The enduring influence of Prem Tinsulanonda

The enduring influence of Prem Tinsulanonda

Former head of Privy Council Prem Tinsulanonda is returning to political power in Thailand, which bodes well for the country’s political and economic success.

The death of Thailand’s King Bhumibol Adulyadej on 13 October 2016 was met by an outpouring of grief amongst Thai nationals. Following the king’s death, the Crown Prince Maha Vajiralongkorn requested a delay in taking the crown in order to allow him and the nation time to mourn his father’s passing. King Bhumibol was famous for his stabilising influence over a country with a turbulent history of coups. There were fears that the ensuing uncertainty over royal succession might heighten the potential for domestic turmoil.

A prominent political figure back in the spotlight

In this interim period, the head of the king’s advisory council, Prem Tinsulanonda, automatically became king regent. The 96-year old former Prime Minister and king confidant is widely regarded as an influential and experienced political figure. A former high-ranking army commander, Prem became Prime Minister in 1980. Governing Thailand for eight years, he withstood two attempted coups and four assassination attempts during this period. When he stood down as Prime Minister in 1988, he was appointed to the Privy Council, a body of official advisors to the king.

In his role as caretaker of the monarchy, the spotlight was once again on a man who has been an important power broker in Thailand for decades. During the eight years that Prem was prime minister, Thailand enjoyed a sustained period of economic growth. At the heart of this growth were the development of heavy industry, the construction of the eastern seaboard, expansion of the automotive industry, and increased foreign investment, most notably from Japan.

Thailand’s infrastructure boom

When Prem became Prime Minister in 1980, Thailand’s GDP growth was 5.17%, with a GDP per capita of US$682.77. Foreign Direct Investment (FDI) was valued at US$3,031,751. Favouring a technocratic management of the Thai economy, Prem placed macroeconomic policy under the control of key officials from the Bank of Thailand, the Ministry of Finance, the National Economic and Social Development Board, and the Bureau of the Budget. These technocrats played a vital role over the coming decade in steering the country’s economic development.

At the centre of this development was the Eastern Seaboard Development Project. A central pillar of Thailand’s Fifth National Development Plan (1982-1986) under the Prem government, the aim of the project was to reduce factory overcrowding in Bangkok by creating more manufacturing and trading centres at the eastern seaboard. Since 1982, the project has given birth to a number of large, wide-ranging industry developments, including the creation of deep-sea ports, the development of heavy chemical and automobile manufacturing industries, and the establishment of related infrastructures such as water resources, roads and railway systems.

Attracting foreign direct investment

By improving Thailand’s infrastructure, abolishing a number of export taxes, reducing import taxes, and enhancing domestic political stability, the Prem government was able to boost Thailand’s foreign investment appeal. A large influx of foreign direct investment from Japan underpinned the Eastern Seaboard project, in addition to other major developments in Thailand. Between 1982 and 1993, Japan provided Thailand with assistance funding totalling 178 billion yen for construction works in the eastern seaboard. By the period 1988-1989, Japan foreign investment constituted approximately 50% of the total FDI flow to Thailand, with the United States, the European Union and newly industrialised economies of Asia contributing the rest.

By the time Prem had stepped down as Prime Minister in 1988, Thailand’s economy had grown substantially. Thailand’s GDP growth was 13.28%; nearly triple the growth of 1980. GDP per capita had almost doubled at US$1,122.57, and FDI was valued at US$24,137,310. The Prem government’s reforms also paved the way for continued economic growth, with the boom years continuing into the mid-1990s. So successful was this period that Thailand’s military rulers have considered replicating a Prem-style government to boost future economic growth, following two decades of mixed economic fortunes.

Political influence moving forward

It is not only in the economic sphere that we see Prem Tinsulanonda’s continued influence. For four decades, Prem has been a vocal figure in the fight against corruption. He has criticised Thailand’s ingrained patronage system, advocated for enhanced transparency and the instillation of effective auditing systems, and called for more support for anti-corruption organisations. Since being appointed a member of the Privy Council, Prem has also continued to exert a significant influence over the armed forces. So strong is this influence, he is widely believed to have been the mastermind behind a 2006 coup to remove then Prime Minister Thaksin Shinawatra from power.

His close relationship with King Bhumibol helped to cement ties between the military and the monarchy. As advisor to the king, and in his role as king regent, Prem continued to have a stake in the trajectory of Thailand’s politics. One example of this is Prem’s reported misgivings over the Crown Prince’s suitability to become king. Believed to have ties with the ousted Prime Minister Thaksin, and well known for his extra-marital affairs, there existed concerns that the Crown Prince could become a divisive and destabilising figure as king. Despite these concerns, the crown prince acceded to the Thai throne on 1st December 2016. In an attempt to assuage any such fears, the new king’s first royal decree was to reappoint Prem as head of the Privy Council. It is believed the new king is seeking a close relationship with Prem to maintain the Thai kingdom’s stability.

Good news for investors

Thailand’s foreign investment and GDP growth has suffered since the most recent coup in 2014. In 2015, Thailand’s economy grew just 2.8%, and the country’s exports decreased by 5%. The death of the king and the ensuing royal transition caused additional fluctuations in the Thai market. Moving forward, it is vital that Thailand’s officials instill confidence in those looking to invest in the Thai economy.

Prem Tinsulanonda’s role as a key power broker can help Thailand achieve this goal. With his strong economic background and influence within the military and the monarchy, Prem is regarded as a stabilising force in Thailand’s politics. The continuation of his guiding role will help to reduce investor uncertainty at a time of domestic upheaval. This is good news for investors, and good news for Thailand’s economy.

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About Author

Laura Southgate

Laura Southgate is Lecturer in International Security at the Centre for International Security and Resilience, Cranfield University, located at the Defence Academy of the United Kingdom. She has a PhD in International Relations from the University of Otago, New Zealand, and an MA in International Relations and Security, and a BA in Law and Politics, from the University of Liverpool.