Asia Country Risk Ratings

IThailand (THA)

Thailand's political risks have intensified significantly following a series of legal and political upheavals. The Constitutional Court's decision in August to dismiss Srettha Thavisin from the prime ministership over an unethical cabinet appointment has shaken the political landscape. In the wake of Srettha's ousting, Thailand’s House of Representatives elected Paetongtarn Shinawatra, daughter of former prime minister and Pheu Thai Party (PTP) leader Thaksin Shinawatra, as the country’s 31st prime minister. Paetongtarn, a political newcomer with no government experience, is expected to govern under the influence of her father, Thaksin, who remains a dominant figure in Thai politics.

Paetongtarn’s government faces a challenging road ahead. Her administration is expected to grapple with fractious coalition politics, which will impede its effectiveness during its four-year term. The exclusion of the military-aligned Phalang Pracharat Party (PLP) from the cabinet has exacerbated tensions, particularly with PLP leader Prawit Wongsuwan, a former deputy prime minister, who still wields significant influence. Meanwhile, the inclusion of the United Thai Nation (UTN) Party, another military-aligned coalition partner and former rival of the PTP, ensures that the military establishment retains a strong hand in government affairs. The competing objectives between the PTP's push for greater democratic representation and the military-aligned factions’ desire to maintain their influence are expected to create ongoing friction within the coalition.

In addition to these internal challenges, political risk is heightened by a lese-majesty charge against Thaksin Shinawatra. The Office of the Attorney-General indicted Thaksin for an alleged insult to the monarchy during a 2015 interview, with the case adjourned until July 2025. This development further complicates the political environment and adds to the instability surrounding Paetongtarn’s administration. The Constitutional Court's dissolution of the progressive Move Forward Party (MFP), the winner of the 2023 general election, over its stance on amending the lese-majesty law has also raised concerns about Thailand’s democratic progress. The MFP’s former members have regrouped under the newly formed People's Party (PP), which now leads the opposition and continues to push for progressive reforms. Tensions surrounding reform of the monarchy remain a divisive issue in Thai society and will weigh on political stability. Paetongtarn’s ability to navigate the complex relationship between the PTP and the military-aligned establishment will be crucial to Thailand’s political future. Should the coalition government collapse due to internal conflicts, the risk of a military coup would increase, marking a return to a familiar pattern in Thailand’s modern political history. Currently, the probability of a coup is estimated to rise from low to high (30-40%) if the government fails to maintain cohesion.

A significant factor in Thailand's political risk is the lack of legislative restraint on the military establishment. While a new set of 200 senators, who no longer have the power to vote on the prime minister’s election, took office in July, many of them are allies of the military and the Bhumjaithai Party (BJT), the second-largest party in the government coalition. This suggests that the Senate is unlikely to challenge the military's influence, ensuring that the establishment continues to hold sway over key political decisions. The Paetongtarn administration has committed to holding referendums on constitutional change, with the goal of introducing greater democratic reforms. However, we anticipate fierce debate over the extent of these reforms, particularly between the PTP and military-aligned parties. This discord is likely to undermine the government’s stability and hinder its ability to pass significant reforms.

Despite these political tensions, the insurgency in Thailand’s southern provinces—home to a Muslim-majority population—remains a localised issue. Low-level attacks on security forces will continue, but the overall threat to national political stability from this conflict is minimal. While there are concerns about a potential escalation in response to the Gaza conflict, the risk remains low.

Singapore (SGP)

Singapore's political landscape remains stable and predictable, bolstered by the technocratic governance of the People’s Action Party (PAP), which holds a parliamentary supermajority. Despite recent leadership changes, political continuity has been ensured, and the PAP’s dominance remains unchallenged. Lawrence Wong, who became prime minister in May 2024, has smoothly transitioned into leadership, maintaining the stability for which Singapore is known. He is supported by Deputy Prime Ministers Gan Kim Yong and Heng Swee Keat, both of whom are seasoned policymakers. This leadership trio ensures that Singapore’s long-standing approach to governance—characterized by efficiency, pragmatism, and policy consistency—remains intact.

While opposition parties, particularly the Workers' Party (WP), have gained visibility in recent years, they remain unable to pose a serious challenge to the PAP's control. The WP has advocated for greater checks and balances on the government and increased public engagement, but their role largely remains that of a constructive opposition. The PAP continues to dominate, and its grip on power is unlikely to weaken in the foreseeable future. Although the WP has managed to secure eight elected seats in the 104-seat parliament, it lacks the numbers or influence to threaten the PAP’s supermajority. One area of potential political sensitivity is Singapore’s ethnic diversity. While the government has made efforts to ensure political representation for ethnic minorities, including Malays and Indians, the ethnic Chinese majority remains the dominant force in politics. The likelihood of a non-Chinese prime minister remains slim, and racial tensions are mitigated by strict laws on public demonstrations and censorship. These factors contribute to Singapore’s overall political stability.

The next general election is expected to take place in early 2025, shortly after the annual budget announcement in February. This timing gives Prime Minister Wong a longer runway to introduce policies that resonate with the electorate and solidify the PAP's voter base. However, scandals involving PAP members in 2023 have affected public support, and the party may see its vote share fall below 60% for the first time since Singapore’s independence in 1965. While this would mark an unprecedented dip in popularity, the PAP is still expected to secure a comfortable parliamentary majority.

The Workers' Party is likely to retain its current seats, while smaller opposition parties like the Progress Singapore Party and the Singapore Democratic Party may gain limited representation through non-constituency members or single-member constituencies. Nevertheless, the opposition remains far from posing any real threat to the PAP's dominance, partly due to Singapore’s electoral system, which includes gerrymandered boundaries and government control over the mainstream media.

The election of Tharman Shanmugaratnam as Singapore’s ninth president in September 2023 also highlights evolving voter sentiment. A former senior minister with ties to the PAP, Tharman is seen as a unifying figure, and his personal popularity underscores the public’s appreciation for progressive ideals and social inclusivity. However, his election should not be viewed as a referendum on the PAP, but rather as a testament to his individual appeal.

Hong Kong (HKG)

Hong Kong’s political landscape has remained stable, with the Chinese national security law, imposed in 2020 and bolstered by a domestic version enacted in March 2024, effectively curbing dissent. The new law, based on Article 23 of the Basic Law, criminalises offences such as treason, sedition, terrorism, and collusion with foreign forces, with some crimes carrying life imprisonment sentences. The broad interpretation of these offences has further tightened control over the city, aligning with Beijing’s view of national security. Since the introduction of these laws, protests and significant political unrest have largely disappeared, ensuring the administration of Chief Executive John Lee continues to operate without major disruptions.

The Hong Kong government has attempted to alleviate public concerns by stating that criticism of the administration does not automatically lead to prosecution under the national security laws. However, the legal landscape remains highly restrictive, as demonstrated in August 2024 when two journalists were convicted of sedition for publishing articles that were ruled to have incited hatred toward the Hong Kong and Chinese governments. These cases underscore the limited space for dissent, with the judiciary continuing to uphold the government's authority in national security matters.

John Lee, appointed by the Chinese government, leads a highly centralised administration that faces minimal public accountability. He has made it clear that political reform, including the possibility of universal suffrage for electing the chief executive and Legislative Council (Legco) members, is not a priority. In a statement in June 2024, Lee confirmed that there would be no moves toward such reforms during his tenure. This decision leaves Hong Kong’s governance firmly under the control of pro-Beijing authorities, with the public’s role in decision-making significantly curtailed.

In terms of policy, the government has shifted its focus from political reform to economic development. Hong Kong’s administration has continued to prioritise its role as a global financial hub, rolling out initiatives to strengthen its economic ties with mainland China. In August 2024, Hong Kong signed a memorandum with China to facilitate easier bilateral remittances, further integrating its financial systems with the mainland. Additionally, the government is expanding its offshore renminbi trading and promoting green finance and crypto asset exchanges to bolster its status as a key financial centre in Asia.

The electoral landscape in Hong Kong remains tightly controlled. The next Legislative Council (Legco) election is scheduled for 2025, with the election of the chief executive to follow in 2027. Both elections are expected to continue the trend of limited democratic participation. Following Beijing’s intervention in 2021, which significantly reduced the proportion of directly elected seats in Legco from 50% to just over 20%, the 2021 elections resulted in an almost entirely pro-establishment legislature. Only one opposition candidate managed to win a directly elected seat, and voter turnout for the directly elected seats hit a record low of 30.2%.

Given these constraints, the 2025 Legco election is expected to produce a similar pro-government majority, with limited representation from opposition parties. The system of indirect elections, which favors candidates aligned with the central government, ensures that the outcome of the elections is largely predetermined. Chief Executive John Lee, who was elected in 2022 under a restricted franchise with no opposition, is expected to remain in office for a second term in 2027, assuming there are no significant economic downturns or personal scandals.

Pakistan (PAK)

Pakistan’s political landscape remains volatile, with its government historically struggling to serve full terms due to political infighting, military interference, and economic challenges. The administration that took office in February 2024 is led by a coalition between the Pakistan Muslim League (Nawaz) or PML-N, and the Pakistan People's Party (PPP). Prime Minister Shehbaz Sharif, from the PML-N, and President Asif Ali Zardari, from the PPP, head this fragile alliance, which has faced significant challenges since its formation. Both parties previously collaborated in a coalition government formed in April 2022, but their joint efforts have often been unpopular due to the implementation of stringent economic reforms tied to IMF requirements.

The political environment in Pakistan remains fractious. The opposition, led by the Pakistan Tehreek-e-Insaf (PTI) party and its leader, former prime minister Imran Khan, continues to be a significant force, despite Khan's legal troubles. Disqualified from running for office and facing multiple judicial cases, Khan’s support base remains strong, galvanised by the government’s crackdown on his party. Despite his previous anti-military rhetoric, Khan signalled a willingness to negotiate with the military in August 2024, offering to engage in talks if conditions were met, including the holding of free and fair elections and the dropping of charges against PTI supporters. However, given the military’s longstanding opposition to Khan, it is unlikely that these overtures will be reciprocated, and the military remains an obstacle to his return to power.

The ruling coalition itself is on unstable footing, having lost its two-thirds majority in the National Assembly in May 2024 after election results in several provinces were suspended amid allegations of vote-rigging. This loss of majority complicates the government’s ability to pass significant legislation and weakens its grip on power. The coalition’s internal divisions also exacerbate its fragility; the PML-N and PPP have a history of hostility and ideological differences that make governance difficult. The lack of legitimacy and credibility, fuelled by suspicions surrounding the 2024 election results, has only deepened public dissatisfaction, making it unclear whether the government can complete its full five-year term.

Pakistan’s ongoing economic crisis further undermines political stability. The country continues to face a severe balance-of-payments problem, forcing the government to seek external financing to meet its obligations. However, this comes at the cost of adhering to IMF-imposed austerity measures, which have proven deeply unpopular. The rising cost of living, food insecurity, and unemployment have sparked mass protests, with citizens increasingly frustrated by the government’s inability to address their concerns. This discontent is likely to fuel intermittent bouts of political unrest.

Military interference in governance also remains a key issue. The military, which has historically played a powerful role in Pakistan’s politics, continues to influence major decisions. This dynamic limits the government’s ability to make independent policy decisions, further eroding public trust. Meanwhile, rising security threats from Islamist militant groups, particularly the Tehrik-i-Taliban Pakistan (TTP), and separatist movements in Balochistan add another layer of instability. Increased attacks on non-nationals, as well as protests over religious and nationalist issues, are expected to persist, complicating the government’s efforts to maintain control. Pakistan’s security situation remains precarious, with increasing threats from extremist groups like the Pakistani Taliban and regional separatist movements. Balochistan, in particular, continues to be a hotspot for violence, with frequent attacks targeting security forces and government officials.