Everything You Need to Know in Aftermath of Thailand Election

Why It Matters

The bolt-from-the-blue victory of Move Forward signaled a broad desire for change from the military establishment that’s ruled for nine years under Prime Minister Prayuth Chan-Ocha. In the months to come, as parliament decides its alliances and selects a prime minister, it’ll be a test of whether Thailand can move on from a cycle of coups that unseated elected governments at least a dozen times in the past eight decades.

What’s the geopolitical significance?

Political infighting has eroded Thailand’s relative economic strength in Southeast Asia and hurt engagement with the US, which had developed strong military ties with the nation during the Vietnam War. In 2003, the US designated Thailand a major non-NATO ally, but the last decade under Prayuth has shown interests diverging on issues like China’s influence and the crisis in Myanmar.

The return of pro-democracy rule in Thailand could go some way toward helping bring Bangkok back into the Western fold as Washington seeks more partners to push back against Beijing. Still, like all countries in Southeast Asia, Thailand is likely to hedge its bets with China.

What’s at stake for the economy?

Southeast Asia’s second-largest economy has been lagging neighbors in terms of economic growth during and after the pandemic, hobbled by heavy household debt and an aging workforce. Political parties had promised $92 billion worth of stimulus to ease the sting of increasing prices and borrowing costs.

Move Forward pledged to dismantle business monopolies and jumpstart business activity outside the nerve center of Bangkok. Pheu Thai, meanwhile, campaigned on a promise of supercharging annual growth to 5% through cash handouts and other incentives. It also pledged to create a central bank digital currency.

What does it mean for investors?

Traders are waiting for the dust to settle as the nation awaits the formation of a new government. Investors had been pinning hopes on the general election to revive Asia’s worst-performing stock market this year. The SET Index has declined more than 7% year to date, compared with a 4.5% gain in the MSCI Asia Pacific Index. Here are the equities to watch, from retail to tourism.

What’s the long view on tourism?

Tourism accounts for a 12% slice of the nation’s GDP. A post-Covid rebound mainly hinges on the return of Chinese tourists, who comprised about 30% of arrivals pre-pandemic. However, the government has been concerned about “zero-dollar” tourism where package-tour agencies including many from China funnel cash to affiliates rather than local businesses. Thai politicians are increasingly focused on attracting high-end visitors to boost spending. Starting in September, the country is set to impose an entry fee for tourists looking to enjoy its beaches, temples and parks as another way to raise revenue.

What could be next for legal marijuana?

Thailand became the first Asian nation to decriminalize cannabis, but the breezy days of buying and selling weed could come to an end after the election. Most political parties favor tighter regulations on the industry, which had been projected to turn into a billion-dollar sector by 2025.