SINGAPORE--Renewed political tension in Thailand threatens to weaken the country's economy by deterring foreign investment, analysts and industry officials said on Wednesday.
"I think it is hard to assess the overall situation. However, it is expected that the political risk will have an effect on investors. Projects that are at the early stages could be reviewed," said Song Seng Wun, economist at CIMB-GK Research .
More than 2,000 people were holding protests outside Prime Minister Samak Sundaravej s home on Wednesday demanding his resignation, alleging that he was a proxy for ousted former prime minister Thaksin Shinawatra.
Shinawatra, who faces prosecution on corruption cases, was reportedly seeking political asylum in the UK.
Investor confidence in the country could be dented as the situation intensified, said sources.
"The political situation will hurt investor confidence in terms of investment decisions. Investors can be expected to delay their decisions," a senior manager with major industrial group in Thailand said.
"Most business people will hold their investments back and wait for a clearer picture before proceeding," he added.
"Probably bigger companies that rely on government projects will be affected. These companies will probably see government projects put on hold as investors become cautious," he said but declined to elaborate.
The worried comments came amid talks of protestors planning another coup, while officials considered the option of declaring a state of emergency.
However, some industry insiders believed the situation was not as bad as it seemed.
Perajed Suwannapasri, general manager of Thailand s Union Intraco Co was confident that there would be no long-term consequences of the political unrest on the economy.
"The political unrest is usual and this is not the first time," Suwannapasri said, adding that Thais were accustomed to bloodless political unrest and the economy had adapted to such events.
"Private entrepreneurs have never depended on government policies to survive and so we are not affected by any decisions there," he said. "I accept that there may be a slowing in demand growth in Thailand, but it may only last for three to four months and everything should settle down."
"The overall picture is that demand will still grow and eventually projects that are pending will still go on at the end," Suwannapasri said, adding that there would be no halt in foreign investments as Thailand was an important and major industrial base for several firms.
Suwannapasri added that the current political turmoil would not affect Union Petrochemical s plans to set up a 40,000 tonne/year ester plant.
Naphat Chantaraserekul, senior investment analyst from Kim Eng Securities believed that in the short-term, company stocks could be negatively impacted due to the current sentiment.
While the political turmoil may not affect petrochemical companies adversely, a weakening of the Thai baht due to the tension, could work to their advantage, Chantaraserekul added.
"Most petrochemical companies are naturally hedged. They buy feedstock [in baht] and sell products in US dollars. The weakening [baht] should benefit them as some portions of operating costs are in the [baht]," he said.
The US is a major export market for Thai goods.
"I think it is hard to assess the overall situation. However, it is expected that the political risk will have an effect on investors. Projects that are at the early stages could be reviewed," said Song Seng Wun, economist at CIMB-GK Research .
More than 2,000 people were holding protests outside Prime Minister Samak Sundaravej s home on Wednesday demanding his resignation, alleging that he was a proxy for ousted former prime minister Thaksin Shinawatra.
Shinawatra, who faces prosecution on corruption cases, was reportedly seeking political asylum in the UK.
Investor confidence in the country could be dented as the situation intensified, said sources.
"The political situation will hurt investor confidence in terms of investment decisions. Investors can be expected to delay their decisions," a senior manager with major industrial group in Thailand said.
"Most business people will hold their investments back and wait for a clearer picture before proceeding," he added.
"Probably bigger companies that rely on government projects will be affected. These companies will probably see government projects put on hold as investors become cautious," he said but declined to elaborate.
The worried comments came amid talks of protestors planning another coup, while officials considered the option of declaring a state of emergency.
However, some industry insiders believed the situation was not as bad as it seemed.
Perajed Suwannapasri, general manager of Thailand s Union Intraco Co was confident that there would be no long-term consequences of the political unrest on the economy.
"The political unrest is usual and this is not the first time," Suwannapasri said, adding that Thais were accustomed to bloodless political unrest and the economy had adapted to such events.
"Private entrepreneurs have never depended on government policies to survive and so we are not affected by any decisions there," he said. "I accept that there may be a slowing in demand growth in Thailand, but it may only last for three to four months and everything should settle down."
"The overall picture is that demand will still grow and eventually projects that are pending will still go on at the end," Suwannapasri said, adding that there would be no halt in foreign investments as Thailand was an important and major industrial base for several firms.
Suwannapasri added that the current political turmoil would not affect Union Petrochemical s plans to set up a 40,000 tonne/year ester plant.
Naphat Chantaraserekul, senior investment analyst from Kim Eng Securities believed that in the short-term, company stocks could be negatively impacted due to the current sentiment.
While the political turmoil may not affect petrochemical companies adversely, a weakening of the Thai baht due to the tension, could work to their advantage, Chantaraserekul added.
"Most petrochemical companies are naturally hedged. They buy feedstock [in baht] and sell products in US dollars. The weakening [baht] should benefit them as some portions of operating costs are in the [baht]," he said.
The US is a major export market for Thai goods.
