Tourism needs confidence fix

BANGKOK, 7 December 201: The Federation of Thai Industries says the government needs to urgently rebuild tourism confidence to boost the country’s economy.

FTI vice chairman, Tanit Sorat, said floods are likely to cost the country as much as Bt1.12 trillion or 10.5% of gross domestic product.

“Many industries are affected indirectly by the floods and the government has to act fast to reduce the impact.”

Mr Tanit added: “Tourism is just one industry and a fund needs to be created urgently for small and medium-sized enterprises to tap working capital to aid recovery.”

Tourism will probably suffer a loss of Bt70 billion in revenue.

FTI’s estimate contrasts with the assessment of the National Economic and Social Development Board, which calculates the damage at a much lower Bt248 billion, or 2.32% of GDP.

Asked to clarify, Mr Tanit said: “About 9,800 factories and 660,000 workers in eight flood-hit provinces were affected and around 838 factories in seven inundated industrial estates, so the impact must be as high as Bt474 billion based on conservative estimates,” he said.

In Ayutthaya and Pathum Thani, flooded estates include Bang Pa-In Industrial Estate, Saha Rattana Nakhon, Rojana, Hi-Tech, Factory Land, Nava Nakorn and Bangkadi. They were covered in over 3 metres of water that destroyed production lines.

Factory owners complained they were not given any warning to prepare for floods, although they suspect the government was aware in advance that the provinces would be seriously flooded.

The automobile industry was hit the hardest, with a loss of 300,000 vehicles and a revenue loss of Bt180 billion.

This is reflected in the auto and electronics industries’ exports in October that grew by just 0.3% year-on-year, the lowest in two years. Exports this quarter are expected to drop by Bt148.41 billion or 10% off the same quarter last year.

“FTI anticipates economic growth of 1.5% to 1.8% for the whole year, while growth of the final quarter alone is expected at 0% to 0.5%,” Mr Tanit said.

Meanwhile, a representative of the tourism industry in the FTI council, Thanet Vorasarun, said international arrivals this year would reach 18.5 million well off the forecast of 19.5 million.

Despite efforts to spin a strong PR message that all other destinations, apart from Bangkok, were safe and open to visitors, tourists didn’t buy the argument preferring to postpone trips until the flood threat receded. Airlines are now struggling to keep flights schedules this month as cabin factors drop. Prior to the flood flights to Bangkok from Europe were packed but are now operating with an unusually high level of empty seats in economy class. THAI has attempted to consolidate some flights to lessen the impact on its fourth quarter results.

“Most districts in Bangkok are dry and safe. So, we want the government to promote the tourism industry and boost the confidence of foreign travellers,” Mr Thanet said.

The problem for promoters is that most tourists prefer to avoid countries suffering any kind of disaster, but once it is clear that Thailand has dealt with the threat then bookings should resume quickly, possibly during the last week of December heading into the New Year.

The tourism industry is asking the government for Bt5 billion to support companies that suffered from flooding. Around 80% to 90% of the travel industry is made up of SMEs and they lack liquidity.

“The tourism industry does not need infrastructure repairs or reconstruction. It just needs the government to help restore the confidence of foreign investors,” he said.

This view contradicts the widely held belief that the floods were caused by an ineptitude of various governments over decades and a refusal to establish a sustainable water management plan, or build an infrastructure to secure the capital from flood threats or rising sea levels in the long-term.

Due to the lack of suitable water management infrastructure, the economy was brought to its knees by the three-month long flood. That has prompted the view that the government must now go back to the beginning and build infrastructure possibly diverting substantial budgets that would have gone to promoting tourism under different circumstances.

Last year, there Thailand welcomed 15,936,400 tourist arrivals generating Bt592,794.09 million in revenue, up 12.63% from 14,149,841 visits earning Bt510,255.05 million in 2009, according to Ministry of Tourism and Sports.


Credit : TTR Weekly