Red and yellow activity stokes investor fear

via CAAI

Renewed protests dent foreign appeal

Published: 20/01/2011

Foreign chamber executives say escalating activity by red-shirt protesters and tensions over the Thai-Cambodian border stoked by yellow-shirt sympathisers are renewing foreign investors' fears regarding making commitments in this country.

The Australian-Thai Chamber of Commerce (AustCham Thailand) said recent negative incidents could prevent Thailand from cashing in on expected further investment from Australia following the current review of the Thailand-Australia Free Trade Agreement (Tafta), especially if the service sector can be opened up.

Despite greater optimism about political stability these past six months, Australian companies remain very cautious about Thailand, said Andrew Durieux, the president of AustCham.

"[Anti-government] protesters have started to come back, the Thai-Cambodian issues are getting bigger, and we all know that the election is coming up. These make [Australian firms] feel a little bit nervous and start to worry about the future," he said.

Threats by the Thai Patriots Network to close the border with Cambodia along with similar pronouncements from the Cambodian side have shaken investor confidence and raised new fears about doing business in Thailand, said Mr Durieux.

"We've learned from past experience that these protests can escalate, and things are going to get worse. This is not a good environment for business," he said, recalling the red shirts camping out at the Ratchaprasong intersection last year and the People's Alliance for Democracy shutting down Suvarnabhumi airport in late 2008.

To date, no Australian company that was affected by the United Front for Democracy against Dictatorship's rallies at Ratchaprasong has received any compensation from the government for the 40 days of disrupted business operations, nor have those affected by the airport closure, said Mr Durieux.

Junichi Mizonoue, president of the Japanese Chamber of Commerce (JCC), said the Thai and Cambodian governments should hold talks to find mutually constructive solutions.

The border disagreements with Cambodia are coincident with the red-shirt protests and should be resolved shortly, he said.

"The JCC is more concerned about Thai politics," said Mr Mizonoue.

Protesters should try to avoid disrupting normal business and scaring shoppers or diners as in the past, he added.

Meanwhile, Australia and Thailand are reviewing the bilateral Tafta that took effect six years ago. The review is expected to be finished in another two months.

Mr Durieux said AustCham had provided some input, recommending further tariff reductions and an opening up of the service industry.

Foods, especially dairy products, medical equipment, coal and gas should enjoy deeper tariff cuts, possibly even eliminated for some items, he said.

For the service sector, regulations should be loosened to allow Australian firms a greater presence.

Given the competitive labour costs, investment incentives offered and geographical advantages, more Australian companies are keen to invest in Thailand, but some are put off by Thailand's long-standing domestic issues, especially politics, said Mr Durieux.