(Bloomberg) — Paetongtarn Shinawatra, a daughter of former Thai President Thaksin Shinawatra, was elected as the Southeast Asian country’s new prime minister in a parliamentary election, ending a tumultuous period in which a court ousted her predecessor and dissolved the main opposition party.
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Paetongtarn, 37, secured the support of 319 lawmakers in the 500-member House of Representatives. Her nomination was backed by a coalition led by the Shinawatra-controlled Pheu Thai Party, which also included a number of conservative and military-backed parties.
She is the third member of the influential Shinawatra clan to lead the country and the youngest prime minister in Thailand’s history. She was chosen for the top job after the country’s Constitutional Court removed Srettha Thavisin from his post as prime minister in an ethics case related to the appointment of a corrupt lawyer as minister.
Paetongtarn’s rise came after Srettha’s party lost popularity during his 11-month term in office, while the popularity of the now-defunct Move Forward – the main opponent of the pro-royalty establishment – rose steadily. The Shinawatra scion, accompanied by her still-popular father, is expected to counter the rise of the opposition People’s Party, which is seeking to reform lese majeste – a law that shields King Maha Vajiralongkorn and other senior members of the royal family from criticism.
Thaksin deal
Conservative groups’ support for a Pheu Thai-led government is a sign that a deal among the pro-royalist establishment that allowed Thaksin to return from a 15-year exile is still valid.
Although her victory ended a brief period of political uncertainty, analysts say it is far from certain that her government will be stable. The shadow of her father, who served as prime minister twice and still wields great influence in Thai politics, will loom over her leadership.
“She will be her father’s puppet and probably won’t be able to do much,” said Punchada Sirivunnabood, an associate professor at Mahidol University in Thailand. “The question remains how she can solve economic problems that even Srettha could not solve.”
While Paetongtarn could continue many of the policies pursued by Srettha’s government, it could abandon a controversial plan to distribute 10,000 baht ($286) each to an estimated 50 million adults to stimulate the economy, according to local media reports on Friday. Most members of Srettha’s cabinet could stay in their posts, while Pichai Chunhavajira, who headed the finance ministry, may be excluded, Thai-language newspaper Krungthep Turakij reported.
On Thursday, Paetongtarn vowed to “do everything in her power” to lead Thailand out of the “economic crisis” with the support of the coalition. Her government’s challenges include strengthening growth through looser fiscal policy and tackling the high cost of living and near-record household debt.
In addition to steering an unstable coalition, Paetongtarn must find ways to raise the average annual economic growth of less than 2 percent over the past decade, attract foreign investment in the high-tech industry and stem the exodus of foreign money from the country’s stock markets.
The University of Surrey graduate had previously advocated lower interest rates and sharply criticized the central bank, saying its autonomy was an “obstacle” to solving the country’s economic problems. The Bank of Thailand has kept borrowing costs at a ten-year high of 2.5%, ignoring calls from Srettha and his associates for interest rate cuts.
Thailand’s leading index is one of the world’s worst performing stock indices this year. Foreign funds have withdrawn more than $3 billion during this period. The baht has lost around 2.8 percent this year and foreign investors sold bonds worth a net $691 million this week. This is a sign that the securities are losing their attractiveness.
– With support from Suttinee Yuvejwattana, Pathom Sangwongwanich and Anuchit Nguyen.
(Updated with final vote count and analyst commentary from second paragraph.)
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