Thai coup raises fears for 'sick' economy

Thai coup raises fears for 'sick' economy

BANGKOK - The last time Thailand had a coup, the stock market crashed when the kingdom imposed draconian capital controls. This time around, investors hope the generals have learned their lesson.

Markets have largely taken May's military takeover in their stride, but there is still nervousness about a regime that has put the air force chief in charge of the economy and appointed the navy commander to oversee tourism.

Experts say the last putsch, in 2006, showed that soldiers lack the expertise to run Southeast Asia's second-largest economy.

"The military government struggled to manage the economy, reflecting the lack of technocratic skills in economic management and administration," recalled Rajiv Biswas, chief Asia economist at the IHS consultancy firm.

The regime was also unable to move ahead with significant reforms because of its caretaker status, he added.

After the 2006 coup, markets were particularly frightened by drastic foreign capital controls introduced several months later to try to curb the rise of the baht, noted Ryan Aherin, Asia analyst at risk advisory company Maplecroft.

"The measure was very unpopular with investors, he said.

The Thai stock market suffered a plunge of 15 per cent in just one day before authorities quickly backtracked.

The regime also briefly considered limiting foreign investment in businesses.

By the time it abandoned the idea, "investor sentiment had already plummeted due to fears of nationalistic policies", said Aherin.

So far, the Thai stock market is up about four per cent since the May 22 coup, helped by buoyant global investment sentiment.

But Japan, Thailand's largest foreign investor, is watching events with trepidation.

Japanese auto giants Toyota, Honda and Nissan have invested heavily in Thailand, attracted by its skilled workforce and the ease of doing business.

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