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Thai military has limited time: Former PM

A year after the military took power in Thailand, the regime has postponed elections but the country's former Prime Minister warns the junta may be running on limited time.

"I have always been supportive of a referendum and I think it's important that rules in the form of a constitution should be approved by the people," Abhisit Vejjajiva, former Prime Minister of Thailand, told CNBC. But "the last thing the country wants a year from now is to still be debating about the constitution…it's time that we move on," he said.

One year after the army took power in a coup, the military government is promising to hold a referendum on a new constitution that will pave the way for elections in early 2016. However, on May 19, Prime Minister Prayuth Chan-ocha conceded that holding a referendum would delay the general elections.

"I said it should be around beginning of the year, April or May, but if we have to do a referendum it should be pushed back by around three months," Prayuth said, according to a Reuters report.

The military government is making concessions and has, for the sake of appearances and in response to concerns from the business sector, recently revoked martial law and decided instead to rule through an emergency provision of the interim constitution, Human Rights Watch Asia advocacy director John Sifton said in a blog.

"Anybody who wants to make a long term commitment, who wants a certain degree of certainty as to where Thailand is heading – they don't have that, and until we have the final part of road map, that's not going to return," said Abhisit, who was in office between 2008 and 2011.

Economy stalled

Foreign investors, in particular, have continued to flee, and have sold $270 million of Thai stocks so far this year, and have offloaded $4 billion worth of equities since the political crisis started with mass street protests in November 2013, according to Morgan Stanley.

Kevin Winter | Getty Images

Neither has military rule helped Thailand's economy.

Gross domestic product in 2014 grew by just 0.7 percent on-year, a sharp contraction from the growth of 2.9 percent in 2013 and 6.50 percent in 2012.

Things are beginning to look up, but only a little.

In the first quarter of 2015, the economy grew a seasonally adjusted 0.3 percent from the previous quarter, above expectations for a contraction, but analysts said that was due to revising the October-December period's figures lower.

The government is forecasting growth of between three and four percent for 2015, but that may be optimistic, according to analysts.

Domestic demand fell off a cliff after the coup and a recovery in a "post-coup environment tends to be more subdued than during a regular growth cycle," the bank said in a note last week. Coupled with the high levels of debt accumulated by the private sector, "there is unlikely to be much pent-up demand to look forward to," said Morgan Stanley. The bank is projecting growth of between 2.6 and 3.6 percent for 2015.

"The business world can accept short term pain if at end of that, we move to a more transparent system," said Abhisit.

But "until we have the final part of road map, [investors are] not going to return. I think you have to accept that's a fact of life... which is why I think even the regime recognizes it has limited time," he said.

---Leslie Shaffer contributed to this article