Aug. 5 (Bloomberg) -- Thailand’s Parliament selected Yingluck Shinawatra as the country’s first female leader after her election win last month, clearing the way for the King to endorse the sister of deposed former ruler Thaksin Shinawatra.
Lawmakers voted 296-3 in favor of Yingluck, who put together a 300-seat coalition in the 500-member parliament after her Pheu Thai party won a majority in the July 3 vote. Her next step will be to name a Cabinet, which must present its policies for a confidence vote 15 days after taking office.
“I will be dedicated and do my best as people have given me a chance,” Yingluck told reporters after the vote. She said her party may be able to present the Cabinet list “next week.”
Yingluck, 44, will have to confront the issue of her brother’s return from a three-year exile -- a move opposed by the military and which could reignite protests that left over 90 people dead last year. While her clearcut victory has boosted stocks -- Templeton Emerging Markets Group’s Mark Mobius said today Thailand was “at the top” of his investment list -- Yingluck will also have to find ways to pay for her election pledges to raise the minimum daily wage and boost rice prices as she inherits inflation near a 32-month high.
“The country’s political challenges remain serious,” said Michael Montesano, a visiting research fellow at the Institute of Southeast Asia Studies in Singapore. “Yingluck and those around her will face formidable challenges in managing Thaksin, the cabinet, the coalition and also in how to treat the Thai military.”
Pheu Thai’s campaign promises would cost 2.3 trillion baht ($77 billion), about half involving agriculture and transport infrastructure projects, Phatra Securities Pcl said in a July 19 note. “These measures are likely to generate more inflation and less growth than optimists are inclined to believe,” it said.
The orderly election and transition of power “has buttressed confidence in the country,” Montesano said. “All the same, some of Miss Yingluck’s campaign promises are hard to reconcile with Thailand’s need to fight inflation.”
The planned spending makes rising consumer prices a greater concern than threats to growth, the central bank said July 27. Thailand’s inflation held above 4 percent for the fourth straight month in July because of higher rice, pork, fuel and electricity prices, Permanent Secretary for Commerce Yanyong Phuangrach said at an Aug. 1 briefing.
The Bank of Thailand raised rates on July 13 for the eighth time in a year to 3.25 percent and called for “harmony” between fiscal and monetary policy.
Pheu Thai won 265 seats while the Democrat party of former Prime Minister Abhisit Vejjajiva won 159.
During her campaign, Yingluck vowed to seek changes to a constitution written after the 2006 coup that ousted Thaksin on grounds he failed to respect King Bhumibol Adulyadej, 83. The constitution established a Senate to which half the members are appointed and includes a clause that disbands political parties and bans all executive members for five years if one person commits election fraud.
Almost a year after Thaksin’s allies won the 2007 election, the first since the coup, the article was used to disband their party and oust the government. Yingluck’s victory was the fifth straight time a party linked to Thaksin has won the most seats in an election since 2001.
Efforts by the last pro-Thaksin administration to change the constitution in 2008 were met with seven months of protests by his opponents, who wore yellow shirts to symbolize their loyalty to the monarchy. They seized the prime minister’s offices and stormed Bangkok’s airports as the military ignored requests from the government to disperse them.
Investors who pulled a net 26.9 billion baht out of Thai stocks in the month before the vote have shed their pre-election jitters, buying 46.3 billion baht of Thai stocks in the past month, according to data compiled by Bloomberg. The benchmark SET Index gained 4.6 percent so far this quarter, Asia’s best performer after Mongolia.
The SET slid 34.61 points, or 3.1 percent, to 1,089.40 at 12:16 p.m. local time. The gauge has fallen 4 percent this week, the first decrease in three weeks.
“Thailand is still right at the top of our list,” Mobius, executive chairman of Templeton Emerging Markets Group, told Bloomberg Television in a telephone interview from Tokyo, where he discussed the global stock sell-off.
Thaksin, who founded what became Thailand’s biggest mobile-phone company, draws his support from poorer Thais in the north and northeast. His opponents view him as a corrupt billionaire who wants to undermine the monarchy and regain power from abroad, where he fled after being convicted of abuse of power in 2008.
In an interview published May 20 in the Bangkok-based Matichon newspaper, Thaksin described Yingluck as “not my nominee but my clone.” Yingluck, who was left motherless at a young age, said in a June 8 interview that Thaksin was like a “second father” to her. In the same interview, she said “I will be myself” in running the country.
Unlike her brother, Yingluck is a political novice, having entered the election campaign only seven weeks ahead of the vote. Before that, she held senior positions at Advanced Info Service Pcl, the mobile-phone company that was founded by Thaksin and became the nation’s biggest, and SC Asset Corp., a property developer owned by his children.
Yingluck obtained a master’s degree in public administration in 1990 from Kentucky State University in the U.S. The Frankfort-based school is about 50 miles northwest of Eastern Kentucky University, where Thaksin earned a master’s degree in criminal justice 15 years earlier.
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