Holt-Realty Newsletter, August 2006 -- Politics and Property

Where Thai politics are moving, and their effect on the Property Market

Well, I'm another year older this month. They say we Leos are very easy to get along with. Well, with a motto like ours, "Be reasonable. Do it my way.", what else could we be?

August is named after that old Roman Emperor Augustus. He thought so highly of himself he made them name a month after him. Can you imagine if they did that with US Presidents? We would end up with, 'January, February, Dubaya….'

With all the unrest and uncertainty around the world, Thailand property looks more attractive all the time. I've noticed a sharp increase in the number of inquiries coming in. Many of them are from the UK, and a significant number are from the US too. I wonder if this reflects the growing discontent with the political situation in both countries?

British clients I have spoken to over the last 24 months have all given me the same reasons for leaving the UK to seek somewhere else to live: The weather, rising costs, high taxes, a large influx of 'asylum' seekers, and so on. Over 500,000 Brits left the UK last year to live permanently overseas. More will leave this year. So, where are they going? Thailand seems to be the number one destination these days. Even with the rising land prices here, buying Thai property is still good value.

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WHAT ABOUT POLITICS?

I know you are probably thinking, but what about the political situation in Thailand now? Isn't that having an effect on the property market?

Actually, not that I can see. We are still getting plenty of inquiries and people are coming here to buy. I mentioned in a previous newsletter that no matter what the politicians do we ordinary people still have to live somewhere, and we still have to eat. Business goes on.

So what is going on here? You probably saw the recent news about the attempted bomb attack on PM Thaksin's home. Despite what he claims, it would seem a lot of Thais don't believe him. He appears to be losing credibility, much the same as other noted leaders using terrorism to scare their populations are. The Thais, at least in Bangkok anyway, are very skeptical.

It might help you to understand better if I give you a breakdown of what has been happening and why we are in a political crisis at the moment.

Thaksin amassed a huge fortune by cornering a monopoly on the emerging telecommunications market, particularly the mobile phone business, during the late 1980's. By 1998 he was a billionaire when he formed the Thai Rak Thai (Thai Love Thai) party. By 2001 he swept into power, bringing what looked like a fresh wind of change. He immediately brought in a 30-Baht (about $US0.75 cents) medical care system, offered debt relief to farmers, and started a program to encourage each Tambon (State) to produce a unique handicraft product. The One Tambon One Product (OTOP) project helped poor people to start becoming self-supporting.

Bangkok business people liked him at first too, because his "Taksinomics" economic policies brought back confidence in the economy again. Business improved quickly. He was able to pay off the huge international IMF debt well before the deadline date. For a while, it seemed he could do no wrong.

But there were rumblings of discontent even then if you listened hard enough. Many expatriate foreigners were not taken in and we were waiting for the axe to fall. We didn't have long to wait. Soon after he was reelected to a second term with a huge majority, he started making mistakes. Citizens and expats alike started noticing that he became much too cocky. He clamped down on any dissent by suing newspapers and reporters who had the temerity to criticize him. He hid the true scope of the Bird Flu crisis until he was forced to admit how serious it was by mounting pressure from overseas health authorities. Another problem was the way he handled serious crime. He declared war on drugs, a laudable goal. But his solution was to send out hit squads to kill over 2,000 people without any trial, or even real evidence.

Instead of using traditional Thai diplomacy to overcome the Muslim insurgency in the south of the country, he decided to use strong-arm tactics instead. That culminated in the suffocation deaths over 100 Muslim youths who were tossed into the back of trucks, stacked up like cords of wood. That didn't earn him any friends, either in the south or in Bangkok.

His biggest mistake, though, came in January 2006 when he sold his family business shares in Shin Corp to a Singaporean company. Many Thais felt that the sale was unpatriotic and a threat to national security. Suddenly, a foreign company had access to Thailand's highly sensitive telecommunications network.

Bangkok voters were especially incensed, because he used his position to avoid paying any taxes on his gains from the sale worth 1.8 billion Baht (about $US48 million). Already chafing at his authoritarian style they took to the streets to protest. Over 50,000 people attended the first protest rally on February 4. By the 24th, hundreds of thousands of protestors forced Thaksin to dissolve Parliament and call a snap election for April.

This didn't appease the people or the Democrats, the biggest opposition party. They announced they were going to boycott the election. The other parties not already in the government followed their example. It was going to be a one-horse race.

In the run up to the polls, there were allegations of TRT paying politicians from other parties to run against the TRT guys in an effort to give the elections a semblance of legitimacy. There were the usual allegations of vote buying. But what really derailed things when the polling started was the large number of 'No' votes that were cast, in Bangkok especially, to indicate that the voters disapproved of TRT and especially Thaksin.

As a result, the Constitutional Court ruled the election unconstitutional and therefore invalid. Thaksin announced he was resigning. He went on holiday, but when he returned he took over as 'caretaker Prime Minister'. So he was back in the saddle once again, but this time without any authority to actually rule. That didn't stop him, however, and he proceeded to pass laws anyway.

The Democrats announced they would contest the next election if the April election was annulled. That got things moving again and the next elections are now scheduled for October.

Will they actually take place? No one is sure. There is so much uncertainty. A 'bomb attack' on August 25 has many people doubting that it was a real attack. He has claimed before that attempts have been made on his life. The latest bomb scare was seen as just another claim that 'people are out to get' him. Either he has become very paranoid, or he is using these 'attempts on his life' as a way of manipulating public opinion. Apparently, many people simply don't believe him now. By the way, you know how to tell if a paranoid is truly paranoid? He's the guy that says, "I know I'm paranoid." Then he looks around furtively and says, "But am I paranoid enough?"

When Thaksin sacked the head of the counter-insurgency operation for being a part of the latest attempt on the PM's life, the army general said, "I was the head of the drug death squads. If I had really tried to kill the PM he would already be dead." So, that doesn't sound like the car bomb attack was very serious, does it? I also noticed that the 'bomb' was only a collection of materials that could have been used to build a bomb. So, if it wasn't a bomb, how could it have been an attempt to kill the PM?

There are even rumors that there may be an Army coup, something we had all hoped would never happen again. This is Thailand and nothing is what it seems, so we can only speculate. I guess all we can do now is to wait for the October elections to take place…hopefully.

So, here we are at the end of August. Agents I have spoken to around Thailand in the past few months have been complaining that business was very quiet. Well, of course it has. July and August is always quiet. That's when Europeans go on holiday. They are not thinking about buying property. I don't think it had anything, or at least not very much, to do with the political situation here.

Americans had their own problems: Katrina, Bush, 'terrorism', and liquid bomb scares. If I were living in the US I would be thinking seriously about investing some of my hard-earned money overseas, just to be on the safe side. Wouldn't you? Thailand is an ideal place to stash some cash.

The good news is that the last couple of weeks the reports from realty agents around the country have been brighter. People are coming in to buy property again.

My advice? Ignore the politicians. They are not affecting the property market to any great extent. Pity the poor Thais who have to put up with the continuing politico antics. But life goes on. Building continues in all the most popular areas. New homes and condos are shooting up as fast as the workers can lay the bricks and cement. There is already a wide choice of new projects to choose from, and even more are planned for the near future.

So, if you want to invest, get in now before the political circus is sorted out. After that, prices are sure to start rising again.

The President is getting his daily briefing. The aide giving the briefing concludes with: "Yesterday, three Brazilian soldiers were killed."

"OH NO!" the President exclaims, looking horrified. "That's terrible!"

His staff sits stunned at this display of emotion, nervously watching as the President sits, head in hands.

Finally, the President looks up and asks, "How many is a brazillion?"

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DISCLAIMER: All information and the opinions expressed in this newsletter have been researched as thoroughly as possible. However, the author is not responsible for any actions readers may take after reading this document. Please consult a qualified lawyer to ensure you get the best possible advice.

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