Is Thailand’s economy undergoing ‘juntification’?

Is Thailand’s economy undergoing ‘juntification’?

Since seizing power from the elected civilian government, Thailand’s junta has become increasingly authoritarian. But attempting to ‘juntify’ the economy is proving difficult for a variety of reasons, and is distracting them from capitalizing on other economic opportunities.

Since seizing power in May 2014, the junta, or the National Council for Peace and Order (NCPO), have consolidated their position using increasingly authoritarian means; stifling dissent through draconian lèse-majesté and cyber-crime laws, imposing heavy media restrictions, and jailing key political opponents, creating what Human Rights Watch Asia Director Brad Adams calls a “climate of fear.”

Initial doubts about King Vajiralongkorn’s relationship with the junta (and his ability to confer legitimacy upon the regime) have subsided. Last month, after considerable delay – several amendments – Vajiralongkorn finally signed the new constitution drafted by the junta. Critics say it is highly undemocratic and will allow the junta a powerful hold over national politics – even after elections resume in 2018.

The junta’s longevity is detrimental to Thailand’s economic interests, particularly if their interests affect the status quo. Two examples are the targeting of hawkers in Bangkok, and the red light district in Pattaya; both play an important role in the tourist economy. Although the latter is clearly problematic, it is backed by powerful interests and the junta will face difficulty shutting it down. Preoccupation with order and ‘morality’ will also distract them from dealing with more pressing issues related to infrastructure capacity.

Junta cracks down on shadow economy

Past crackdowns have been ‘notoriously ephemeral’, and citizens are reportedly hoping likewise this time. But if the tough-talking junta follow through on their promise, economic interests will be threatened over the long term.

Authorities view street vendors as cumbersome obstructions on public walkways, and are targeting those working in Bangkok’s busiest districts. Last year, thousands of vendors were forcibly relocated. But the actual intentions of city officials are altogether unclear. While the ‘purging’ of popular street food spots has been widely publicised, locals allegedly believe this is exaggerated or ‘fake news’.

From the junta’s viewpoint, cleaning up the streets will allow for redevelopment of public footpaths and reduced congestion, but it also opens up the area to gentrification – which one article reports is already happening, along the popular Sukhumvit Road. The future of vendors there is in doubt, as property developers gradually erect office blocks, condominiums and shopping malls. Consequently, “once-burgeoning markets… have been drastically pruned or even closed.” The word ‘juntification’ was coined to show how the junta are sterilising the capital, transforming it into ‘Singapore-lite’; a claim they refute.

Street food is a big part of Bangkok’s identity, and is vitally important to working-class citizens. Aside from being near-impossible to enforce, a blanket ban, in one journalist’s words, attacks “the unique chaos that gives Bangkok its soul.” Given Thailand’s dependence on tourism, the tourism ministry hinted that hawkers in some areas will be allowed to remain. The area will most likely be managed, with authorities imposing zoning regulations as to ‘when and where’ vendors set up. This is a positive sign the junta are being rational where rationality is needed. Their previous u-turn on rice subsidisation proved they are willing to endorse the status quo when push comes to shove.

Recent reports about underage sex workers in Pattaya have prompted clean-up operations. Yet prostitution constitutes an important part of the shadow economy, which itself reportedly contributed up to 40.9% of real GDP in 2014. Thailand is notorious for sex tourism; an estimated 10% of tourist expenditure goes toward the sex trade.

Forcing sex workers to leave the industry will prove difficult. UNAIDS estimated there to be over 140,000 sex workers in Thailand in 2014. Sex work promises instant and bountiful rewards, with earnings multiple times the national average – often sent as remittances to family in rural areas. Prostitution is also deeply and historically ingrained, stemming from the state’s historical contract with the US military to provide ‘rest and relaxation’ services for soldiers.

Thailand’s sex trade has been called its “worst-kept secret.” Despite the junta talking big, in reality the trade could not happen without the state’s implicit acceptance. According to one source, official rhetoric is “divorced from reality”; authorities overlook the trade and claim that the women work as waiting staff, in return for under-the-table payoffs from business owners. Essentially, the junta’s ‘moral outrage’ will not be met by an equally forceful response. Even targeting underage prostitution will prove problematic, due to the ties between the police and mafia. The junta may thus backtrack after realising their predicament.

Infrastructure issues

Tourism remains a huge economic driver for Thailand, accounting for over a fifth (20.6%) of the economy, according to World Travel & Tourism Council figures. During this uncertain political and economic period, Thailand has been relying on its long-established reputation as a tourist hotspot in particular. Thailand’s preoccupation with cleaning up may distract the government from properly handling tourism-related economic pressures. Annual visitor numbers more than doubled between 2010 (15.9m) and 2016 (32.6m). The tourism ministry has projected 60m visitors annually by 2030, based in part on rapid travel growth among increasingly economically mobile Chinese consumers.

Pongpanu Svetarundra, permanent secretary to the tourism ministry, states that the government must focus on providing relief via infrastructure projects. It must expand ports, airports and railways, and invest in new projects like the Eastern Economic Corridor (EEC). This will improve Thailand’s connectivity with the rest of Asia and particularly ASEAN markets, without which tourism – and economic growth in general – faces obstacles.

Albeit vital to Thailand’s economy, tourism must be well managed. The junta have not shown promise in this department, with delays on large-scale infrastructure projects like the Bangkok metro extension. Despite announcing a multitude of projects, actual outlays have been very limited. The delay regarding elections (and the next civilian government) may also hamper fundraising efforts for these projects, discouraging investors from bidding on contracts and entering into public-private partnerships.

Having now consolidated their political position, the junta are attempting to put their stamp on the economy, tackling various areas including hawking and prostitution. Despite this the junta will struggle to move against prevailing economic tides, and doing so is not in their interests in any case. While continuing to entertain aggressive rhetoric around ‘morality’ and ‘order,’ the feared ‘juntification’ will likely be very shallow. Furthermore, should the junta proceed, they risk damaging Thailand’s reputation over the long term, as well as failing to capitalise on other, more important economic opportunities.

Categories: Asia Pacific, Economics

About Author

Alexander Macleod

Alex is a Manchester-based Analyst specializing in Southeast Asian political and security risk. He holds a PhD in Politics and Geography from the University of Newcastle, where he examined the role that online media play in promoting and sustaining Malaysia's racialized political landscape during general elections. Alex also freelances as a social media manager for a digital marketing consultancy. He blogs at