably take credit for overseeing the orderly succession of King Maha Vajiralongkorn Bodindradebayavarangkun, the late king's only son. But now that this has been achieved -- amid ceremonies costing about $90 million -- the public mood could become less accommodating.

The end of the 70-year "Bhumibol era" has been both unifying and cathartic for the nation. Now, however, the country must face a host of challenges, including lagging economic growth, political intransigence and overarching questions about its commitment to liberal democracy. Thailand has traded for years on its cheap labor, but some of its neighbors in Southeast Asia have become more competitive while business leaders have grown jittery about political uncertainty in Bangkok. The new king may set the tone for how the country approaches these problems.

King Vajiralongkorn participates in the royal cremation procession for his father in Bangkok on Oct. 26.   © Reuters

"What many Thais are waiting to see is how the new monarch, King Maha Vajiralongkorn, intends to reign," said Thitinan Pongsudhirak, director of the Institute of Security and International Studies at Chulalongkorn University. "Since democratic institutions are weak and divided, there is no stopping the military so far. The relationship between the new king and the junta is thus critical to understanding how Thailand's new politics will unfold."

Political uncertainty

Thailand is nominally a constitutional monarchy, and the king is meant to be above politics. King Bhumibol was, however, regarded as a last resort in times of crisis. Using his moral authority, he twice intervened to stop bloodshed on the streets.

The kingdom is ostensibly on course for a general election next November, marking a resumption of political activities that were suspended with the 2014 coup. There has been no sign of reconciliation between the camp of exiled former Prime Minister Thaksin Shinawatra, largely supported by farmers in the country's northern provinces, and the military-backed Bangkok establishment. The two sides have been at loggerheads for more than a decade.

The new constitution, drawn up at the military's behest, defines the first five years after the election as a transitional period that will be overseen by a powerful senate hand-picked by the military government, with six seats reserved for its most high-ranking officers. Reform of the election system and party rules are expected to preclude any single party gaining a majority of seats in the next lower house. The military wants this to guide Thailand's development for 20 years.

Color returns to the streets of Bangkok on Oct. 30, when the yearlong mourning period officially ended. (Photo by Shinya Sawai)

It remains to be seen if the recent flight of former Prime Minister Yingluck Shinawatra, Thaksin's youngest sister, will weaken the political base of the Shinawatra clan, which has won every election since 2001. A widening wealth gap during military rule has helped keep many ordinary Thais loyal to the fugitive siblings and their populist policies.

Pranee, a single mother in the northern province of Chiang Mai, is one of them. Last year she fled her home to escape loan sharks. She had borrowed at least 200,000 baht (about $6,000) -- more than double her annual income -- after many of her curry stall's customers fell away because of the poor economy. Many were farmers. The 52-year-old now works in a restaurant kitchen, hoping debt collectors will not find her. At the same time, she has taken on 100,000 baht in new loans as fees for her daughter's university education weigh heavy. "I want Thaksin to come back," she said. "He can definitely come up with measures to save us and improve our lives."

Thaksin was unseated by a military coup in 2006 and has lived in self-imposed exile since the summer of 2008, when he fled criminal prosecution. Yingluck was removed from office shortly before the 2014 coup. She fled the country in August before the supreme court sentenced her in absentia to five years in prison for negligence in relation to a dubious rice subsidy scheme. The saga has cast doubt on Thai institutions, including the judiciary, and underscored the country's broken political system.

Workers produce small motors at a MinebeaMitsumi plant in Cambodia. Rising wages, labor shortages and political uncertainty in Thailand have prompted Japanese manufacturers to expand into neighboring countries. (Photo by Kosaku Mimura)

Political instability could continue to hinder economic growth, which has dipped below the average 5% to 6% rate it enjoyed until the early 2010s. In 2016, it was down to 3.2%; a report by PricewaterhouseCoopers this year says the pace could slow to an average 2.6% by 2050. The report also sees Thailand's gross domestic product slipping to fifth place in Southeast Asia. It currently ranks second, but is expected to be overtaken by faster-growing economies like those of Vietnam and the Philippines in the coming decades.

Thai officials worry that foreign direct investment will be hit as labor-intensive industries shift elsewhere in the region. Some Japanese companies have adopted a "Thailand plus 1" policy, where operations are split between Thailand and neighboring countries such as Cambodia, Laos and Myanmar. To compensate, the government is trying to attract high-tech investment.

Some executives say business sentiment in Thailand should improve if the elections are carried out smoothly.

"One of the reasons for the low private investment in Thailand has been the uncertainty stemming from the extension of [military rule]," said Rajiv Mangal, chief executive of Tata Steel (Thailand). "Once the election dates are fixed and announced, that uncertainty should come down and release more energy for private investment."

Thailand's wealth remains concentrated among a tiny fraction of its 70 million people. According to a 2016 report by Credit Suisse, 58% is owned by just 1% of the population, making it the third most unequal country among 38 surveyed. It trails only Russia, where the richest 1% controls 74.5% of the wealth, and India. Such inequality is key to Thailand's political fissures.

A discussion about wealth redistribution has been going on for decades, but politicians and bureaucrats -- usually wealthy or upper-middle-class individuals themselves -- have been reluctant to implement effective measures. A land and building tax has been under consideration by the military-appointed National Legislative Assembly that would be levied on homes and land whose value is appraised at more than 20 million baht. But enactment is unlikely to meet the latest target of early 2018, and some news outlets predict it will not pass.

"Income redistribution is politically difficult in Thailand," said Somchai Jitsuchon, research director of the Thailand Development Research Institute. "Rich and middle-income people in Thailand don't subscribe to the idea of giving away money and resources. They have the idea that you should help yourself rather than ask for help from others."

Royal housekeeping

King Vajiralongkorn has yet to have a date announced for his ceremonial coronation, but it may not happen until after the general election planned for next autumn. To allow for grieving -- but also demonstrating his firm grip on the succession process -- King Vajiralongkorn chose to wait until 50 days after his father's death last October before going through an elaborate formal acceptance ceremony.

There was again considerable ceremony when he finally gave the royal assent to Thailand's constitution -- its 20th since the overthrow of the absolute monarchy in 1932 -- at the astrologically determined time of 3:11 pm on Thursday, April 6. Nothing like it had been seen in almost 50 years. The ceremony was broadcast live from the Italianate early 20th-century Ananta Samakhom Throne Hall, and attended by privy councilors, diplomats, the military-appointed cabinet, and members of the unelected National Legislative Assembly.

The second draft of the military's new constitution was approved by a national referendum in August 2016, but its adoption had been further delayed when King Vajiralongkorn sent it back for changes regarding his royal powers. One crucial change allowed the king to travel overseas without appointing a regent.

Until the mid-1990s, King Bhumibol frequently traveled upcountry, where he maintained a number of provincial palaces. He initiated numerous rural development projects, replacing opium crops with orchards and cabbage fields, and was fascinated by irrigation and water management. The royal projects often benefited marginalized people, and buffed the king's aura as a caring and forward-looking monarch. He did not travel abroad after 1967.

King Vajiralongkorn has traveled widely overseas and continues to spend much of his time in Germany, where his youngest son, Prince Dhipankara Rasmijoti, 12, attends school. His main interests have been aviation and the military, but he has nevertheless been busy putting his stamp on the royal household and the monarchy's assets. In May a new law placed a number of state agencies connected to the running of the palace directly under the king's control. The Royal Thai Aide de Camp Department was previously under the Defense Ministry, and the Office of the Royal Court Security Police was part of the national police force, but the king can now appoint and remove officials in these departments at his discretion.

The way crown assets are handled has also been changed. In July, the Crown Property Act was revised for the first time in nearly 70 years. The Crown Property Bureau manages the monarchy's real estate and holdings in major listed blue chip companies, such as Siam Cement and Siam Commercial Bank. The CPB's assets are conservatively valued at 1.4 trillion baht. They were previously regarded as properties belonging to the crown as an institution but have now come under the king's personal control.

In October, the king personally became a major shareholder of Siam Commercial Bank, the nation's third-largest bank, following a share transfer from the CPB. The 3.33% stake transferred was worth around $500 million. Filings to the Securities and Exchange Commission did not mention if any payment was involved in the transaction.

Air Chief Marshal Satitpong Sukvimol, the king's close aide and secretary when he was crown prince, was appointed chairman of the CPB, a post previously filled ex officio by the finance minister. In October, the king made Satitpong a Knight Grand Cross of the Order of Chula Chom Klao -- the highest honor that can be granted to someone outside the royal family.

Professor Yasuhito Asami of Japan's Hosei University, a specialist in Thai politics, believes the changes could have an effect on the national economy given the size of the royal conglomerate.

"The assets of the monarchy are huge," he told the Nikkei Asian Review. "Depending on how the assets are managed, it may create uncertainties."

Thailand meanwhile retains the strictest law of lese-majeste in the world, with penalties for insulting senior members of the royal family of up to 15 years in jail -- in some instances with consecutive terms. The law has been applied with renewed vigor by the military government. A student who was arrested in December for sharing on Facebook a Thai-language biography by the BBC of the new king has not been granted bail.

"No choice but to take it"

The late king believed reducing poverty would strengthen democracy, according to Sumet Tantivejkul, secretary-general of the Chaipattana Foundation, which oversees royal projects. "Democracy cannot be developed when people are hungry," Sumet quoted the king as saying. "When somebody comes to give poor people a certain sum of money, they have no choice but to take it."

It is difficult to gauge the extent to which King Bhumibol's unaudited development projects contributed to overall poverty reduction, but they certainly played a major role in reminding people about the poor and advancing new ideas.

"All my life, I have seen the king devote his life to helping the Thai people," said Wooth, a 49-year-old taxi driver in Chiang Mai. "He worked harder than any prime minister."

In 2008, the king said his son would be ready to succeed him when the time came, and that it would be important that people help him. "If they push him in the right direction, he will do good," he said.

The reigns probably defy comparison. King Bhumibol acceded at the age of 18 and spent his life winning his people's reverence. King Vajiralongkorn is already 65 and will follow a different path in a vastly changed world. In a five-minute televised New Year's address -- a rare public appearance -- he called for unity. "Whatever problems or abnormal circumstances we may face in our country, we can overcome and alleviate them if we work together," he said. "I will work along with the Thai people with my best capability to continue the work of the late king."

Dominic Faulder of the Nikkei Asian Review and Hiroshi Kotani, Nikkei staff writer in Bangkok, contributed to this story.

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