‘It’s a far cry from Thailand’s more usual image of freewheeling sexuality, with its nightclubs and “massage parlors”. But this is Thailand under the rule of the generals…’

Thailand is mainly perceived this way by outsiders and visitors. The vast majority of Thais are very conservative when it comes to appearance and behaviour. Whilst there are a raft of sexual services aimed at locals, most are offered behind closed doors. They are not approved of by most, but are tolerated. Those offered to tourists are much more obvious tend to offend the values of everyday people much more readily. (It is also easier to blame the foreign customers for this blight, too!)
There have been regualar conservative backlashes for years, not only under the junta. I suspect that it is the result of a developing nation, full of inherent conservatism, dealing with the liberalisation of social values that comes with modern, global, capitalist, consumerism.
Whilst the response of the ministry and the university may seem an over-reaction to outside observers, naive Amy should have seen it coming!