Thailand awaits election outcome


Thailand held its first general election in accordance with the new 2017 Constitution drafted under the ruling military junta on March 24.

The latest available results have confused the public and injected a dose of uncertainty on Thailand’s political front.

The noticeable change in the new constitution is in the nomination structure of the upper house of the legislative branch, the Senate.

Before the enaction of 2017 Constitution, 76 of the 150 members of the Senate were elected one per province from the 75 provinces of Thailand and another one from the Bangkok Metropolitan Area.

The Senate Selection Commission, made up of both elected and appointed officials, then selected the remaining 74.

The new 2017 Constitution consists of a 250-member nominated Senate. The National Council for Peace and Order (NCPO) appoints the nomination committee.

The NCPO is set up by General Prayut Chan-o-cha after he declared martial law and dissolved the government together with the Senate back in 2014.

The new constitution allows NCPO to appoint an eight-to 10-person panel to elect all Senators with six seats reserved for the heads of Royal Thai Army, Navy, Air Force, Police, military’s supreme commander and defence permanent secretary.

Under the new constitution, the Senate has the veto power to stage a no-confidence vote against a future elected government.

The prime minister can also be a candidate who is not one of the members or even a politician, as long as the Senate approves.

Essentially, the Thai military is the “third hand” in the political backdrop, shadowing the presence and power of the future government.

From a democratic standpoint, the new constitution appears to be a reduced form of democracy as it weakens the influence of political parties and future governments. However, if the constitution had been voted down, the perceived risk of greater political uncertainty and economic instability was far more petrifying.

The proposed constitution was approved by 61.4% of Thai voters with 59.4% of the public participating, reflecting Thai people’s aspirations for peace.

The general election last Sunday was to elect the 500-seat lower house members (House of Representatives), made up of 350 constituency seats and 150 party seats. The constituency seats are directly elected by the people, where the candidate with the most votes wins the district in the first-past-the-post system.

The remaining 150 party seats are allocated by the total number of votes cast and each party’s share of the nationwide vote.

This piece of information will only be released after the coronation ceremony of the King which is scheduled to take place on May 9, 2019.

For instance, Party A has secured 204 constituency seats. If the turnout is 34 million voters, the value of a party seat will be 68,000 votes (34 million votes / 500 senate seats).

If Party A wins 45% of the total votes, it has a limit of 225 seats (45% x 34 million / 68,000 votes per seat).

That leaves it with 11 party seats (225 earned seats-204 constituency seats). If Party A has already reached or is close to its limit in constituency seats, then it cannot get any more party seats than that cap allows.

At this juncture, it seems like Pheu Thai has already exceeded its seats limit, while Palang Pracharat could yield an additional 22 party seats.

The authority to elect the next prime minister requires a majority of a combined 376 votes between the Senate and the House of Representatives.

Given the Senate is entirely supportive of the Palang Pracharat party,  Chan-o-cha only requires another seven lower house seats from the other parties.

Chan-o-cha’s second term is certain, but it is still essential for the military-backed party to form a coalition with the remaining minorities to secure a 250-seat majority in the lower house.

A majority helps to assemble a stable government with reduced friction in the process of crafting and passing fiscal policies.

Our base case is that the Thailand military government can secure a majority in the lower house.

The kingdom is currently going through an economic recovery post 2014 due to the political stability the new constitution provides.

The current recovery would aid Chan-o-cha in garnering support from the minor political parties to stand against the non-military-backed party.

The worst that could happen would be the retaliation of Pheu Thai and other anti-Junta parties through demonstrations and riots.

That could cast Thailand back into the realms of political chaos and social unrest.

Nevertheless, we think any potential conflict is likely to settle peacefully because the threat of civil dis- order will give a stronger reason for the military to confine the influence of political parties further.

Civilians and businesses are also more likely to lean towards the military to secure peace in troubled times.

Thai equities are susceptible to downside risk. So, investors should look away from Thai equities until the results are finalised.