🇹🇭 Srettha, cabinet prepare for central bank war

Hello friends!

Busy, busy, busy in Thailand this week where the Thaksin Shinawatra lese-majeste charges lead to plenty of intrigue and musing. Across the way in Vietnam, it’s all business, but never as usual. And in Cambodia, a visit from US Defence Secretary Lloyd Austin has led to warm embraces and big pledges, but I’ll be waiting to see what comes to actual fruition. 

Let’s crack in,

Erin Cook

🇹🇭 If Thaksin took it too far, how does it bring it back?

Former prime minister Thaksin Shinawatra’s lese-majeste charges continue to shake Thailand. It’s all evidence of the old guard keeping him on a tight leash, observers told the Bangkok Post. “The lese majeste case is meant to be a warning to Thaksin not to step out of line. The deal must be honoured. The line-up of the new cabinet and the election of the new Senate are also included [in the power-sharing deal],” Stithorn Thananithichot, director of the Office of Innovation for Democracy at King Prajadhipok's Institute, said. 

He suggested that nothing would happen to Thaksin in the end — certainly not the years in prison others charged under lese-majeste cop — if he sees the ‘warning’ for what it is. 

So is he going to do a runner? No! Well, probably not. Maybe not? “I am confident he will not leave the country. I think he is ready to fight [the lese majeste case]. He was in exile abroad for 17 years. That’s long enough. Today, he has already entered the justice system. This is another hurdle [for him], so he has to deal with it. I cannot speak on his behalf. But I don’t think he is going anywhere,” Prime Minister Srettha Thaivisn said after speaking with Thaksin’s daughter — and Pheu Thai party boss — Paetongtarn Shinawatra. 

Very pleased to see this one from Joshua Kurlantzick and Pavin Chachavalpongpun over at CFR. While the elite keeping Thaksin in check totally tracks, there is one enormous element here that hasn’t been discussed — what’s the King thinking? This one is beyond me so let’s quote the pair in full:

“Yet, the recent lèse-majesté charges against Thaksin indicate that his deal with the royalist establishment might not be final, and he may not be a free man after all. The growing insecurity of the monarchy is no longer caused only by the Move Forward Party. Thaksin’s political resurgence is now reminding the royal establishment that he, once back in Thailand, is charismatic and potentially popular enough to challenge the monarchy’s power, as he did at the height of his popularity in the early 2000s. Therefore, it seems possible that pro-monarchy elites, and possibly the king, are using their judicial power to block Thaksin’s political resurgence. Lèse-majesté continues to serve as a vital political weapon for the Thai political elite.”

Srettha’s war with the central bank is set to escalate, Bloomberg reported yesterday. Citing unnamed sources clued in on cabinet discussions, Srettha is set to name an ally for the Bank of Thailand’s board chairman role, which is vacated in September. Kittiratt Na-Ranong, a former finance minister and current advisor to Srettha, and Supavud Saicheua, a former advisor to Pheu Thai, have been floated. 

This Bloomberg piece is an excellent look at how we got to this point, but also what’s up in the Thai economy more broadly. Bank of Thailand hasn’t been overly forthcoming with monetary policy assistance, but the government is hardly helping things with political instability widely expected and unsettling would-be investors. Structural! Reforms! Are! Needed! Says the bank. Srettha wants a quicker fix that will help Thais immediately — and get him in the good books. 

Instead, Srettha’s government continues to fuss at the edges. Tax reforms aimed at boosting domestic tourism were approved by cabinet Tuesday, Deputy Finance Minister Paopoom Rojanasakul said. The measures are tied to the low period, from May until November, and will ‘include tax deductions for companies organising conventions and seminars,’ Reuters reports. It will cost the government around $41 million in revenue, the Prime Minister said, but is expected to be worth it. 

During that same cabinet meeting, the government confirmed 15 million welfare cardholders will have their 10,000 baht ($273) digital wallets paid by Sept. 30, Bloomberg reported Tuesday. Srettha, who has invested considerable political capital into this controversial plan, has given the roll-out priority. 

🇻🇳 How much can Vietnam afford to save embattled SCB?

Central bank loans to the Saigon Joint Stock Commercial Bank are jaw-dropping. SCB, as it’s known, is at the centre of the staggering fraud case involving dozens of accomplices including tycoon Truong My Lan. She was sentenced to death for her role in the case in April. 

In an exclusive, Reuters reports a further $1.2 billion was lent to the bank in the last two months bringing the total to $24.5 billion — or around 6% of last year’s GDP. Yeesh. The State Bank of Vietnam has not made any specific comments, only previously confirming to the wire that yeah, it was helping out with special loans to secure the bank. 

It’s one headache after another for SBV. Inflation hit a 16-month high, reaching 4.44% in May from a year earlier and up from 4.40% in April. The statistics office said in a statement that pork and electricity are the main drivers, as reported by Bloomberg. 

China has violated Vietnam’s sovereignty in the Paracels, the Ministry of Foreign Affairs said last month after a navy hospital ship was sent to the waters. The Youai hospital ship sailed around the Paracels treating Chinese personnel in the area, Voice of America reports via Global Times which cited China Central Television. And here you are reading it in Dari Mulut ke Mulut! 

Don’t get too excited: “This would appear to be a pro forma objection by Vietnam, intended to publicly respond to China’s public announcement of the hospital ship’s voyage, and thus register Hanoi’s continued claim of sovereignty over the Paracel Islands,” Raymond Powell, a fellow at Stanford University’s Gordian Knot Center for National Security Innovation, told the outlet. 

Back on dry land, the South China Morning Post poses the question — could China gain from Vietnam’s political drama? A fractured political class could leave Vietnam less equipped to deal with pressures like the South China Sea or courting investment from abroad (typically away from China), experts suggest. 

“There are few signs that the infighting is already at its peak, and it is expected to continue and may become more intense in the lead-up to the 2026 transition. It shows the cracks in Vietnam’s top leadership, which may affect the ruling party’s ability to stand united to deal with China on the South China Sea dispute and other issues,” Zhang Mingliang, a regional affairs specialist at Jinan University in Guangzhou, told the outlet. 

Maybe not, says Nguyen Khac Giang at ISEAS: “Vietnam has gradually become more authoritarian, but its open economy and multilateral foreign policy prevent it from becoming an inward-looking state. While the turmoil might distract Vietnam’s efforts in addressing the situation in the South China Sea, I don’t think it will change its current approach.” 

🇰🇭 Hey, hey, hey don’t forget about us, says US

The Americans are on the move in Cambodia. After being apparently so shocked and surprised by the presence of China at the Ream Naval Base, the loving embrace of Defence Secretary Lloyd Austin was only a matter of time. Swinging by Phnom Penh after his attendance at the Shangri-La Dialogue, Austin met with Prime Minister Hun Manet this week.

The announcement was made by papa Senate President Hun Sen on Facebook, where he confirmed military exercises will resume and Cambodians will again attend West Point: “The two countries can change [our] attitude to improve our relations, although we have different views on some issues. But our cooperation in many sectors [has been] fruitful and we can sit down to work together for fruitful results,” Hun Sen said in the post, as reported by CamboJA. 

Interestingly, much was made during the succession that Hun Manet himself was a former student of West Point — a fact that Austin pointed to during the visit. “We discussed how the US and Cambodia can strengthen our defence relationship in support of regional peace and stability,” Austin said in a tweet. 

Austin also met with Defence Minister Tea Seiha, though you’d be forgiven for missing that. 

Elsewhere, Cambodia is keen to see investment from Japan increase to offset the reliance on China, Deputy Prime Minister Sun Chanthol told Nikkei Asia last week on the sidelines of the Future of Asia forum. Currently, around two-thirds of investment in the country is coming from China. "We'd like to see a Japanese company that has a factory for the electronics, electrical or automotive [industries] … It will help Cambodia achieve its vision of becoming a high-income country by 2050,” he said. 

He made some interesting comments on why the country is so heavily-China at the moment. Pointing to the pandemic, he said no other country came to help Cambodia and only China offered vaccines. Nor has anyone else put their hand up for infrastructure investment: “We never reject any support from any Western country or Japan ...You cannot blame us [for reliance on China alone]” 

How much of this is just calming would-be investors that Cambodia doesn’t exactly want to be a vassal state and how much of it is sincere is not for me to say, but it did catch my eye. 

And to end things, an update on opposition parties. Meach Sovannara, a former official of the Cambodia National Rescue Party, has been elected president of the New Generation Party, CamboJA reports. The brand new party held its first congress with around 500 members Tuesday. It was officially recognised by the government as a party in April. 

“Adherence to political hatred divides the nation. So, the NGP is committed to building unity, trusting each other, not destroying each other and restoring ties,” Sovannara said.