Thailand: Thai citizens vote in favor of military-backed constitution
August 7, 2016
In a referendum held on 7 August, Thai citizens voted in favor of a draft constitution backed by the current military government and also a proposal for the Senate (the upper house of Parliament) to join the House of Representatives (the lower house) in selecting the next prime minister. Voter turnout was 55% and the draft charter was approved with a majority of 61.4%, while the proposal for the Senate to join the House of Representatives was approved with a majority of 58.1%.
The approval of the new charter paves the way for general elections to take place in November 2017, as the National Council for Peace and Order (the military junta) has been planning since it completed the draft in March. Critics have warned that the new constitution—together with the provision for the upper house to select the prime minister—has the potential to curtail the democratic rights of Thai citizens and increase the army’s grip on politics. Although it is likely that a large proportion of voters were aware of this, the perceived risk of increasing political uncertainty and economic instability in the event of a “no” vote was far less appealing.
The new constitution contains three aspects that significantly boost the military’s political influence. The charter provides for the Senate to be appointed rather than elected, which will allow the military to dominate the upper house of Parliament. It also allows for an individual, who is not necessarily an elected politician, to become prime minister through appointment by both the upper and lower houses. Moreover, any government that is deemed to violate the 20-year National Strategy, which is a framework for long-term national development laid out by the military, will be impeached and removed from office.
The referendum result will provide Thailand with relative political stability in the near term compared to the situation that would have ensued if the charter had been rejected. But the result does little to solve the entrenched political divisions in the country, which can be seen in the results for each region. The northeast region of the country, which is one of the strongholds of the Pheu Thai Party and the Shinawatra camp, rejected the new constitution, while the Center, South and North voted to accept it. The general approval of the constitution and acceptance of the result by the main political parties suggests that the military government will remain in power until fresh elections are called in late 2017.
Economically speaking, the acceptance of the constitution and a more predictable timeline will provide more certainty to foreign and domestic investors. In addition, economic policies will likely be maintained while the military government is still in power, therefore no significant shift in the economic outlook is on the horizon. However, the positive effect on political stability will not necessarily translate into a strong improvement in Thailand’s economic prospects. Political disruption is only one factor that has caused Thailand’s economy to perform poorly in the past decade. In order to substantially boost the economy, the Thai economy will need to reduce structural bottlenecks and solve other problems such as high household debt and a decrease in private capital investment.
Author: Ricardo Aceves, Senior Economist