Thai Crisis Is Yingluck's Decisive Moment
AYUTTHAYA, Thailand—Thailand's deadly floodwaters
haven't only inundated homes and cut off critical supplies of auto-parts and computer components to the rest of the world. They also threaten to consume the country's brand new prime minister.
Premier Yingluck Shinawatra greets supporters in Ayutthaya on Wednesday.
The main test for Yingluck Shinawatra is how quickly she can get some of the worst affected companies dried off and running again—a mission which could prove crucial for the global economy.
"We'll do anything to help them survive and restart their businesses," Ms. Yingluck said as private contractors began pumping water out of one of the worst affected industrial parks here.
As Ms. Yingluck surveys submerged factories from a helicopter, 67 kilometers or 42 miles north of Bangkok, she knows she faces stinging criticism back in the capital for her government's handling of the floods. Although she took office after the onset of the crisis in late July, Ms. Yingluck could still prove one of the deluge's most prominent casualties as critics round on her for contradictory reports on the extent of the flood and the chaos caused by multiple agencies trying to do the same job.
At the same time, the challenge to pull Thailand quickly out of the crisis—a mission which could prove crucial for the global economy—could give her a chance to create her
own identity and help set her apart form her elder brother, populist billionaire Thaksin Shinawatra, who refers to Ms. Yingluck as his "clone."
Many of the diatribes launched against Ms. Yingluck on social-networking sites and in Thailand's Parliament revolve around her close relationship with Mr. Thaksin, who ran Thailand for half a decade before being ousted in a military coup five years ago and now lives overseas to avoid what he says is a trumped-up corruption charge.
Opposition leaders are urging Ms. Yingluck to abandon her plans to copy his free-spending handouts and divert more money instead to Thailand's flood-recovery effort. In the coming weeks, Ms. Yingluck, 44 years old and Thailand's first female leader, could face further trouble as Thailand's opposition parties decide whether to file a no-confidence motion against her government in Thailand's Parliament.
"She will be like a phoenix rising from the ashes if she manages to carry on without any big problems," said Paul Chambers, a professor at Payap University in Chiang Mai and an expert on Thai political and military affairs.
The key to Ms. Yingluck's survival is how she manages the massive recovery effort, analysts say, and that means finding a way to bridge some of the country's gaping political divides and streamline the country's bureaucracy to speed up Thailand's big rebuild.
Analysts say Ms. Yingluck is trying to draw a line under Thailand's recent past—marked by a worsening series of
conflicts since Mr. Thaksin's 2006 ouster, including barricaded airports and bloody street protests—by
appointing Virabongsa Ramangkura, a respected
economist who helped steer Thailand out of its 1990s financial crisis, to head the long-term reconstruction bid. Analysts say the appointment of Mr. Virabongsa, who is largely seen to be above the country's political feuds, was an astute move.
At times Ms. Yingluck has seemed deeply frustrated by the way overlapping bureaucratic agencies are complicating her efforts to control the floods. She has appeared to choke back tears on occasion, and her voice is often hoarse from nonstop speeches and news conferences. As she goes around inspecting pump stations and other facilities she is often mobbed by supporters. Over 530 people have been killed in the floods, the worst the country has seen in over half a century. Heavy monsoon rains dumped a mass of water on some of Thailand's most productive industrial zones. Honda Motor
Co., Pioneer Corp. and Toyota Motor Co. were among the worst affected, and all three have taken the unusual step of withdrawing their financial guidance for the current financial year because of the impact of the flood disruptions. Production at many auto makers around the world has been hit badly by a shortage of crucial components made in Thailand's flood zone.
Around a quarter of the world's output of hard-disk drives was also under water at one point, and many plants are still flooded. Industry analysts say it could take several months for affected manufacturers to restore the pristine "clean-room" environments they need to resume
production. Some disk makers have raised prices by between 20% and 40% because of the falling supply from Thailand, which is the world's second largest producer of the devices after China.
Peter Hookham, Asia operations claims manager at FM Global, a commercial-property insurer, said the dislocations could end up rivaling the economic impact of the earthquake that hit Japan in March. "Japan was an eye-opener for anybody operating supply chains, and
depending on how long Thailand's crisis lasts, our feeling here is that it could be even worse," he said.
In an interview with The Wall Street Journal in Ayutthaya, Ms. Yingluck said that while Bangkok is still under threat, the floodwaters in Thailand's industrial belt are beginning to recede—and that provides a chance for her government to begin a recovery effort designed to encourage local foreign manufacturers to reinvest in this flood-washed, mud-strewn region.
So far, her government has pledged 200 billion baht, about $6.5 billion, in an initial investment to boost flood defenses, including a new 65 kilometer-long flood barrier, and also to provide soft loans to help key businesses get back on their feet. Ms. Yingluck said she is refocusing her priorities to better manage future floods, and is tapping army engineers, among others, to help provide more relief for flood-stricken sites where plants belonging to firms such as Honda, Canon Inc., and hard-disk-drive maker Western Digital Inc. are still submerged.
Ms. Yingluck's top aides, meanwhile, say they are working to restructure the country's regulatory agencies to better
respond to quickly unfolding disasters. Commerce Minister Kittiratt Na-Ranong says he has counted at least 31 different agencies involved in managing the country's system of dams and rivers, making it difficult to put effective flood-prevention measures in place.
The anger in Bangkok, which is controlled by Ms. Yingluck's political rivals, is still growing, though. Last week, Bangkok Gov. Sukhumbhand Paribatra loudly complained that Thailand's Irrigation Department hadn't supplied urgently-need water pumps for city engineers as the floods there worsen. It turned out his staff sent their formal request for the pumps to a different agency.
In the latest developments Thursday, floodwaters are beginning to spill over to the last dry route to Thailand's south, Rama II Road, as floodwaters move steadily through and around Bangkok to the sea. If the road is cut off, vital food and water supplies to the capital could be badly disrupted, although irrigation officials say the risk of a total inundation is now receding.
Thailand's Board of Investment, meanwhile, is offering tax deductions on flood-damaged raw materials and import-tax exemptions on replacements for damaged machinery. Ms. Yingluck says that in recent days there are signs that national and local authorities are beginning to cooperate more effectively as the economic consequences of the disaster become clearer.
"Now we are working as a team with the army and other people, so at least I hope we can get a united Thailand now," Ms. Yingluck said, as supporters around her chanted "Fight! Fight!"