Financial markets begin to strike a sour note as political squabbling threatens the prospect of a smooth transition to a new government next month with a rift opened between Move Forward and Pheu Thai parties over the House Speaker position and dogged opposition from conservatives to the election of Mr Pita Limjaroenrat as Prime Minister on July 13th next.
The Thai baht fell to a seven month low against the US dollar on Wednesday as a rift began to appear within the proposed eight-party coalition between the Move Forward Party and the Pheu Thai Party while political forces hostile to the elevation of 43-year-old Pita Limjaroenrat appeared to quicken in recent days with calls for the prospective prime minister to face scrutiny by the Constitutional Court ahead of an expected vote to elect a new government leader due to come before a joint session of parliament on July 13th next.
On Wednesday, the Move Forward Party announced that it would meet with the Pheu Thai Party on July 2nd next, the day before parliament opens to address the key issue of who should be the next House Speaker.
The House of Representatives is expected to meet on July 4th after parliament is opened by His Majesty King Maha Vajiralongkorn on July 3rd to elect an MP to the role.
Pheu Thai Party raised the stakes on Wednesday by publicly demanding that the party’s nominee for House Speaker be supported by the proposed coalition
Earlier on Wednesday, the Pheu Thai Party issued a public demand for the position to be filled by its nominee for the role with a tentative understanding being reached between the two principal parties to what is expected to be an eight-party coalition with each of the two major parties having 14 ministers in the next cabinet with the Move Forward Party nominee for Prime Minister expected to be elected as Thailand’s 30th Prime Minister at a meeting scheduled for July 13th next with a cabinet expected to be appointed on July 21st.
The Move Forward Party has insisted the House Speaker position be filled by its nominee saying it is essential to pursuing the busy legislative programme it proposes.
Pheu Thai had been expecting to meet with the Move Forward Party leadership on Thursday but during the day this meeting was cancelled indefinitely by the latter.
There is growing unease about the lack of resolution to this key issue which had confidently been expected to be resolved some weeks ago.
Two days of talks required to iron out differences between the two parties says Pheu Thai but time is running out with the new parliament due to sit
Sources within the Pheu Thai Party on Wednesday suggested that it will take two days of talks to iron out the key differences between the parties on the House Speaker issue and the allocation of cabinet portfolios.
Time however is running short with parliament due to sit next week.
It comes as uncertainty remains over the ability of the Move Forward Party leader Mr Pita Limjaroenrat to win the vote in a combined sitting of the House and Senate on July 13th with 376 members of the 750-member joint legislature required to vote him into office.
Strident opposition remains to his candidacy among ultra-conservatives in Thailand and members of the junta-appointed upper house despite reports that Move Forward representatives have held productive discussions with many senators regarding the proposed government’s programme and a commitment in the Memorandum of Understanding between the eight parties to the next ministry to uphold the status of the monarchy.
Mounting scrutiny of Pita Limjaroenrat in quest to become Thailand’s 30th and youngest PM since 1945
Mr Pita is already facing an Election Commission probe into his shares in defunct media firm iTV which could refer a criminal prosecution against him under Section 151 of the Electoral Act to be decided by the Constitutional Court although respected legal experts consider it unlikely such a charge will result in a conviction.
He is also facing calls to answer questions relating to a land sale for ฿6.5 million concerning a Prachuap Khiri Khan 14 rai land plot that was listed by him as an asset in a 2019 declaration to the National Anti-Corruption Commission (NACC) as valued at ฿18 million.
His arch-critic and multiple petitioner against his appointment as prime minister, political activist and former Palang Pracharat Party list candidate Ruangkrai Leekitwattana, is demanding yet another probe.
Meanwhile, his candidacy is being examined by members of the upper house with Senator Somchai Sawangkwang, the Chairman of the Committee on Human Rights, Freedoms and Consumer Protection on Tuesday calling for the Election Commission to put the share issue before the Constitutional Court to test Mr Pita’s eligibility for the role.
Opposition remains at the heart of Thailand’s upper house or senate despite ongoing talks reported as constructive between Move Forward and its members
‘We must consider things that may become an issue of concern in the interests of national security. We must ensure the appointment of the next prime minister does not lead to instability problems. For some policies of the party (Move Forward), they are thought to be risky, so I asked them to remove them for the benefit of the country,’ the senator told the press.
It is not clear which policies the senator was referring to but there is widespread opposition in the senate to any move or even a willingness to reform Article 112 of the Criminal Code dealing with lèse-majesté which is, significantly, not part of the proposed government programme.
It could be the new minimum daily wage of ฿450 a day or the party’s plan to create a welfare state in Thailand to combat inequality although some members of the upper house are understood to support these moves.
Way cleared for Pita’s election as PM but seeds sown for political conflict with criminal probe under poll law
Senator Somchai was joined on Tuesday by Senator Seri Suwanpanon, the Chairman of the Political Development and People’s Participation Committee who proposed that senators make a submission under Section 82 of the Constitution through the President of the Senate to test Mr Pita’s eligibility and suitability for the role of Prime Minister over the media share issue.
Struggle facing the election winner is generating international media coverage with Thailand’s reputation as a democratic country facing scrutiny
Senator Seri is also calling for the Election Commission to quickly conclude its probe and act under Sections 42(3) and 151 of the 2018 Organic Act on the Election of Members of the House of Representatives where a criminal case can be taken over the shares based on an interpretation that Mr Pita knowingly misled election officials which is categorically denied by him on the basis that any possible ownership of the shares held as part of his late father’s estate has been legally disavowed by him, were held as part of his duties as legal executor of the will and that this situation was notified to all relevant agencies in 2019.
Meanwhile, the growing unease and political minefield now facing the 43-year-old Mr Pita in his quest to become Thailand’s youngest Prime Minister since 1945 is threatening to impact the kingdom’s economy.
International media networks, this week, began covering the hurdles facing the young leader who won the May 14th General Election.
This puts Thailand’s commitment to democratic values and principles under a microscope with implications for future inward investment and trade with the kingdom.
Baht hits a seven-month low against the dollar due to the threat of political instability and robustly positive economic data in the United States
The Thai baht on Wednesday fell to ฿35.62 against the US dollar not only on the threat of political instability but also robust economic data from the United States where the economy, in defiance of expert opinion, appears to be powering ahead despite elevated interest rates and a renewed resolve by the Federal Reserve to raise them again perhaps as many as two times by the end of 2023.
It represented the lowest level of the currency in seven months since November 2022.
All regional currencies have fallen against the US dollar in the wake of this as well as the poorer performance of the Chinese economy and the setback to Russia’s war effort in Ukraine due to last week’s mutiny in the country led by the Wagner Group and maverick military leader Yevgeny Prigozhin.
Markets turning sour on the election aftermath
The markets are beginning to sour on the prospect of a smooth democratic transition as hurdles facing the Move Forward Party leader multiply leaving him facing a daunting challenge with the unity of the proposed coalition government now being put in question after today’s developments.
‘It is unlikely that the Move Forward coalition has the necessary votes to go ahead to form a new government,’ declared Alvin Tan, the head of Asia FX strategy at RBC Capital Markets, a banking and investment advisory services company with offices worldwide including in Singapore and Hong Kong, on Wednesday. ‘All major data in the US definitely raises bets that there is a possibility of the US Fed hiking interest rates again in July and that they will not be cutting the interest rates quickly this year also.’