Rulings May Ease Troubles And Bring The Thai Economy Back?

Interesting reporting from the Asia Property Report on the recent Thailand crisis...

Thailand’s real estate and business players are optimistic that Wednesday’s rulings by the country’s Constitutional Tribunal will bring some much needed stability to the economy.

In a converse ruling that took nearly 12 hours to read, the Constitutional Tribunal, comprised of nine senior judges from the Supreme Court and the Supreme Administrative Court, cleared the country’s oldest political party - the Democrats - of election law violations charges. The former ruling Thai Rak Thai party (TRT), founded by ousted Prime Minister Thaksin Shinawatra and having 14 million members, wasn’t so lucky, and was found guilty of breaking election laws and ordered to be disbanded.

Business players were pleased there was no outright violence after the rulings, believing it will increase confidence among consumers and investors.

Robert Collins, managing director of Savills Thailand, says he’s already seen signs of the positive sentiment this decision has made on the market.

“The day following the ruling we were on site in Phuket with a HK based buyer who was very pleased with the decision as political stability is now seen closer to hand,” said Collins. "This is another step to hopefully realising a positive outcome at the next election. We are confident that the strong economic underpinnings of the Thai economy will become apparent soon and that the real estate market will continue on the recovery that we have experienced during the last few months.”

Teerachon Manomaiphibul, assistant managing director of Property Perfect, was quoted in the Thai media as saying he hoped that investment would return to Thailand in the second half if the election schedule was kept.

"Then the property market should recover next year after we know who will form the government and what are their economic policies," he said.

It’s been a rough few months in the Thai real estate industry, with many foriegn buyers taking a “wait and see” stance over fears of the political situation and economic moves by the military junta that were perceived as protectionist and “anti-foreigner.”

The Finance Ministry earlier this week downgraded its economic growth forecast for 2007 to 3.8-4.3% from 4.0-4.5% as consumer spending and business investment have fallen off due to the political uncertainties that have snowballed since last September’s coup.

Santi Vilassakdanont, chairman of the Federation of Thai Industries (FTI), told Thai press that business and investor confidence would now pick up following the court rulings.

"It’s a good sign that there was no rallies or chaos after the ruling. It shows that politics and the economy should be back on the right track soon," he said.

The court ruled Wednesday that the Democrat Party did not malign ousted Premier Thaksin Shinawatra nor urge voters to cast a "no" vote in last year´s election. It also found the party not-guilty of using a smaller party to trick the Thai Rak Thai in election law violations, and ruled it had not obstructed a parliament candidate from registering in a southern constituency.

"There are no legal grounds to disband" the Democrat Party, a judge read.

But the Tribunal´s verdict said that the TRT has committed misconducts which broke election laws and undermined national stability and democratic standards, warranting its dissolution. The Tribunal also revoked the voting rights of the party´s some 110 executives for five years. The revocation involve former party executives, including Thaksin Shinwatra, who has been out of the country since the September coup.

Although the verdict has left supporters of the TRT calling foul, analysts say it could help restore political stability ahead of December elections, and give the economy a much-needed boost. But people are closely monitoring the political situation in case the dissolution of the TRT unleashes more political chaos, which could disrupt the charter-drafting process and general election.

On Thursday, more than 1,000 supporters of Thaksin protested the court ruling that banned his party and barred its entire leadership from politics for five years, saying the military-appointed tribunal lacked legitimacy.

In the wake of the ruling, Thaksin sent a handwritten letter to his party and supporters, urging them to continue their political activities for the benefit of the country.

"As a founder and ex-leader of the party until the coup, I would like to apologise to members and all supporters for this unexpected turn of events," he said, criticising the expulsion of party executives as out of all proportion to the accusations against them.

The letter was read out by Thaksin’s lawyer, Noppadol Pattama, at a press conference in Bangkok.