The Thai Coup and Supply Risk

Anyone who has been to Thailand knows what a wonderful country they have ventured into. The Thai are perhaps the most courteous and thoughtful people in the world (and real Thai food is an experience like no other). But from a business perspective, there are also many things about the region to like. For example, they have opened up their nation to the West, inviting foreign direct investment and global sourcing dollars. Now contrast this to Burma and Laos, two neighboring countries, which are essentially closed to the outside business world. About the only other regional competitor to Thailand from a continental South East Asian export perspective is Vietnam, which has also unlocked the doors of its economy to the outside world (despite strong central economic planning and a communist government).

Given Thailand's recent economic progress, the successful coup attempt this week is all the more surprising (even though the former billionaire Prime Minister was infamous for his corruption and co-mingling of business and political interests). At this point, no one knows how the coup will impact export production. But as the military is still in charge, the situation could no doubt deteriorate until democratic elections are held in the coming months and years. For companies sourcing from Thailand -- and any developing global economies, for that matter -- the Thai coup should serve as an example of how regional politics can play a critical role in the overall supply risk of doing business globally. We will continue to track the Thai coup on Spend Matters as the story unfolds.

Jason Busch

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