• 
• 

Business leaders' calls for the government to put its energies into solving the economic problems instead of focusing on the current political conflicts should be taken seriously. Pramon Sutivong, chairman of the Board of Trade of Thailand and Thai Chamber of Commerce, recently warned that the renewed confrontation will hold back the country's economic growth to less than 5 per cent because Thailand is facing double negative factors: both internally and externally.

Now, the question is whether the government will heed this advice and show its leadership in steering the economy to achieve the satisfactory growth benchmark of 5 per cent or more. Unfortunately, over the past few months, the Samak government has been engaged in rewriting of the Constitution. Although the Cabinet agreed to hold a referendum on whether to rewrite the 2007 Constitution, the political turmoil is unlikely to be put to rest as the government has yet to spell out details of the draft referendum to be put up for people to decide.

The Fiscal Policy Office yesterday issued a warning that soaring oil prices have now become a serious threat to the economy, while the Thai Chamber of Commerce released its business survey which showed that the sector believed that ongoing political factors would likely dampen economic-growth prospects until the fourth quarter.

While there's nothing much that the government could do regarding higher oil prices, the government can play a pivotal role in ending the political conflict at home. Worries over the consequences of the current political turmoil have caused some investors to delay their decisions to boost their investments in the country.

If this is allowed to continue, Thailand's economy will again lose the opportunity to improve to the level it should have done. It would be a repeat of the situation in the third quarter of 2006 when economic factors all showed signs of growth. Many people had expected the economy to turn in a good performance. But the September coup ended in political and economic stalemate. 

This time around, the domestic factors have been supportive to the economic prospects. The Fiscal Policy Office said that the economy in April had the potential to expand, driven by domestic demand and investment, which has seen a recovery. Private consumption in April rose by 12.2 per cent, thanks largely to higher income for people in the agricultural sector. Motorcycle sales rose for the third consecutive month to 7.6 per cent on year.

Imports of consumer goods expanded at the high rate of 34 per cent on year.

Investment from the private sector in April rose by 44.6 per cent, thanks largely to the recovery in the property sector. However, consumer confidence in April showed a declining trend due to record oil prices and political instability.

Eroding consumer confidence has led to disenchantment with the worsening political climate. This is despite the fact many people had high hopes that the newly elected government would have brought about political stability, which had been absent over the past two years.

However, the current government decided to destabilise its own house by proposing to rewrite the Charter after being in office for barelya few months.  The fallout from the initiative has caused more political instability and revived conflicts within society.

By focusing on politics at home, Prime Minister Samak Sundaravej has sadly missed the opportunity to exert his leadership to set the right priorities for the nation. He failed to set clear priorities for his economic team to follow.

After all, the ongoing movement by the People's Alliance for Democracy against the government's effort to rewrite the Charter, might not shake Samak government as much as the government's inability to set the right priority to solve the economic problems.