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Yingluck Banks on $26 Billion Plan After Flood ‘Stumble’

Thai ‘Credibility’ at Stake as Factories Soak in Flood Plain
A Toshiba factory is partially-submerged at Bangkadi Industrial Park in Pathum Thani province on October 21, 2011. Photograph: Pornchai Kittiwongsakul/AFP/Getty Images

Thai Prime Minister Yingluck Shinawatra plans to win back confidence in her 12-week-old government with a reconstruction package after Bangkok residents blamed her for an inadequate response to the country’s worst floods since 1942.

“The floods may be a blessing in disguise for the government to wake up and do the things it needs to do to improve this country,” Energy Minister Pichai Naripthaphan, who has proposed spending as much as 800 billion baht ($26 billion) on recovery efforts, said in a phone interview. “It’s just like a kid who starts walking and a strong wind blows. You might stumble, but then you need to get up and start walking again.”

Mixed messages over the severity of the flooding, which fueled panic in Bangkok, threaten to erode Yingluck’s popularity and energize opponents whose protests led to the demise of her brother, Thaksin Shinawatra, five years ago. To regain the trust of voters who have seen floods swamp their homes and shutter factories employing more than 600,000 workers she will have to rebuild damaged roads, bridges, homes and factories.

“This is really hers to win or lose,” said Michael Montesano, visiting research fellow at the Institute of Southeast Asia Studies in Singapore. “If she does a good job with the recovery, a lot of the fumbling recently will be forgiven, at least with everyone except her diehard opponents.”

Inadequate Relief

Three-quarters of the respondents in an Oct. 30 Assumption University poll of Bangkokians said the administration’s relief efforts were inadequate. A poll by the same organization conducted Oct. 1-15 in 19 provinces rated the army and volunteers ahead of the government in dealing with the floods.

The central bank, which last week slashed its 2011 economic growth forecast to 2.6 percent from 4.1 percent, expects expansion to slow as the global economy weakens and the flooding impact increases, according to minutes of its Oct. 19 meeting. Government spending in response to the floods may prompt policy makers to hold the key interest rate at 3.5 percent, Goldman Sachs Group Inc. economist Mark Tan wrote in a note yesterday. Thailand’s SET Index has gained 10 percent in the past month, mirroring regional benchmarks.

More than a meter of water has inundated parts of northern, eastern and western Bangkok as the government aims to divert floods around the city center. Yingluck has said the floodwaters may take a month to drain from the capital.

‘Everything’s Flooded’

“I don’t believe in my government anymore,” said Supalak Antonna, 29, as she stood on the foot of a six-lane bridge near Bangkok’s Grand Palace waiting for a boat to ferry her through chest-deep waters that have turned parts of the city into a trash-filled lake. “Many times they would say it’s okay, don’t worry, and two or three days later everything’s flooded.”

Yingluck, Thaksin’s youngest sister, became Thailand’s first female leader on Aug. 9 after her Pheu Thai party won 265 seats in the 500-member Parliament, the fifth straight time a party linked to the former leader has come first in an election since 2001.

Thaksin was ousted in a 2006 coup and has lived overseas since fleeing a jail sentence for abuse of power. His allies won elections in 2007, and ruled for a year before a court disbanded the party for corruption amid protests by opponents who seized government buildings and the nation’s main international airport.

In the 26 provinces still affected by flooding, Yingluck’s party won about 70 percent of constituency seats in the July vote. The Democrats, who were ousted in the July election, control 23 of 33 seats in Bangkok, where Thaksin’s party won 32 of 37 seats in 2005.

‘Clearly Underestimated’

“The situation was clearly underestimated by the government,” former Prime Minister and Democrat leader Abhisit Vejjajiva said in an Oct. 31 interview while helping flood victims in Bangkok. “There wasn’t sufficient warning.”

On Oct. 5, after floodwaters broke through a levee at Saha Rattana Nakorn Industrial Estate in Ayutthaya province 78 kilometers (48 miles) north of Bangkok, Yingluck went ahead with a scheduled trip to Myanmar as part of a tour of Southeast Asian capitals.

Two days later, with the deluge threatening two more industrial estates where Honda Motor Co. and Nikon Corp. have factories, she set up a flood crisis command and evacuation center at Don Mueang airport in northern Bangkok and canceled trips to Malaysia and Singapore.

‘50-50 Chance’

Yingluck said on Oct. 13 inner Bangkok would be protected by floodwalls. She reversed course two weeks later, declaring a five-day public holiday and warning of a “50-50” chance downtown areas would see as much as 1.5 meters of water in low-lying areas. Bewildered residents began hoarding bottled water and vacating the city.

Her Cabinet members also fueled uncertainty. On Oct. 13, Science Minister Plodprasop Suraswadi warned residents in northern Bangkok to evacuate immediately, only to have colleagues retract the order a few hours later. The next day, Justice Minister Pracha Promnog, who heads the flood relief command, said he would “guarantee that Bangkok won’t be affected.”

“We are not ignorant or indecisive,” Yingluck told reporters on Nov. 1. “I want to ask for sympathy from the media and the public because there are many problems. When we fix one, it doesn’t mean all problems will be solved.”

The Democrat party, which controls Bangkok’s city hall, has clashed with Yingluck on when and where to open floodgates and issue evacuation warnings. Bangkok Governor Sukhumbhand Paribatra told the public on Oct. 13 to heed only his warnings.

‘New Thailand’

“You’ve got a government that so far has not shown competence in handling the situation, nor transparency,” former Finance Minister Korn Chatikavanij said Oct. 31. “To start immediately talking, even before you’ve taken care of the people, of spending almost a trillion baht smacks of opportunism.”

The government’s so-called “New Thailand” project to revive the economy and build new water management infrastructure may cost as much as 800 billion baht, Pichai said Oct. 31.

“The government wouldn’t get it in a short time or be able to execute it that fast” because of strict rules on budget spending, Bank of Thailand Governor Prasarn Trairatvorakul told reporters in Bangkok late yesterday.

Yingluck will head the committee overseeing the effort, Pichai said, without providing details on how the money will be spent.

“Nobody’s going to block the budget for flood relief,” said Sanit Nakajitti, a director at PSA Asia, a Bangkok-based risk consulting company. “People are going to be smiling when they get that money.”

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