BANGKOK, July 21 (Reuters) - Thailand's election-winning Move Forward party announced on Friday it was making way for runner-up Pheu Thai to try to he form the next government, after its leader's bid was twice thwarted this month by a military-backed Senate.
Move Forward and Pheu Thai have 151 and 141 seats in 500-member lower house, respectively, but their alliance needs the backing of more than half of the combined chambers, including a 249-member Senate appointed by the military after a 2014 coup, which has voted as a bloc to protect establishment interests.
Move Forward's ambitious agenda of ending business monopolies and reforming the military and a tough law that insulates the monarchy from public criticism, represents a challenge to conservatives and old money elites, which have for decades wielded influence over Thailand's politics.
Chaithawat said rival lawmakers had used Move Forward's bid to amend article 112 of the criminal code, which prohibits insults of the crown, as a pretext to deny the will of the people.
"They used 112 as an excuse and used loyalty (to the monarchy) to clash with the public vote," he said.
Pheu Thai, the political juggernaut of the billionaire Shinawatra family and Thailand's most dominant party for two decades, is expected to nominate real estate mogul and political newcomer Srettha Thavisin for prime minister for the next vote on July 27.
The benchmark Thai index (.SETI) and baht were both up slightly in Friday morning trade.
Pheu Thai faces the many of the same hurdles as Move Forward, and has its own bitter history with the military, which overthrew two of its governments, leading to criminal charges that forced two prime ministers - siblings Thaksin Shinawatra and Yingluck Shinawatra - into self-imposed exile.
But it has been more circumspect on the proposal to amend the royal insult law.