The ongoing political instability in Bangkok, Thailand will likely continue to hamper growth of the country and impact on the inflow of foreign investments.
Driven by their animosity for Prime Minister Yingluck Shinawatra and her brother, antigovernment protesters Monday seized control of major roads in Bangkok as they began their campaign to shut down the city in an effort to prevent next month’s elections. The highly charged protesters are largely led by the middle and upper classes in Bangkok and residents of southern Thailand.
Richard Dailly, Managing Director at Kroll’s Southeast Asia Investigations & Disputes Practice, expects the intensity and severity of the demonstrations and civil unrest to increase.
"Foreign investors should be more cautious before investing in Thailand," warns Dailly. "For example, investors looking at involvement in much needed infrastructure projects, particularly relevant with the opening of corridors into Myanmar - are likely to look twice at these projects if their security cannot be guaranteed."
Dailly urges hotel and travel operators to think carefully about future investment if tourism is significantly affected by visitor numbers dropping; similarly, international retail brands which make up the majority of the Bangkok’s huge malls will surely be watching developments with interest if visitor numbers to the capital and elsewhere start to wane.
International manufacturing, which has transformed Thailand’s economy in recent years, and which has already been hit hard by the poor flood management systems two years ago, will surely be looking critically at Thailand if security, infrastructure and policy continuation and coherence become increasing less reliable.
"With the ever-increasing role played by emerging markets, it is important that foreign investors must be aware of the political risks that could potentially arise when entering into a new market. Failure to conduct adequate due diligence and to identify political risks would potentially damage investment returns,” warns Dailly.