Asia Sentinel

With the barricades down, counting the damage begins

The extent of the damage to Thailand’s economy is just starting to come clear in the wake of the chaos wrought by anti-government protestors who drove away risk-averse investors and wrecked the tourism industry with the closure of Bangkok’s international airports.

With the Democrat Party’s leader Abhisit Vejjajiva installed Monday as the new Thai prime minister, business and tourism leaders are hoping that the political situation is finally starting to even out, although there is no guarantee that the “Red Shirt” backers of former Prime Minister Thaksin Shinawatra won’t take to the streets in outrage over what they regard as having had their democracy stolen from them in a Royalist coup.

Even before the People’s Alliance for Democracy seized the airports in November, economists were predicting a slowdown next year because of the global economic downturn, with gross domestic product falling to 2.5-4 percent from 3.0-4.8 percent. Now many are forecasting zero growth or recession for 2009 as a direct result of the blockades and their collateral damage.

Thai business associations reckon that the protests cost Bt137 billion (US$3.9 billion) in direct losses and have asked the government to help cope. Numerous ratings agencies have downgraded their investment and security outlooks to negative on the economy and some of its banks and key businesses.

Tourism, commonly seen as Thailand's economic life raft, accounts for Bt600 billion annually or 6 percent of GDP and was expected to attract some 15 million tourists this year. But that is expected to fall dramatically with the global media circulating images of thousands of yellow-shirted PAD demonstrators occupying Suvarnabhumi and Don Muang airports demanding the government's ouster and stranding more than 300,000 foreign tourists amidst escalating reports of bombings, shootings and other violent clashes.

"Politics has invaded Thailand's tourism industry," says a Thailand-based tourism consultant with more than two decades of experience in the local market. "Any confidence in it was kicked to death by the airport seizures. It's going to take one-to-five years to recover."

"Blocking the airports was like cutting the arteries to a heart," he says. "SARS, avian flu, the tsunami all had a time frame and could be managed to a conclusion. But even the famous Thai touch has no effect now." Only rapid, progressive steps towards a peaceful reconciliation and the end to lawlessness will return investor and tourist confidence in the country, he added.

"Thailand’s image is battered," said Ken Scott, managing director, ScottAsia Communications, which specialises in the travel trade. "It needs political stability and a firm, articulate prime minister who inspires confidence inside and outside the country. There needs to be an unequivocal assurance that the airport will never be hijacked again."

Thailand's economic future remains stark until such stability returns. Unemployment figures, currently at 1.8 percent or 1 million jobless, are expected to triple next year, economists say. Fallout from the airport seizures will put an additional 1 million people out of work, according to the National Economic and Social Advisory Council, with the same number losing their livelihoods as the global economic downturn takes Thailand in its full grip.

December is typically tourism's busiest month of the year. But last week the Thai Hotels Association said nationwide occupancy was a pitiful 20-30 percent. The fact that only 10-15 percent of rooms are lit at night at the luxury hotels lining the banks of Bangkok's Chaopraya River confirms this fact.

A walk through Lumpini Night Bazaar, a popular draw with foreign tourists, reveals more shopkeepers than customers. The scene on Khao San Road, Bangkok's backpacker mecca, tells a similar story.

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written by Dr. Heimburg , January 09, 2009

I am advising a hard sell on Thailand. With the global deflation in property value, property owners in Thailand are still demanding rent of $2,000+/month in areas around Bangkok. A similar sized apartment can be rented in SF Bay area for a lot less, where workers earn significantly more income. In short, the price being asked by Thais is not justified in by its economic fundamentals. With lower tourist, I believe their is an oversupply of property and a correction in prices will soon follow.

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Giveme a chance
written by Sirikit , December 19, 2008

Let Abhisit a chance to try his miracle to revive the ailing economy and tourism. Should he fails, he will have to beg the IMF to disburse some small change and the likely outcome will be a clamour for Thaksin safe pair of hands on the till.

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written by Rodent , December 18, 2008

oh sorry miss type its "sarcasms" cannot edit the post is always a minus.

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To mad dog
written by Rodent , December 18, 2008

Ah calling me a rat, inferred how you feel of being grab by the balls and then correct the "obvious" sacasism, this really show who being emotional here.
Anyway let me correct you point by point first
About the IMF loan, you seems to have no idea of what condition the IMF put on Thailand if we were to receieve that loan aint you? Well let me as you this, if the cheap IMF loan is so beneficial, why countries like Brazil or Russia are so eager to pay back such a notorious loan?? I'm wonder who is this "economist" that shake their head then? One of the reason that no country like the IMF is that the IMF impose their spending policy on the country that asked for the loan, and yes Thailand had to obey those condition as well, and the one thing "most economist" criticize the IMF is that the IMF limited the government spending and raise tax, and you know what happen right?? limit economy expansion that lead Thailand to a worst unemployment period in the country's history and very limited GDP growth for a developing country standard. By paying back those loan, Thailand took those pressure off its spending policy.
read this for more info http://www.economicshelp.org/2...f-imf.html
Well I think before you start bashing the tycoon who, I'm pretty sure, more successful and wealthy than youself, you got to be damn sure to know more than him..... I'm just saying.
Your second point........ again, before you start bashing other people, you can at least look at yourself in the mirror and ask "why".
Your third point, well, I agree this juridical double-standard doesnt seem to go away isnt it? I'm wondered who is the cause of all this....

Lastly, the A-Train?? haha that's the best joke I've seen here.

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Re:Great Article
written by Mr. Wrigley , December 18, 2008

Yes, things in the US are in pretty bad shape right now. However, your point ignores Thailand's the fact that its a globalized world, and as such, what happens in the US will affected Thailand's economy (e.g. decreased US consumer spending/demand=fewer orders to Thai manufacturers=fewer Thai exports=less income=less consumer spending=factory layoffs...and with the global downturn, Thailand's tourism industry will also be affected..This is not so much preaching but economics

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Time to roll with the A-Train
written by Bad Dog , December 18, 2008

To the Rat

Sorry Rodent ( just to show you how it feels when someone takes a ‘cheap shot’ at you like you took at me i.e.’Mad Dog’ but if my characterizations of ‘Mr. Yesterday’ and my reminders of his track record are upsetting to you, then all I can say to you is this: the truth hurts.

Anyway, I will try to show you how to respond to an argument point by point in a reasoned manner rather than ignoring or glossing over points you disagree with. Until you can do that it will appear to many that you are ‘in denial’ and respond too emotionally to make any kind of persuasive argument. Hopefully we can then move on without mentioning ‘Mr. Yesterday’ from Chieng Mai.

Firstly, ‘sensical’ is not a word that any good dictionary would list.

Second, a correction (i.e. comma deleted): “laid bare his (Thaksins) lack of any real vision and his crass neuvo-rich values for all to see who could tell the difference between someone who had earned a genuine modern education and a clueless clod like Thaksin…”

Third, while your seeming charge of judicial ‘double-standards’ does have some merit, there is another law that says, “What comes around goes around”. Furthermore, I remind you that since the king warned the country about ten years ago that the “double standard remains the biggest problem in Thailand” this seems not to have changed much.

Fourth, I too remember the early repayment of the IMF loan. However, I also remember respected economists shaking their heads over the financial cost to the country of having to borrow new capital at high interest rates to replace the low interest IMF loans. Of course, this does make sense if you are a telecoms tycoon trying to pump up the economy so you can cash in on the doubling or tripling of your company’s worth mainly due your slick ‘policy corruption’ – just don’t forget to sue anyone for millions of dollars for merely drawing a correlation between your political ascent and the explosive increase in the price of shares in your telco.

Bottom line: ‘Mr. Yesterday’ blew his chances : it’s time to roll with the ‘A-Train’.

Bad Dog.

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Never again
written by Nata , December 17, 2008

Never again will I even venture into Thailand after my supposed 1-hour layover turned into days and days stuck in Thailand with my young son. While I have visited Thailand before, and love and admire the culture, the selfishness of the PAD's actions to affect 300,000 travellers is unacceptable - not to mention their own businesses and economy. I will avoid Thailand and any Thai airline carrier for the rest of my life.

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20% full? -Thai hotels as greedy as ever!
written by Andrew S , December 17, 2008

About 3 years ago Bangkok hotel rates really jumped especially in the well located areas. I find it incredible that despite the airport crisis and alleged collapse in tourist numbers afterwards, the price of Bangkok hotels on all the last minute reservation sites (www.wotif.com; www.ratestogo.com) have not dropped lousy 1 Baht. 2,000 Baht gets you a very ordinary hotel, and at Koh Samui and Phuket 4,000-6,000 Baht hotels everywhere. Come on hoteliers you pay your staff peanuts, yet expect us to pay through the nose even if you're 10-20% full! If you want us back give us a discount!

And if the Thai economy is in such bad shape why is the Baht stuck at 35 to the US$? Thailand is no longer cheap.

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Thailand getting worse under BEGGAR PM ABHISIT
written by Return to Ancient Civilization , December 16, 2008

Thailand has just gotten a beggar for PM.
SAD!

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The Devil made them do it!
written by Keerock Rook , December 16, 2008

This excellent article quotes Ken Scott, managing director, ScottAsia Communications, which specialises in the travel trade. "There needs to be an unequivocal assurance that the airport will never be hijacked again."
From whom we ask?
The newly appointed Prime Minster, Abhisit Vejjajiva, who has been intimately involved in the PAD group since its inception and throughout their hijacking of the airports.
The Thai military which has responsibility for the airports but refused to follow the directives of the elected government to assist in removing the gang?
The Thai courts which ignored the violation of numerous Thai criminal and civil statutes, and instead cancelled the entire elected government for the alleged "voter fraud" by one of its board members?
Or perhaps the palace which also openly sided with the PAD?
PAD claims they had no choice because "the devil made them do it" (image link) and they did it for the country and assures us all they will do it again.

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Free F**K
written by Sirikit , December 16, 2008

Short of going to IMF for immediate handouts, I think the PAD backed Abhisit government will probably have to offer free f**ks to lure back the tourists as a panacea to revive economy from the global economic downturn. As per usual, the free services will have to be procured from the wives and daughters of stupid peasants who voted for Thaksin.

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to mad dog
written by Rodent , December 16, 2008

Well, I actually read your post 3 times, but I fail to grab any sensical point, anyway I assume that you say Thailand is what it is today because the court rules in favor of Thaksin before he get the office??
Why dont you use the same law with those in Democrat Party and see who can get away with it.....
Oh well I'm wondering who actually managed to pay the $20B loan from IMF??? yeah you tell me, I'm asking you a very simple question, since I recall Tarrin Nemarnhemin (Chuan's govrnment ministry of finance) said that the debt would takes Thais generations to repay.

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Honeymoon to Hell
written by Bad Dog , December 16, 2008

I find the author's interpretation of the Phatra securities report, " It says the current (economic/political) troubles started with the 2006 coup" both ingenuous and self-serving.

After a period of necessary stabiization followed by unnecessary stagnation under the last Democrat-led government, Thaksin was only able to take his place as PM due to an infamous judicial decision in his favor.

This is when the trouble really started - when the judiciary went soft on a filthy rich political opportunist with a history of low personal integrity leading a party with no real political ideology (funny how the two go together) for whom the end (never clearly stated) always justified the means (cynical exploitation of the poor vote).

So after a long honeymoon period accompanied by a binge in government spending and unprecendented (in sheer size, scope, savvy and success) political marketing/sleight of hand to position Thaksin's snake oil as a modern cure-all balm, reality began to emerge as the ever-widening discrepancy between Thaksin's set-piece speeches (presumably drafted by others) and his other public utterances and dodgy deeds increasingly laid bare his lack of any real vision and his crass neuvo-rich values for all to see, who could tell the difference between someone who had earned a genuine modern education and a clueless clod like Thaksin - just another philistine and self-confessed cowboy like the disgraced George W. Bush?

So PM Abhisit, just one simple question?

Do you have "the vision thing" ?

BAD DOG.

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sasf
written by pad thai , December 15, 2008

thailand needs to manage its law and order and finances fast. otherwise it will be a failed state, and soon be part of IMF rescue again

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Great Article!!!
written by ibrahim , December 15, 2008

I think it is rather the West who will fall apart. The latest "Mad Off" $50,000,000,000 frauds attest to that premise.....following the falls of Lehman Bros, AIG, and all those US and European banks. Stop preaching Thailand what to do. Greg Lowe, the s**t is hitting the fan in your hometown.

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Reality
written by Reality , December 15, 2008

Back to the IMF,

Are you dreaming? Wake up from the reality now. Like most Asian, Canadian and Australian banks, Thai banks is among the least affected in the world by the current global meltdown, thanks to the 1997 crisis and prolonged political crisis. Bank of Thailand along with most Asian central banks with huge FX reserves and Thai businesses taking low degree of leverage will sail Thailand through the storm. It is painful to endure negative GDP growth but Asia is going to be safe and sound.

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Back to the IMF
written by Sirikit , December 15, 2008

In this severe financial crisis environment, Thailand is likely to go back to the IMF for bailout soon.

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