For the past 100 years, the Thai baht seems to remain relatively stable regardless of political or economic turmoil. This article seeks to explain this phenomenon.
The Thai baht tends to appreciate by 10 points in the two decades following junta (a military or political group that rules a country after taking power by force) control. Between 1980 to 1988, the Thai regime was under Prime Minister General Prem Tinsulanonda.
In the 20 years that followed (1988 to 1998), the baht rose by an average of 10 baht/USD. To understand Prem’s rise to fame and fortune we need examine the historical relationship between the Thai baht and the US dollar.
Between 1932 to 1979, the Thai baht traded, on average, at 25 baht/USD. These were interspersed by authoritarian governments. Prem was Prime Minister (PM) from 1980 to 1988. Selected by the King Rama IX for being “Mr Clean” he was also appointed President of the Privy Council in 1998 (Bangkok Post, May 19th 2019). The Asian financial crisis of 1997 was precipitated by foreign and local corruption and the collapse of the Thai construction industry. In the year that followed, the Thai baht averaged 27+ baht per US dollar with a high of 52 baht/USD (i.e. in 1998) therefore confirming my thesis and the significant appreciation of value of Prem’s own wealth.
The Thai economy saw highs and lows when Thaksin Shinawatra was in power (1996 to 2006). Yet the era dictatorship from 1942 to 1956; 1957 to 1973; and 1976 to 1979 saw stability in the baht/USD value. This is supported by Thongchai Winichakul’s Siam Mapped (1994); Pasuk Pongsaipich’s Corruption and Democracy in Thailand (1998); Thitinan Pongsudhirak’s Ten Years After the Economic Crisis: Thai Democracy at a Three-Way Crossroads (2007); and The King and the Making of Modern Thailand (2017).
Prem was born in Songkhla and attended Chulachomklao Royal Military Academy (1941). He became Deputy Interior Minister (1977 to 1978) and later Minister of Defence (1979 to 1986). The Communist insurgency pressured to appoint Prem Prime Minister because he could not be bribed and had a good record as a Senator and MP. The political reality was that the Communist insurgency itself was not well organised and the Communists themselves were broken up along divergent ideological lines; some preferring neoMaoism while others being influenced by European neoMarxism.
Also, between 1985 and 1989, the most powerful Communist regime, the Soviet Union was itself imploding due to Perestroika and Glasnost. Therefore, Prem was fortunate because he was “aided” by regional and global events. King Bhumiphon was also integral in keeping the Thai Communists at bay as a significant symbol of Thai royalty based on western capitalism. Meanwhile, the Thai people managed to conceive of another new Constitution in 1997 through their Parliamentary representatives. It was widely believed by local and farang (usually a white foreigner) political scientists that Prem was the mastermind behind the rejuvenation of the military general class.
Risk assessing agencies such as Global Risk Insights observed that, “… by the time Prem had stepped down as Prime Minister in 1988, Thailand’s economy had grown substantially. Thailand’s GDP growth was 13.28 per cent; nearly triple the growth of 1980. GDP per capita had almost doubled at US$1,122.57, and FDI was valued at US$24,137,310” (Global Risks Insight, February 1st 2017).
Political scientists Leszek Buszynski (1989), James Ockey (2007), Kevin Hewison (2007), and Rappa (2014; 2015; 2019) all tie Prem Tinsulanonda to the military coup that overthrew Thaksin Shinawatra in 2006 and all of them referred to Prem in different ways as a political powerbroker. Prem was also not as clean as official records reveal. Recent interviews with Bangkok based lawyers show that many still think Prem was guilty of having received 250,000 baht in a real-estate loan scandal after stepping down as prime minister. The official Nation newspaper reported that “General Pairoj Phanitsamai, former aide of Privy Council President Prem Tinsulanonda, has net assets worth Bt388.2 million” (The Nation Multimedia, October 3rd 2014).
Nevertheless, Prem was deeply revered by most Thai people. Almost as much as the king. Yet he knew his place in the pecking order. Prem made Thailand wealthier as the King lay decaying and insolvent for a decade. While Prem was not the wealthiest man in the Kingdom, he was at the end of his life the most powerful. Prem’s wealth comes from legitimate sources: he had a hand in every single Constitutional reformation since 1980 and every single military coup as well. When Rama IX was incapacitated, Prem was appointed Regent and in fact exercised all the power of a de facto King. Reporting on his death, Bloomberg News reported that “Prem Tinsulanonda … was accused of masterminding a 2006 coup against former leader Thaksin Shinawatra” (May 26th 2019).
Prem died on May 26th 2019. He was 98 years old.
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