The Political Economy of Industrial Development in Thailand

Home , Corporatization, Suthep Thaugsuban

Shangmao Chen Fo Guang University, Taiwan

Abstract Since the 1990s, governments around the world have emphasized the core concepts of globalization. Many governments initiated a series of political policies regarding liberalization and privatization in response to the inevitable phenomenon. In Southeast Asia, Thailand participated in the development as well by reconstructing its financial system to allow greater foreign capital for investments. Unfortunately, the importance of prudential regulations was underestimated, and the neglect thereafter caused the Asian Financial Crisis which initially occurred in Thailand on the second of June, 1997. The Thai government received 17.2 billion US dollars from the International Monetary Fund (IMF) to stabilize its domestic situation and implemented structural reform to minimize losses from the crisis. Meanwhile, different voices regarding the policies for globalization were expressed. These opinions mainly referred to regionalization/ regionalism and localization/ localism. This study discusses how the Thai state transformed under globalization from three industries: the Telecommunication industry, the Automobile industry, and the Cultural Creative industry. This article observes that Thailand turned to take regionalization and localization into consideration, which in turn demanded the state to increase domestic autonomy and capacity. The findings also suggest that cooperation with other governments in the region to accelerate economic recovery from the crisis was inevitable. However, political instability and close state-business relations continue to make the future of Thailand uncertain.

Keywords: Thailand, Regionalization, Localization, Industrial Development

Aspiration Party) to step down from Introduction office and the succession of Chuan Leekpai (Democrat Party) as leader of the The Asian financial crisis in 1997 not government. Once in office, Chuan only caused severe damages to the Thai carried out globalization and economy, the event also caused Prime liberalization policies and accepted great Minister Chavalit Yongchaiyudh (New assistance from the IMF, World Bank and

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other international organizations, in the argues that after Thailand’s confrontation hope of leading the Thai people out of the with the globalization crisis, the country shadow of financial crisis with speed. turned to emphasize regionalization and However, such unconditional localization. Through economic liberalization policy generated significant cooperation and integration with other repercussions from the Thai people. It countries in the region, and improvement was under such condition that in the state’s institutional autonomy and telecommunication tycoon Thaksin capacity, the Thai government brought Shinawatra grasped the heart of the related industries onto the path of Thailand people and established the Thai economic recovery. However, Thailand’s Rak Thai Party in 1998. political instability in recent years and corrupt state-business relations continue In the 2001 general election, to make the future of Thailand uncertain. Thaksin’s policy appeal to nationalist and populist sentiments enabled him to defeat The structure of this paper is as the Democrat Party and become the follows: section one is the introduction; twenty-third PM of Thailand. Not only section two introduces the changing role did Thaksin implement many populist of the Thai state, including policies after entering office, under the regionalization, localization and state- suggestion of renowned business business relations; section three provides strategist Michael Porter and others, a brief introduction of Thailand’s Thaksin selected five industries as his key automobile, cultural creative and policy focus: tourism, fashion, food, telecommunication industries; section software and automobile (Ketels 2003; four uses the automobile industry to Porter 2003). The fashion, food and explain Thailand’s regionalization software industries are closely related strategy; section five uses the cultural with the cultural creative industry. The creative industry to explain how Thailand cultural creative and automobile responds to globalization through industries thus became important localization; section six explains how windows for Thailand to respond to the Thailand exploits state-business relations globalization crisis through to buffer its telecommunication industry regionalization and localization. and the negative impacts of political instability on related industries; section Based on the examples of the seven is the conclusion. telecommunication, the automobile and the cultural creative industry, this paper Changing Role of the State seeks to analyze the changing role of the Thai state under globalization. This paper

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After the publication of Bringing the state capacity against globalization. It is State Back In in 1989, the state became the easy to see that globalization has caused focus of political and economic research local companies to face severe (Evans, Rueschemeyer & Skocpol, 1985). competition and influenced state capacity At the same time, the wave of in many ways. State capacity is therefore globalization began to emerge and caused the variable that best explains the great impact on the state. The zero-sum differences among industries of different framework of thinking of academics states in a globalized age (Evans 1997). regarding the relationship between globalization and the state began to The Emergence of Regionalization change. The academia began to emphasize the “enabling face of In the Fifth WTO Ministerial Meeting globalization”, which includes: (1) the of the Doha Round held in Cancun in increasing sense of economic insecurity, 2003, as a result of the inability to reach which demands the government to consensus and ensuing deadlock provide social security; (2) increased regarding the issue of agriculture, many competition among states, which states turned to the negotiation of demands the government to provide regional trade agreements (RTAs). more mechanisms for the creation of Regionalism has become a very important industries; (3) intensified competition concept of the international system today among key industries, which demands (Dent 2008, p.6). Regionalism can be the government to respond with new divided into two categories: open policies, strengthen supervision regionalism and closed regionalism. mechanisms and carry out structural reforms (Weiss 2003, pp.15-18). Open regionalism emphasizes the relationship between the state and the In order to break away from the zero- global market and regards regionalization sum framework of thinking regarding as a complementary stage that supports globalization, when analyzing the state participation in the process of phenomenon so called “globalization”, globalization. The regionalizing process we must emphasize the research can be considered as meso-globalization approach of domestic institution. The or a transitional phase before challenges of globalization and economic globalization. In short, regionalization liberalization do not deny the importance should not be seen as contradictory to of domestic institution. Rather, Deyo(1996, globalization (Munakata 2005, p.16). p.136) argues that we must place more Open regionalism can be further divided importance on the regulatory capacity into two branches: neoliberal regionalism and organization structure of domestic and the FDI model. The FDI model institution because they can increase the 65 Journal of ASEAN Studies

emphasizes the importance of foreign In Thailand, the debate between direct investment for regionalization. globalization and localization has existed for a long time, especially after the Asian Closed regionalism focuses on the financial crisis (Hamilton-Hart 1999). relationship between the state and society After the Asian financial crisis, Chuan and places importance on distributional accepted the suggestions of IMF and or social justice and other non-economic carried out privatization, liberalization values. This category of regionalism and other reforms. However, these considers the regionalizing process as an reforms did not realize without negative oppositional force against globalization. consequences. Many of Thailand’s Legitimacy is an important basis for important companies fell into foreign decision makers when accessing ownership, which generated great regionalism. Closed regionalism is also discontent among the Thai population. divided into two branches: developmental regionalism and the In the birthday speech in 1997, the resistance model. Developmental King pointed out the importance of the regionalism places emphasis on the sufficiency economy based on the importance of domestic capital individual, the family and the state. He (Nesadurai 2003a, 2003b). pointed out that by carrying out sufficiency, not only can the country Under the influence of globalization, reduce the influences of both the domestic transnational corporations grew on a and international market, Thailand could massive scale and entered into also decide on whether to connect with developing economies. Southeast Asia the world or not, and not be forced into became the main target of transnational the international market and free trade by corporations. In order to counter the globalization (Hamilton-Hart 1999, 2000; negative impacts of globalization, East Hewison 2000). The call for sufficiency Asian countries adopted regional garnered great support in less developed cooperation (Munakata 2005, p.38). rural areas in Thailand’s northern and Thailand adopted the response of closed northeastern regions. As a result, Chuan regionalism but does not shut out was forced to step down from office in globalization completely. Developmental 2001 and hand over power to the Chiang regionalism best explains the condition of Mai born Thaksin. Thailand. Keeping in mind the discontent IMF reform policies have generated in the past, The Response of Localization Thaksin shifted the tone of his economic policy from market liberalization and

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globalization to an emphasis on State-Business Relations in the Thaksin Era localization (Hewison 2000), a policy later known as “Thakinomics.” Thaksin’s main Thaksin, born on July 26, 1949 in argument was dual-track: the first track Chiang Mai, is a fourth generation emphasizes the influence of FDI on Chinese immigrant. The second and third Thailand’s economic development; the generation ancestors of the Thaksin second track emphasizes the importance family engaged in the textile industry in of the domestic market. Such local based the Chiang Mai area as early as 1932, policy thinking effectively improved the hence it is little wonder that Thaksin capacity and autonomy of the Thai inherited the business acumen of his government while the economy quickly family. After receiving his doctorate in recovered. Populist localization became criminal justice at Sam Houston State an effective weapon against globalization. University in Texas in 1979, Thaksin returned to Thailand and became a police The example of Thailand suggests officer. Thaksin started a small computer that the Thai government and the state’s dealership and used his father-in-law’s role were indeed affected by the connections in the Thai police force to negative impacts of globalization, which expand his business effectively in the indirectly led to the eventual outburst of early eighties. After achieving business the 1997 financial crisis. Yet after the success through connections in the police crisis, the government and the role of the force, Thaksin gained a deep state began to undergo change. The Thai understanding of the importance of state- government adopted a more active business relations. response towards globalization. By guiding the development of the On July 14, 1998, Thaksin established automobile and cultural creative the Thai Rak Thai Party. It was the first industries and integrating the forces of time in Thailand’s political history that regionalization and localization, the Thai such an influential corporate figure enters government successfully overcame the into politics. Thaksin entered the 2001 challenges of globalization. general election and announced his ambition to rule the country -- Thailand Besides the response of officially entered the Thaksin era. regionalization and localization, Thaksin Thaksin’s victory in the election not only also exploited traditional state-business symbolized the re-emergence of business relations to support specific industries interests, the new leader’s business and facilitate Thailand’s economic background and his corporate relations recovery. also changed the essence of state-business relations completely, moving Thailand from money politics in the period of 67 Journal of ASEAN Studies

democratization to “big money politics” The increase in automobile import caused (Baker 2005, p.130). Thailand’s new acute trade deficit. The Thai government leader was able to maintain close relations was forced to change its policy and adopt with both international and domestic a more rigid stance against foreign capital. Thaksin’s rule reflects the investment. In 1972, Thailand passed importance of the network between the related laws to limit the influence of state and business. However, close state- foreign capital on the Thai economy business relations generated popular (Kesavatana 1989, p.107-112). discontent and repulse in the end and sparked Thailand’s first military coup 1. Protectionism Period (1971-1991) since 1992. In 1971, the Thai government established the Automobile Industry The Political Economy of Industries in Development Committee (AIDC) under Thailand the Ministry of Industry, in the hope of facilitating the growth of the automobile The Automobile Industry industry through state assistance. Accordingly, the Thai government Import Substitution Period (1961-1971) announced a series of policies geared towards the automobile industry. By 1975, Before the 1960s, Thailand imported all assembled parts should reach 25% of all its automobiles (Niyomsilpa 2008). In local content ratio, which means that at order to develop its own automobile least 25% of all parts used should be industry, the Thai government passed the made in Thailand. In 1978, the Thai Industrial Promotion Act in 1960 (Doner government further adopted a more 1987, p.415). The IPA provided incentive protectionist policy. However, for investment and in the same year the protectionism increased production cost IPA was introduced, several automobile and decreased the quality of the assembly plants obtained licenses. In 1961, automobile in Thailand. The high price of the first automobile assembly plant in automobile greatly affected the sale of Thailand, Anglo Thai Motor, was vehicles in Thailand and even drove away officially established. In the first year of foreign corporations such as GM Holden implementation of the IPA, 310 passenger and Chrysler/Dodge from the country cars and 215 trucks assembled (Lim & Fong 1991, p.153-154), planting (Poapongsakorn & Techakanont 2008, the seed for the next round of reforms. p.203; Terdudomtham 1997, p.3). However, Thailand’s import substitution Liberalization Period (1991-1997) policy in this period was unsuccessful.

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After the military coup in February Thailand’s automobile market shrunk 1991, Anand Panyarachun succeeded as 40% while car sales plummeted from Thailand’s eighteenth Prime Minister. The 561,523 in 1996 to 349,033 in 1997. By 1998, new administration decided to liberalize the sale figure for automobiles reached Thailand’s automobile industry in order only 140,402, achieving only 1/4 of the to lower the domestic sale price of the sale figure in 1996. In order to resuscitate automobile and increase the sector’s the dying automobile industry, the Thai competitiveness in the world (Higashi government undertook a series of 1995). The first step the Anand liberalization policies. The government administration undertook was to lift the reinforced cooperation between the state import ban on Complete-Built-Unit (CBU) and the private sector to promote the in April 1991 and lower both the tariffs development of the automobile industry for CBU and Complete-Knock-Down and improve its global competitiveness (CKD) in July of the same year. In this (Thailand Automobile Institute 2006). The period, Thailand’s industrial policy in automobile industry began to show signs terms of the automobile basically of life again thanks to appropriate state corresponds to the development of policies and Thailand’s activeness in globalization. The automobile industry entering economic cooperation in East began to be internationalized in this Asia. period. However, Thailand’s policy autonomy was relatively low and The Cultural Creative Industry measures and policies corresponding to the new development remained Bangkok Fashion City (BFC) insufficient. In addition, the Thailand Under the planning off the Ministry government relaxed the threshold on of Industry, the BFC integrated the six foreign shareholding in the same period, biggest private corporations in Thailand which caused most of the country’s and seeks to transform Bangkok into a automobile plants to fall into foreign regional hub for fashion by 2007 and an ownership, particularly Japanese international hub for fashion by 2012, ownership, at the end of the 1990s through the joint corporation of the state (Fuangkajonsak 2006). The policy change and private sector. BFC can be regarded greatly affected Thailand’s national as a very important cultural creative interest and generated serious problems industrial policy that is quite successful in in 1997. the Thaksin governmant. With the Post-crisis Period (1997- present) promotion of fashion in Bangkok, Thailand’s design industry exceeded 300 The Asian financial crisis had a major billion baht in export while fashion textile impact on Thailand’s automobile industry. export exceeded 130 billion baht, grossing 69 Journal of ASEAN Studies

20% growth per annum. The entire plan in other regions of the country, spreading was to be carried out from 2003 to 2007. the concept of creativity across Thailand. However, with Thaksin’s resignation on September 19, 2006 following a military One Tambon, One Product (OTOP) coup, the BFC proposal came to an end, as the succeeding military government The idea of OTOP came from the did not put forth its support. Japanese concept of “one village one product” (OVOP), an idea proposed by Thailand Creative and Design Center Oita Governor Hiramatsu Marihiko in (TCDC) 1979. Thailand’s OTOP concept originated from Thaksin’s plan to Thaksin once expressed that stimulate rural and urban economy in “creativity can create job opportunities 2001. The Thai government allocated one and increase income; although creativity million baht to 45,000 tambons across the and economics seem like two different country, in hopes of helping them things, we can combine the two develop products of local characteristic concepts.” Under the thinking of and move away from poverty. When the “creative economics,” the Thai OTOP project began in 2001, the project government established the TCDC on grossed only 215 million baht in sales September 2, 2003 and the center went income. By 2003, OTOP sales reached 33 into work on November 14, 2005. Beside billion baht, with the figure rising to 46 the goal of providing professionals with billion baht in 2004 and 50 billion baht in the latest information in the industry, 2005. Small and medium enterprises TCDC aimed to provide average citizens (SMEs) that participated in OTOP reached with creativity and design related 35,179, evidence of the project’s success. knowledge. Accordingly, TCDC was Unfortunately, like the BFC, the OTOP established on the six floor of the project terminated after Thaksin’s Emporium shopping center in the heart of resignation, as it also failed to garner the Bangkok (TCDC 2009). Even though the support of the succeeding government. TCDC was established with government support, the fact does not diminish its The Telecommunication Industry effect of closing the gap between the design industry and average citizens, Thailand’s rapid economic bringing the concept of design into the development since the 1980s caused a heart of the Thai people. Based on its corresponding growth in demand for success, the TCDC stepped out of telecommunication facilities in the Bangkok and established “Mini TCDCs” country. As Thailand’s two state corporations, the Telephone Organization 69

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of Thailand (TOT) and the Telecommunication Reform Phase II Communication Authority of Thailand (1997- present) (CAT), could not satisfy increasing demand, the telecommunication industry After liberalization of the began to face difficulties in the late 1980s. telecommunication industry, the TOT and The Thai government was forced to CAT played both the role of player and consider serious reform in the referee. At a time when the establishment telecommunication industry. In this of the National Telecommunication context, the government sought the help Commission (NTC) was under planning, of the private sector to provide better privatization of the TOT and CAT became telecommunication service and combined the main issue of concern in the second such help with the country’s second wave phase of reform. Thaksin’s original plan of privatization in 1984. Since the late was to have both TOT and CAT eighties, Thailand initiated the first phase corporatize first before merging and of telecommunication reforms and undergoing privatization (Pathmanand opened up the sector to private and Baker 2008). According to the participation through the scheme of Telecommunications Master plan passed Build-Transfer-Operate (BTO). in 1997, privatization of TOT and CAT should be completed before October 2000. Telecommunication Reform Phase I (late However, the privatization process was 1980s - 1997) severely delayed and only the first step of TOT and CAT corporatization was Thailand’s rapid economic growth completed before Thaksin was thrown since the 1980s greatly boosted the out of office. The succeeding government demand for telecommunication service in became busy attending to political the country. As a result, Chaticahi instability and did not prioritize the Choonhaven undertook the task of sector privatization of TOT and CAT. It is reform once he entered office. Under the expected that TOT and CAT privatization support of TOT and CAT, the Chaticahi still have a long way to go. administration issued more than 22 telecommunication licenses, including The Response of Regionalization four special concessions for fixed-line telephone and mobile phone. However, The Role of East Asian Countries the process of issuing licenses and concessions was hampered by huge After the 1985 Plaza Accord, the controversies (McCargo and Pathmanand Japanese yen appreciated sharply, rising 2005, p.27). from 236 yen per dollar to 125 yen per dollar. The sharp rise of the yen caused 71 Journal of ASEAN Studies

Japanese manufacturers to move out of resource development. As the above the country in search of new investment discussion suggests, it is clear that the grounds. Thailand became the top choice JETPA will improve the trade relationship for foreign investment by Japan’s between Japan and Thailand, especially automobile companies. With time, the the real interest of the automobile phenomenon of Japanese growing industry in both countries. dominance over the automobile industry in Thailand became apparent (Busser Regional Economic Integration 2008). On the other hand, Thai government support for the automobile Tariff reduction under regional industry was another important reason economic integration provides major for Japanese investment in the country benefits for the economic development of (Takayasu and Mori 2004). In 2004, Japan Thailand. By 2003, Thailand’s average became the top importer and second tariff rate had fallen to 4.64% (Puntasen, largest exporter of Thailand while Lewnanonchai, & Rattanawarinchai 2008). Thailand was Japan’s tenth biggest The development of Thailand’s importer and sixth biggest exporter automobile industry is significantly (MOEA 2006). related to free trade agreements with countries such as Japan, China, South As the development of globalization Korea, Australia, New Zealand and India. stagnated, many countries in the Asia- At the same time, other Southeast Asian Pacific began to move towards countries served as big export markets for regionalization and the pursuit of free Thai automobile. The export of trade agreements (FTAs). Thailand and automobile related products in Thailand Japan have long maintained a close has always remained as the country’s economic relationship. The Japan- second largest exported good. In 2009, Thailand Economic Partnership automobile exports reached 11.1 billion Agreement (JTEPA) signed in 2005 clearly USD, accounting for 7.29% of total export. pointed out that Japan would support In 2010, as a result of Thailand’s economic Thailand as the “Detroit of Asia” through recovery, automobile exports increased to joint cooperation in the automobile 17.7 billion USD, accounting for 9.07% of industry. Furthermore, the JETPA also total export. mentions the plan for joint establishment of the Automotive Human Resources On the other hand, besides the Development Institute (AHRDI), a mentioning of bilateral cooperation in the concept that aims to improve the automobile industry in the JETPA, tariff international competitiveness of the Thai reduction of automobile related goods is automobile industry through human also contained in free trade agreements 71

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between Thailand and Australia, India, of Science and Technology (MOST) and and New Zealand. Beginning from the Ministry of Education (MOE). Besides January 2005, Australia reduced or official ministries and departments, the eliminated tariffs on passenger and Prime Minister’s policy direction has commercial vehicles, as well as trucks. important influence on the cultural Tariff on related vehicle parts was creative industry as well. reduced from 42% to 20% and completely eliminated by January 2010. In short, FTA Second, in terms of the production, between Thailand and Australia the process can be further divided into generated a complementary, rather than a four sections: zero-sum, relationship (Chaksirinont 2005, p.40-44). In September 2006, India agreed(1) Finance: Financial assistance to businesses to reduce tariff on Thai automobile parts and individuals is jointly undertaken by as well. Finally, beginning January 2010 the Ministry of Finance (MOF), the Board as well, New Zealand reduced or of Investment (BOI) and the Office of removed tariffs on passenger and Small and Medium Enterprises commercial vehicles, trucks and related Promotion (OSMEP). vehicle parts produced in Thailand(2) Knowledge and technology: Research and (Office of Industrial Economics 2006, development of the cultural creative p.19). The automobile industry can be industry is undertaken by the National regarded as the biggest benefactor of Science and Technology Development regional integration. Agency (NSTDA), the Thailand Research Fund (TRF) and the Software Industry Promotion Agency (SIPA), as well as The Response of Localization other research institutes and universities. These agencies seek to increase the The Role of Government production and added valued of cultural creative products. Effective development of the cultural (3) Quality management and standard creative industry demands various control: The quality and standard of government policy and institutional cultural creative production is monitored support, which can be discussed on three by the Food and Drug Administration levels: policy, production, and marketing. (FDA), the International Organization for First, in terms of policy, Thailand’s Standardization (ISO) and the Tourism cultural creative policies are largely Authority of Thailand (TAT). defined by the National Economic and(4) Human resource: The training and Social Development Board (NESDB), the development of artisans and cultural Ministry of Culture (MOC), the Ministry creative talent is performed by the Community Development Department 73 Journal of ASEAN Studies

(CDD), the Department of Intellectual the “Creative Economy Year” of Thailand, Property (DIP) and universities and an action that demonstrates the colleges in the country. incumbent government’s commitment towards the promotion of Thai culture. Finally, in terms of marketing, the Ministry of Foreign Affairs (MOFA), the At the inaugural NCEPC meeting on Department of Export Promotion (DEP), October 7, 2009, Abhisit expressed his the Department of Business Development aspiration for Thailand to become the hub (DBD) and the Thai Tribal Crafts for creative economics in Southeast Asia. Organization are responsible for the In addition, he also expressed his worldwide promotion of Thai cultural ambition for a major increase from twelve creative products and services. to twenty percent in creative economy as a proportion of GDP. In order to The above description suggests that accomplish the above goals, the Thai in terms of the cultural creative industry, government integrated creative economic the main role of the Thai government is to policies into its national economic carry out policies that aim at recovery programs, the Thai Khem development of the industry Khaeng and the Tenth National Economic (Termpittayapaisith 2007). and Social Development Plan (NESDP) (Inside Thailand 2009). Abhisit also The Importance of Economic pushed for inclusion of the concept of Development creative economy into the Eleventh NESDP (2012-2016), in hopes of After the succession of Abhisit Vejjaji establishing a cultural creative economy as PM in 2008, Thailand pushed forward in Thailand and greatly boosting the various projects aimed at promotion of significance of the cultural creative the cultural creative industry. August 31, industry as a driving force of GDP by 2009 marked the official takeoff of the 2012. “Creative Thailand” project. On September 10, Thailand established the The Tenth NESDP is hinged on the National Creative Economy Policy guiding principle of sufficiency. Under Committee (NCEPC) with PM Abhisit the principle, the NEDSP aims to achieve leading the committee and advisor to the three main goals: people centered PM office, Apirak Kosayothin, serving as development model; a balance between consultant to the committee. Building on economic, social and environmental the tide of actions towards development capital; and the establishment of a happy of the cultural creative industry, the Thai and green society. In order to meet the government announced that 2010 will be above goals, the Thai government hopes

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to increase the influence of its knowledge Abhisit Vejjajiva, Yingluck Shinawatra, based economy through the re- and Prayuth Chan-o-cha. Many serious organization of different sectors. The conflicts broke out during this period of agricultural, manufacturing and service frequent successions. In November 2007, sectors now all emphasize the concept of the so called “Yellow Shirts” occupied creativity. Suvarnabhumi and Don Muang airport and was determined to force Somchai out of office. In April 2009, the “Red Shirts” Political Instability and State-Business blocked the ASEAN Summit Meeting in Relations Pattaya. On March 12, 2010, the Red The Impact of Political Instability Shirts launched a million people march on the streets of Bangkok and occupied Thaksin’s leadership style and the Ratchaprasong area for more than two personal business relations gave rise to months. The Thai security forces strong popular discontent in the country. responded with two massive crackdowns Thailand fell into political instability since on April 10 and May 16-19, causing the the second half of 2005. After more than a more than 90 deaths and 1,800 casualties. year of political distress, on September 19, 2006, the Thai military staged the first In 2011, PM Abhist decided to military coup in the country since 1992 dissolve the parliament and hold an and dismissed Thaksin (Montesano 2007). election. The Puea Thai Party led by Supporters of Thaksin formed the United Thaksin’s younger sister Yingluck Front of Democracy against Dictatorship triumphed in the election and Yingluck (UDD) and expressed their discontent succeeded as the PM of Thailand. After against the military government. The two years in office, in 2013, Yingluck UDD and the People’s Alliance for proposed an amnesty bill. The bill was Democracy (PAD), led by Sondi opposed by former Deputy Prime Limthongkul, subsequently initiated Minister Suthep Thaugsuban, who would massive protests against the government. establish the People’s Democratic Reform It is clear that the military coup did not Committee (PDRC) and generate solve the political distress of Thailand, instability by initiating large scale but rather deepened the country’s demonstrations on the streets of Bangkok. political division. In the end, on May 22, 2014, the Thai military once again staged a coup and Since 2005, seven candidates took over executive and legislative succeeded as Prime Minister of Thailand: powers of the state. The military expects Thaksin Shinawatra, Surayud Chulanont, to initiate one to two years of reform Samak Sundaravej, Somchai Wongsawat, before carrying out popular elections and returning the state to the Thai people. 75 Journal of ASEAN Studies

Frequent overturn of the Thai regime In an interview in 1997, Jasmine has an impact on the sustainable Group founder Adisai Bodharamik development of the cultural creative pointed out that in Thailand, business industry. Although Thaksin’s BFC project depends on connections (Pananond 1999). was not without controversies, the project On the other hand, UCOM president contributed to the development of Boonchai Benjarongkul also expressed Thailand’s cultural creative industry. that connections is always the most Thaksin’s exit from office and the military important factor (Niyomsilpa 2000, p.76). government’s succession ended the Thailand’s main telecommunication project and caused developments in the groups also hold similar view and try fashion industry to grind to a sudden halt. hard to maintain various connections Similarly, the OTOP project achieved including state agencies, political figures some appealing results but was forced to and the military. change its name after the end of Thaksin’s office, which generated a succession In the past, nearly all of the problem of Thailand’s cultural creative management level personnel in policy. Thailand’s state enterprises consisted of political patronage or reward. Moreover, Furthermore, political distress in as a result of the instability of Thai 2009 also had a severe impact on politics, the government’s short terms Thailand’s movie industry. In 2008, as caused constant changes on the many as 526 foreign film production management level in state enterprises, teams worked in Thailand and generated which further affected corporate an estimated income of 2 billion baht. performance significantly. In short, However, in 2009, as a result of political excessive political intervention exists in chaos in Thailand, despite the slight drop Thailand’s telecommunication industry, in foreign teams working in Thailand to which severely hampers sector reform 496, the income declined significantly to (Thailand Development Research 0.8 billion baht, which severely crippled Institute 2002). the development of the Thai movie industry (Thailand Investment Review After Thaksin’s entry into office, 2010). The movie industry is a good Thailand’s telecommunication industry example of the impact of politics on the underwent change and key figures from cultural creative industry in Thailand. major conglomerates joined the Thaksin administration, including the chairman of The Impact of State-Business Relations CP Group, Dhanin Chearavanont, who served as advisor to the Ministry of Finance, and Jasmine Group founder,

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Adisai Bodharamik, who served as the state priority. At the same time, first Minister of Commerce (Kritsophon discussions of regionalization and 2002, p.47). localization appeared, and Thailand hoped to respond to globalization On the other hand, the Thai through the dual strategies of government formed a special task force regionalization and localization. that aimed to realize the country’s Although Thailand’s dual strategies promise to liberalize the succeeded in helping the automobile and telecommunication industry under the cultural creative industries respond to the WTO. The task force introduced a challenges of globalization, political proposal that sought to balance instability beginning in the second half of competition in the telecommunication 2005 and Thaksin’s personal connections industry. The proposal was strongly damaged part of the cultural creative opposed by an incumbent member of industry and caused reforms in the parliament, who is also a close friend of telecommunication industry to fail Thaksin, and failed to come to light. It is completely. However, the most important generally believed that opposition was to factors in the future are Thaksin and the ensure the dominant advantage of current political situation. Thaksin played Advanced Info Service (AIS) at the time. an important role not only in the telecommunication industry, but also all It is clear that Thaksin exploited his the industries in Thailand. If Thaksin connections in both the state and business return to Thailand will definitely affect communities to extract personal interests. the development of various industries. Thaksin played an important role before Meanwhile, The attitude of military and after sector reforms, whether in the government toward industrial license granting period, after the financial development also determines the future crisis or during his office. However, it is of Thai political economy. undeniable that state-business collaboration curtailed the national strategy to use the telecommunication About Author industry for economic recovery. Shangmao CHEN is an associate professor at Department of Public Affairs, Conclusion Fo Guang University, Taiwan. His research interests include Thai politics, Since suffering from the Asian Thai industrial development, and East financial crisis in 1997, successive Asian economic integration. He can be governments in Thailand all deemed reached at [email protected] economic development and recovery as a 77 Journal of ASEAN Studies

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