Thailand is poised to witness political and economic disruptions after the opposition Move Forward Party (MFP) stormed to a decisive electoral victory on May 14, closing the curtain on the reign of Prayuth Chanocha, who seized power in a coup in 2014.
MFP leader Pita Limjaroenrat aims to take the reins as the country's next prime minister, backed by an eight-party coalition. The 42-year-old Harvard graduate has vowed to introduce social and economic reforms, including abolishing business monopolies, notably in brewing and other alcohol production, as well as boosting assistance to small and medium-sized enterprises (SMEs).
The political shakeup has buoyed law firms in Thailand, banking on a conducive environment for home-grown businesses and foreign investment. But they are also closely monitoring legislative uncertainties posed by resistance from the country's more conservative elements.
WHAT IS THAILAND'S ECONOMIC OUTLOOK UNDER ITS NEW GOVERNMENT?
On May 23, MFP signed an agreement with its seven coalition partners spelling out the alliance's governance priorities as it appealed for parliamentary support to form a government.
The 23 agendas included drafting a new constitution, legalising same-sex marriage, decentralising administrative power, and re-imposing controls on the production and sale of marijuana.
Pavinee Bunyamissara, a partner at Nishimura & Asahi's Bangkok office, entrusts the highly educated, progressive MFP leader Pita with charting an upward economic trajectory for Thailand, the second-largest economy in ASEAN.
"His educational background- a Master of Public Policy (degree) which trained him on economic and public policy issues and a Master of business administration (degree) led us to the believing that he has good relevant knowledge," says Pavinee.
Thailand is on track to a stable recovery after years of COVID-related shutdown buffeted the tourism sector – the bloodline of its economy. The Southeast Asian country is poised for a 3.6 percent GDP growth this year, a jump from last year's 2.6 percent expansion. It is also shielded from inflationary pressure that persisted in the United States and Europe, with inflation projected to fall below three percent this year.
WHAT SECTORS ARE LIKELY TO SEE CHANGES?
Vowing to "demilitarise, demonopolise and decentralise," Pita, the rising star in Thailand politics, is confronted with the tricky task of following through bold commitment to changes without uprooting the entrenched conservative business and political interests.
For example, Pita has pledged to increase the minimum wage and improve the social security system for workers, amidst concerns that such measures will increase pressure on businesses which are prone to shift their production bases elsewhere for lower labour and operational costs.
But Pavinee is confident, citing positive feedback from a recent meeting between Pita and the Federation of Thai Industry, whose members include industry heavyweights.
"The meeting is to seek details about the proposals put forward by a joint committee on commerce, industry, and banking and to elaborate MFP's economic policies," explains Pavinee.
Pavinee also highlights specific sectors that she believes have the potential to turbocharge the Thai economy.
"The Policy of MFP seems to focus on promoting SMEs and perhaps tech companies that can help transform the country's data into assets according to MFP's initiatives," she says. "The companies must keep an eye on changes in laws or regulations related to their business."
HOW CAN LAW FIRMS HELP CLIENTS NAVIGATE POST-ELECTION THAILAND?
With Thailand headed for a new era, law firms are crucial in steering their clients through the shifting political and regulatory landscape. Pavinee says that includes providing clients with updates on legal development and keeping pace with changes in government practices related to their clients' businesses.
"Perhaps, conducting seminars or training for the client's in-house lawyers would help in keeping the client up to date, which may help the client's business to overcome these political uncertainties and economic low visibility," says Pavinee.
There are also risks that Pita may not secure enough votes in the Senate to form a government, and his proposed reforms could be crippled by stakeholders and parties affected by the changes.
To better prepare, "I believe legal updates and training would help the clients to be able prepared to prevent any risk created by political complications," notes Pavinee.
From a macro standpoint, Pavinee is convinced that an MFP-led coalition government can better equip Thailand to compete with regional economies and withstand global volatility.
"If MFP can push all policies into reality, the growth of the Thai economy seems to be significantly improved, and that would increase the competitiveness of Thailand among other countries," she says.
"We need to be prepared for the changes by keeping updated on announcements of regulatory or legislative changes which our firm has been active on," adds Pavinee.