Thailand’s parliament suspended plans to hold a vote Friday to select a prime minister, prolonging a political stalemate that’s kept investors on edge since the May election.
The vote was postponed after the nation’s Constitutional Court said it needed more time to review a petition against a parliament move last month to bar pro-democracy leader Pita Limjaroenrat from renewing his nomination for prime minister after failing in a previous bid.
The parliament will set a new date for premier vote after the court decides on the legal challenge on Aug. 16, House Speaker Wan Muhamad Noor Matha told reporters in Bangkok on Thursday.
The baht extended losses to as much as 0.8%, the biggest decliner among major Asian currencies, while the benchmark stock index ended the morning session 0.7% lower on concerns about a prolonged impasse.
The delay of the vote came hours before Pheu Thai Party was due to unveil a new coalition that will nominate Srettha Thavisin, a property tycoon, as its prime minister candidate. The party, linked to former premier Thaksin Shinawatra, has parted ways with first-placed Move Forward as it looks to secure Srettha’s win. It needs the support of the majority of 750 lawmakers, including those in the military-appointed Senate.
Conservative parties such as Bhumjaithai and Palang Pracharath are expected to join the new coalition and their inclusion would boost support for Srettha’s nomination in the 500-member House of Representatives. His win depends on the Senate, which blocked Move Forward’s leader Pita Limjaroenrat from the top office due to his party’s election pledge to amend a controversial royal insult law.
Investors are counting on a Srettha victory to help break the political gridlock that’s roiled Thailand’s financial markets since the May 14 election. While stocks and the baht have rallied in recent weeks to recoup some of the post-election losses, foreign funds remain net sellers of about $3.5 billion of stocks this year.
The market outlook is expected to brighten with a Pheu Thai-led government, as analysts including Rakpong Chaisuparakul from KGI Securities view its policies as more investor-friendly. In comparison, Move Forward had campaigned to curb business influence. Stocks linked to a couple of Thailand’s tycoons such as Advanced Info Service Pcl, Gulf Energy Development Pcl and True Corp. Pcl have erased most of their losses since the May election.
Thaksin’s Homecoming
Move Forward’s Pita, who previously headed a coalition backed by 312 lawmakers in the elected house, failed on July 13 to muster the votes needed to become premier, while a second attempt a week later was blocked by pro-establishment lawmakers.
Pheu Thai, which won the most number of seats in every national election over the last two decades, is under pressure to form the next government ahead of Thaksin’s planned return from 15 years of self-exile next week. The party has also two other prime minister candidates in reserve: Thaksin’s youngest daughter, Paetongtarn Shinawatra, and former attorney-general Chaikasem Nitisiri.
Yuttaporn Issarachai, a political scientist at Sukhothai Thammathirat Open University, said this would be Pheu Thai’s last chance to lead a government as it is losing its support base to the more progressive Move Forward.
“Thaksin’s homecoming plays a big part in the necessity for Pheu Thai to be in the government after nine years,” Yuttaporn said. “Now is their final chance to seize this opportunity. Pheu Thai no longer has a monopoly on the pro-democracy ballots.”
Move Forward won 151 seats in the election after sweeping Bangkok, a traditional battleground between Pheu Thai and conservative rivals, and about 39% of the popular vote. However, its pledge to amend the royal insult law also known as Article 112, which comes with jail terms, and a push to reform the military, have riled the senators.
Pheu Thai will have to contend with protests from its supporters and Move Forward followers if it ties up with any of the military-backed parties. Srettha and Paetongtarn had earlier vowed not to ally with groups backed by outgoing premier Prayuth Chan-Ocha and Prawit Wongsuwan, who were behind the 2014 coup that ousted a government of Thaksin’s sister Yingluck Shinawatra.
Even if a prime minister is endorsed by the parliament, political turmoil may still remain, according to Tim Leelahaphan, a Bangkok-based economist at Standard Chartered Bank Plc.
“It may take a couple of months for the political noise to gradually decline,” he said.
--With assistance from Anuchit Nguyen and Niluksi Koswanage.
(Recasts with PM vote cancellation.)
