October 21, 2016 9:20 pm JST
Thitinan Pongsudhirak

Could the economy be Thailand's saving grace?

After King Bhumibol Adulyadej's seven-decade reign, Thailand is an emotionally charged landscape, overcome with grief and nostalgia for a remarkable past and anxious about an uncertain future. On the late monarch's watch, the country clocked steady growth on sufficient political stability to rise from a village backwater to a modern nation with a 70-million-strong market and a $400-billion economy. But unless Thais can come to new terms in their society through renegotiation and recalibration, all their achievements will be at risk. As political volatility looms, the economy that grew out of King Bhumibol's reign may -- ironically -- prove to be Thailand's saving grace.

For a country transitioning from a 70-year political order, it is unsurprising that Thailand is in limbo. Crown Prince Maha Vajiralongkorn, King Bhumibol's anointed successor, has asked for an unspecified waiting period to grieve with the Thai people and to prepare for the throne. While Prime Minister Prayuth Chan-ocha has stated in unmistakable terms that the crown prince will be King Rama X, the absence of an immediate new monarch, officially acknowledged by parliament, leaves Thailand without a traditional head of state.

In the interim, Gen. Prem Tinsulanonda, who has been president of the monarchy's advisory Privy Council, has filled the void as caretaker regent. He is replaced on the council by Thanin Kraivichien. This so-far tentative new reign will need to be formalized and solidified over a year-long mourning period while funeral preparations are underway, for the first cremation of a king that most Thais will see.

The time gap between King Bhumibol's passing and the ascension to the throne of his only son can be expected to close in the near future because of the complications it may engender. As Thailand's monarch is required to countersign bills and state documents, a regent without a new monarch may not be able to perform this function on a long-term basis.

The loose ends surrounding the new monarch do not augur well for Thailand's political continuity and macroeconomic stability. For example, the local bourse and the baht wilted during King Bhumibol's final twilight as rumors of his failing health went into full motion. A prolonged period of unsettled monarchy may impede state functions. As the Prayuth government is consumed by the royal succession and cremation, its energy and attention to promote a more digitized "Thailand 4.0" may lose thrust. More bets will be off as Thailand's edgy uncertainty unfolds over its mourning months.

For investors and the business world generally, this will be a time that requires close attention. The political order set up around King Bhumibol on the back of the military-monarchy-bureaucracy axis during the Cold War has left a lasting legacy in Thailand's vaunted macroeconomic technocracy -- comprised of the widely respected Bank of Thailand, Bureau of the Budget, National Economic and Social Development Board, and Ministry of Finance.

While Thailand was ruled by military strongmen for much of the period 1947-97, this clutch of macro-policy institutions shouldered and steered the country's economic development over those decades. As Thailand stood up to the communist expansionism engulfing its neighborhood, economic expansion stayed on track. The technocracy became insulated and autonomous as the ruling generals needed economic growth to bolster their legitimacy.

Since they were shaken and demoralized by the 1997 Asian crisis, when their autonomy was penetrated and captured by elected politicians in the early 1990s, these technocratic institutions have recovered integrity and acumen. Thailand's central bank, for example, is the country's best talent pool of economists, drafted from the best universities and the business world.

When push comes to shove, these macro-policy institutions, and the Thai bureaucracy more broadly, tend to stand out and serve as the backstop for political downslides. This is why the Thai economy has managed to expand on a 3% trajectory despite the color-coded tumult and turmoil over the past decade. It is the reason Thailand has had a Teflon quality underpinning its ongoing political rollercoaster.

Moreover, Thai economic fundamentals are sound, with external accounts in surplus, a manageable debt profile, a stable currency, and price stability. Above all, the ultimate safeguards for potential political downturns are Thailand's critical mass, enviable geography, and cultural intangibles. The Thai market increasingly covers mainland Southeast Asia as its fulcrum, with an integrated regional labor pool, retail finance, healthcare, tourism, and more on the way. Yet the country's often unnoticed asset may be its hospitable and resourceful people who have a knack for moving on and getting on with things.

Coups have come and gone, along with as many constitutions and frequent elections, but Thailand has remained standing. This time, the imperatives of popular rule coupled with needed reforms of the monarchy under a new king will profoundly test Thailand's mettle. But the wealth and growth prospects accumulated during King Bhumibol's reign should prod and prompt Thailand's movers and shakers to realize they have too much to lose by trying to win it all.

Compromise and accommodation is needed in the next constitutional order, with both democracy and monarchy in the right mix that fits stakeholder demands both at home and abroad.

Thitinan Pongsudhirak teaches International Political Economy and directs the Institute of Security and International Studies at Chulalongkorn University in Bangkok.

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