Political Risk of Doing Business in Thailand
Case Study Abstract:
Question: Thailand has experienced a series of military coups that toppled democratically elected governments. Should companies in Thailand and those interested in doing business with it be concerned about political risks?
Thailand, the second-largest economy in Southeast Asia, is a constitutional monarchy headed by King Maha Vajiralongkorn, (officially known as King Rama X, was crowned in May 2019), with a parliamentary government. Since the coup d’etat of May 22, 2014 (the 13th successful coup out of 22 attempts since the first written constitution was issued in 1932), the 2007 Constitution was revoked, except for the second chapter, relating to the monarchy.
Since then, Thailand has been under the rule of the military organization called National Council for Peace and Order (NCPO), led by coup leader and prime minister General Prayuth Ghan-ocha, until 2019.
On March 2019 a general election was held in Thailand for first time since the 2014 coup d’etat, under a complicated new system that empowered small parties and the military. In July 2019 the junta chief Prayuth Chan-o-choa ordered an end to the military rule but kept the power as Prime Minister. The new civil government focused on addressing the slow economic growth and an aging workforce, but the election aftermath has been characterized by increasing disputes in parliament and social media. The new government enjoys the support of the junta and the king, which ensures a certain degree of stability in the country.
Case discussion Questions:
- Does Thailand have a democracy?
- As CEO of a multinational that has already invested in and been successfully producing in Thailand (for both Thailand and overseas markets), when you heard the news about the 2006 and 2014 coup that toppled democratically elected governments, should you be concerned?
- With the 2019 election under the new constitution, do you believe the political risks in Thailand has now been mitigated?
- As CEO of a company that is ready to export to Thailand or that is ready to source from Thailand, would you be concerned about the political risk in Thailand? Would you proceed as planned or look for alternative export markets or alternative countries from which to source products?