With Thailand announcing that foreign entity will be restricted to shareholding of below 50%, it has sent ripples throughout the investment fraternity. Ever since Thaksin’s removal by a bloodless coup, Thailand’s economic reform has been taking backward measures, like for example its recent bungling of the foreign exchange currency measures.
The regime has been known to use monetary policies to ensure its bahts do not appreciate as it will result in its export losing its competitive edge. Hence a weak baht is preferable. The 24 hours U-turn by the military government was seen as a victory for investors who returned the next day to Thailand share market.
However, by restricting foreign ownership in Thailand’s industries will eventually result in foreigners picking other locations which are more foreigner friendly. Will this restriction provides opportunity for other nations around the region as they become the best alternative to Thailand?
Under Thaksin, the Thai economy has done well. Thaksin’s focus on rural poverty has helped bridged the gap between the rich urban and the poor rural. Fact is this probably one of the reason why he was brought down in the recent coup.
Will Thailand’s military government pick some one more capable of running the economy? Only time will tell.
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