Prime Minister Srettha Thavisin was removed from office by Thailand’s Constitutional Court due to an ethical breach, causing further political unrest in Southeast Asia, reported by Time.
During a read-out of the decision on Wednesday, the nine-member court stated that Srettha had violated the integrity and ethical standards established by the constitution by selecting a tarnished lawyer to be a cabinet minister in April.
The judges dismissed Srettha and his government by a vote of 5 to 4. Decisions made by the court are final and cannot be challenged.
A group of former conservative senators filed a petition alleging that Pichit Chuenban’s nomination as a minister was unethical, and Srettha was dismissed as a result. The petition states that Pichit, a former attorney for Thaksin, was ineligible since 2008, when he was imprisoned for contempt of court after attempting a bribe.
Srettha expressed sadness about the court’s ruling and optimism that the parliament will choose the next prime minister shortly. According to him, the government’s removal will impact important economic initiatives. Such as a contentious $14 billion cash transfer program intended to boost the economy.
The benchmark stock index for the country dropped as much as 1.3% before cutting losses to end the day 0.4% worse. After the decision, the baht gave up some of its gains. However, it ended the day 0.6% stronger than it started.
“The decision won’t be taken well by markets given the rise in political uncertainty and the associated downside risks to growth stemming from potential unrest and delays to economic policy implementation,” said Krystal Tan, an economist at Australia & New Zealand Banking Group.
“We need to see whether we end up with a prolonged political vacuum.”
Pheu Thai announced that it is looking into the prospect of renominating Srettha. They will soon negotiate with its partners to choose a new prime minister. In a post on X, the party promised to overcome the setback and work toward a better living for all Thais.
Paetongtarn Shinawatra, Thaksin’s 37-year-old daughter, is still eligible to be the next prime minister. Another strong candidate is 57-year-old Anutin Charnvirakul of the Bhumjaithai Party, the second-largest party. Other choices from the conservative camp include Pirapan Salirathavibhaga of the royalist United Thai Nation and Prawit Wongsuwan of the military-backed Palang Pracharath.
The removal of Srettha poses a risk to economic expansion. Particularly if the coalition parties continue their political backstabbing and leave a possible power vacuum. A stop to foreign investments could occur while markets wait for further clarification on the country’s next leader. A dispute with the Bank of Thailand on its interest-rate policy also occurred during his administration. Which alarmed investors and cast doubt on the independence of central banks.
The unrest may have adverse effects on fiscal policy. It could cause problems for the upcoming year’s budget, too, according to economist Tim Leelahaphan of Standard Chartered Bank Thai Pcl. In a note, he stated that the events further reinforced the bank’s demand for a December interest rate drop.
Foreign investors have removed over $3 billion from the country’s stock market thus far this year. The benchmark SET Index of companies is among the worst performers among all the global exchanges Bloomberg tracks over the last 12 months.
