The history of the Thai party system could be characterized as one of multi-party, personality-based, ecliptic, turncoat, and regionalized system. It was a multi-party system because never was there a single party able to win parliamentary majority or
94 www.mof.go.th/ther_2/index_ther.html, 4/12/2000.
95 www.sec.or.th/about/profilee.html, www.sec.or.th/mis/act/chap5.html, 4/13/2000.
96 Paul Handley, "More of the Same? Politics and Business, 1987-96." In Kevin Hewison, ed., Political Change in Thailand: Democracy and Participation (New York: Routledge, 1997), 106..
even 32% of the seats.98 All cabinets were formed by a coalition of political parties.
Most of the political parties were personality-based in the sense that a powerful political figure, usually a strong military leader or an ex-Prime Minister, created a party to house his personal followers. For instance, the Chart Pattana Party was created by former Prime Minister, General Chatichai Choonhavan; former army leader Chavalit Yongchaiyudh established the New Aspiration Party; other smaller parties like Social Action, Prachakorn Thai, Nam Thai, Palang Dharma were still controlled by their founders. Only the Chart Thai and the Democratic Party did not belong to any individual. Ideology or policy platform was less an organizational principle than patron-client relationship. Due to their patronage nature, once the leaders of these parties lost their influence or withdrew from politics, their parties usually died with their creators. Because politicians joined political parties not for ideological reasons but political interests, many politicians changed their party affiliations before elections to the ones that could provide the best offer, e.g., financial incentives or cabinet posts. For example, in the 1996 election, the New Aspiration Party was able to defeat its rival, the Democrat Party, by a small margin of two seats because the NAP received a large number of turncoats from the Chart Thai Party. 99 Finally, in the elections of 1992 and 1995, major political parties were divided among regional lines. Democrats drew their support from the South, Chart Thai dominated the Central region, Palang Dharma received the largest vote share in Bangkok, and Chart Pattana and New Aspiration controlled the Northeast region.100 Financial constraints and the lack of ideological appeals probably explained the regionalization of Thai political parties.
The above characteristics of Thai party system tended to encourage politicians to treat their offices as personal propriety, by which to maximize their short-term interests before the coalition government collapsed or before a military coup occurred.
At the beginning, politicians extracted rents from agricultural productions by helping the owners to get concession permits and export assistance - a practice continued up
97 www.sec.or.th/newact.html, 3/22/99.
98 David Murray, "Thailand's Recent Electoral Reforms." Electoral Studies, Vol.17, No.4 (December 1998), 526.
99 Daniel E. King, "Thailand in 1996: Economic Slowdown Clouds Year", 161.; David Murray,
"Thailand's Recent Electoral Reforms", 525; Surin Maisrikrod and Ducan McCargo, "Electoral Politics:
Commercialisation and Exclusion," in Kevin Hewison, ed., Political Change in Thailand: Democracy and Participation (New York: Routledge, 1997).
100 Maidrikrod and McCargo, "Electoral Politics," 144.
to date. As the industrial production picked up its momentum in the 1980s, politicians extracted campaign contributions from industrialists by representing their interests in government procurement projects, infrastructure building, export assistance, and tax evasion.
However, with the expansion of the financial system in the late 1980s, including both the security market and the banking market, politicians found more convenient ways to raise campaign money or to distribute patronage. Politicians could use their position to acquire privileged information about government policies that might affect stock prices or interest rates. They could get legal campaign contributions in the form of low-priced pre-listing stocks, and sold the stocks at market rates for huge profits in a few months. Politicians could put pressure on the state's supervisory agencies not to investigate the insider trading of security companies, the over-extended loans of banks, and the under-reported profits of financial owners.
Democratization of the 1990s, and particularly the 1997 constitutional reform would probably change Thailand's financial politics. The student demonstration against the military government in 1992 seemed to put an end to the military part of the vicious cycle mentioned before. No military coups have been attempted since 1992. For politicians, the uncertainty of political future caused by surprised military coups would be reduced. They could focus more on long-term development achievements to win popular support.
The democratization movement of the Thai society also led to the revision of the constitution in 1997, with an aim to reduce patronage politics. One clause of the new constitution specified that a member of the parliament must register for a political party at least 90 days before the election date. This clause was designed to reduce the number of turncoat politicians and the patronage associated with this practice.
Another constitutional clause set the educational qualification for representatives to bachelor's degree, in the hope that many of old-style politicians would be disqualified.
The new constitution also changed the multi-member districts to single-member districts, which would make vote buying less effective. Finally, the new constitution required all eligible citizens to vote in elections and referenda. Its aim was to dilute the effectiveness of vote buying by national politicians and local canvassers.
Accompanying with the constitutional revision were other measures to reduce patronage politics. For instance, the House abolished the Development Fund for representatives (about $200,000 for each MP); the money was previously used to
patronize supporters.101 The Election Commission became an independent agency from the Ministry of Interior to run and monitor elections. In the past, the Ministry of Interior had conducted elections in dubious manner: it either failed to suppress fraud or collaborated with rigging ballot boxes.102
These constitutional and legal innovations will not eliminate financial politics overnight. However, they constitute new constraints on the practice and effectiveness of financial politics. The real results remain to be seen.
Conglomerates
Before the 1980s, Thai economy in the countryside was dominated by landed gentry, developers of natural resources, and smugglers. In the urban areas, the predominant capitalists were conglomerates consisted of large banking families, industrialists and traders in monopolies and oligopolies. Due to the nature of the businesses, they were strong supporters of the military and civilian bureaucrats who provided these privileges.103
In the late 1980s and early 1990s, new conglomerates emerged and their direct and indirect participation in politics increased.104 Many business elites participated in the newly liberalized elections and were appointed cabinet members.105 These were the industrialists associated with Thailand's export success as well as the investors in real estate and security market. Representative of these new conglomerates were the BMS group (mostly economists in government, universities, banks, and businesses), Pairoj Piempongsarn and colleagues (mostly real estate companies), the Shinawatra group (in the oligopoly of telecommunication business), Song Vatcharasriroj (security-market investment group), and the Group of 16 (young members of the parliament). In addition to these civilian conglomerates, the military started to establish its financial arms, including the Thai Military Bank and a number of
101 Philip S. Robertson, "The Rise of the Rural Network Politician: Will Thailand's New Elite Endure?" Asian Survey, Vol.36, No.9 (September 1996), p.933.
102 David Murray, "Thailand's Recent Electoral Reforms", 528-31; Surin Maisrikrod and Duncan McCargo, "The Electoral Politics".
103 John L.S. Girling, Thailand: Society and Politics (Ithaca, NY: Cornell University Press, 1981);
Kevin Hewison, Power and Politics in Thailand: Essays in Political Economy, (Manila: Journal of Contemporary Asia Publishers, 1989); Akira Suehiro, Capital Accumulation and Industrial Development in Thailand, (Bangkok: Chulalongkorn University Social Research Institute, 1985).
104 Anek Laothamatas, Business Associations and the New Political Economy of Thailand: From Bureaucratic Polity to Liberal Corporatism, (Boulder, CO: Westview, 1992).
105 Suchit Bunbongkarn, "Elections and Democratization in Thailand." In R.H. Taylor, ed. The Politics of Elections in Southeast Asia (Washington, DC: Woodrow Wilson Center Press, 1996), 190.
investment companies.
The new conglomerates found a faster and easier way to wealth by investing in security market and engaging in banking activities. Through innovative bookkeeping exercises, preferential stock allocations, insider trading, and the privileged information received from their political connections, they could manipulate security prices for instant and handsome profits.106 These new conglomerates strengthened their bonds with state officials through joint investments in the security market.107
The 1997 crisis brought some changes on the part of the new conglomerates.
Under the pressure of the IMF, the Thai government issued new regulations on corporate bookkeeping, insider trading, and conflict of interest. The Securities and Exchange Act was revised to strengthen transparency. Many financial firms were ordered to close down or change their management. A total of 58 insolvent and liquidity strapped finance companies were suspended by the end of 1997. The Bank of Thailand further intervened in a total of six commercial banks and twelve finance companies in 1998 to change their management and practices.108 In 1999, the Bank prosecuted 40 executives from defunct finance companies.109 The rest were under tight supervision by the government and the IMF. If implemented effectively, these new rules would greatly reduce the room of financial politics for conglomerates.