Index trend
Previous Quarterly Editions
Expropriation risk: 54 54 54 54 ► Political violence risk:60 59 59 57 ▼Terrorism risk:55 57 57 57 ►Exchange transfer and trade sanction risk: 45 45 45 45 ►Sovereign default risk:47 47 47 47 ►
Overall Risk Temperature: 54 (Medium) TREND ►
Special topic: Relationship with the 'global rules-based order'
Thailand has had a mixed history of democracy, and the country — which has seen various military coups — has been reluctant to endorse universal norms of democracy and human rights. Political corruption has surged as the economy has grown. Authoritarianism runs deep in Thai politics, and thus Bangkok avoids issuing or joining statements criticizing human rights violations or reversals of democracy.
In foreign affairs, Thailand’s government has frequently engaged in a policy of pragmatism, only aligning with an individual country if deemed to be of Thailand’s benefit more so than remaining fluid. Even so, Bangkok is deeply friendly to the West, mainly because it sees a brighter economic future resulting, and aspires to be seen as a modern state in support of a global rules-based order, even though Thailand is agnostic about that order.
Thai foreign policy is increasingly torn by U.S.-China rivalry. The U.S.-Thailand alliance has survived into the 21st century, although many younger Thais question its need. At the same time, Thailand retains close relations with China, which will likely strengthen. Beijing is putting pressure on Bangkok to accede to the construction of a railway that will eventually connect Kunming to Singapore, which by necessity must run through Thailand.
On the security side, Thailand does not consider that its national security is at imminent risk from China, as Thailand does not face the South China Sea or border on China. This could change if Cambodia allows China to base military vessels at Ream naval base (on the Gulf of Thailand) and if Beijing completes its project with Myanmar to construct a deep sea port at Kyaukphyu (on the Indian Ocean).
Within the Association of Southeast Asian Nations (ASEAN), Bangkok rejects a group approach to the South China Sea, arguing that only half of the members are subject to threats from China on this score; however, Bangkok does not oppose the long-standing negotiations for an ASEAN-China Code of Conduct on the South China Sea. When territorial disputes arise, Bangkok often is willing to allow international bodies to mediate, such as the International Court of Justice did over Thailand-Cambodia border disputes in recent years. Due to the inherent economic dimension of the Thailand-Cambodia Gulf of Thailand natural gas reserves dispute, Bangkok is likely to submit to international arbitration only if it believes it will win.
Thailand is not a party to the 1951 Status of Refugees convention but has granted temporary asylum to over a million people in the past four decades, primarily those fleeing wars in neighboring countries. Thailand’s government designates these migrants as “displaced persons” and usually allows the United Nations (U.N.) to offer them protection on Thai territory. Bangkok is reluctant to take sides on sovereignty violations outside the immediate region. Thailand has attempted to remain neutral on the Russian invasion of Ukraine and at one point angered Washington when it abstained on a U.N. General Assembly resolution condemning Moscow.
On the trade side of global rules, in principle Thailand supports free and open trade as a means to develop its economy further. Bangkok is in the ASEAN-China Free Trade Agreement and the Regional Comprehensive Economic Partnership and has expressed a desire to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
However, although Thailand’s government financial sector has a respectable core of technocrats, the disruption of military coups has made it difficult to formulate and enforce long-term policies to bring Thailand’s economy in line with the requirements of new trade agreements.
Thailand also suffered more economic damage from the COVID-19 pandemic than some other ASEAN members, largely because tourism was hit hard. Additionally, there is much economic nationalism in Thailand, and the negotiation of trade agreements can be inflammatory, for example, in 2006 stymying a U.S.-Thailand trade deal over public concerns about the U.S. pharmaceuticals sector.
TREND ►
The government is determined to make Thailand the center for electric vehicles manufacturing in the region and for clean energy. This will motivate Bangkok to assure foreign investors that there is little risk of expropriation.
At the same time, ambitious infrastructure projects — from a series of railways (likely in partnership with China) to the new government’s plans for a “land bridge” across the Isthmus of Kra — will likely require some land expropriation.
However, Thailand’s constitution prohibits most expropriation, and land rights are a sensitive subject with lower-income Thais. Both of these factors will overall temper any major shift toward expropriation.
TREND ▼
As the government led by the Pheu Thai Party (PTP) settles in, efforts to dissolve the Move Forward Party (MFP) have increased, with petitions to Thailand’s Constitutional Court. The court has ruled that the MFP’s attempt to pass laws revising Section 112 of the Criminal Code — which criminalizes criticism of the monarchy — are an attempt to overthrow the King.
This points to the likely dissolution of the party in short order. If so, large-scale demonstrations are possible, some of which could be violent. Adding fuel to this fire, former Prime Minister Thaksin Shinawatra’s release from prison has encouraged public perceptions that he now controls the PTP. This could stir up a new phase of “Red Shirt/Yellow Shirt” confrontation, although it is not likely to reach the extremes of 2009 – 2010.
The long-standing separatist conflict in southern Thailand remains at a fairly low level and is not expected to expand soon.
Iran has a Southeast Asian presence, and Thai security officials have found small Hezbollah cells before now; however, there is little evidence of a Hamas presence in Thailand, as there is in Malaysia (with Malaysian government consent).
Having worked with Egypt to evacuate most of their workers from Gaza after the October 2023 attacks, Thailand still has overseas workers in Israel; however, Bangkok maintains a low profile on Middle East issues and will be doubly careful to avoid entering the political fray on the current conflict there.
Thailand’s economy remains sluggish, expanding 1.9% in 2023, down from 2.5% in 2022. The government has revised its estimates for growth in 2024 from 2.7% – 3.7% to 2.2% – 3.2%. An expected boost in tourism could improve matters, but rice shortages due to El Nino effects could lower them.
No direct trade sanctions are leveled at Thailand, but Thai companies could be caught in secondary sanctions relative to Western sanctions on military governed Myanmar.
Although the default risk remains moderate, two initiatives could strain Thailand’s debt situation, in which the debt-to-gross domestic product ratio has hovered around 60% in recent years. One is the PTP’s populist policies, which will include cash payments to lower-income Thais. The other is the administration’s ambitious southern peninsula land bridge plan noted above; however, the very size of the project has cast doubt on its viability, and so it is not expected to be a drag on the national budget in the near future.
