by Pooky, this blog economics journalist
Emergency Decree Invocation Fiesta:
TNN TV reported today that the head of Thai conference and seminar tourism business (MICE) as saying that the the business has dropped by 50% since the news of the emergency decree invocation to handle the Red protest hit the globe.
Thailand in heading into the high tourist season at a time politics is heating up again, that have resulted in the “Tourist Not-Friendly” invocation of the emergency decree around the 19th of this month. Then the ASEAN head of state is coming up and the latest news is another invocation of the emergency decree.
All in all, the emergency decree have been or will be invokes for about half a dozen of times, with little attempt to solve underlying political problems in Thailand. Hoever, as no real attempt is being made to solve the political crisis, Thai government have little choice but to invoke the decree as protest in Thailand have a track record of getting out of hands.
In the mean time, about 22,000 SMEs, many in the tourism business has shut down since the start of the year, breaking record for the first time that closures were more than start-ups.
MICE Hit Hard:
“The MICE business has dropped by about 50% since the decision to invoke the emergency decree and I expect it to get worse,” said the head, adding that 3-4 countries is expected to issue warnings to their tourist not to visit Thailand.
The cost is difficult to estimate, however last year the Thai MICE business attracted about US$1.5 billion, or about US$100 million a month. Roughly therefore, the invocation could cost Thailand’s MICE business about US$50 million, if the invocation last for about the week as stated by the government-coming right before the Thai tousism high season.
Red Shirt Put Tourism at Risk:
“If the 19th Red Shirt protest turns into a major conflict, Thai tourism will not recover until a few years down the road,” said the unit head. The Red Shirt are planning to gather in a major protest to show force against military coups, and the government have invoke the emergency decree, against the objection of the Thai human rights commission as premature and over-reaction.
Tourism is a major business in Thailand with about 14 million visitors at its height in 2005, the year before the coup, but has since fell significantly. The smart right wing Bangkok Post newspaper, reported that currently, about 15 major hotels in Bangkok are on the selling block, with few takers.
Thailand has identified the MICE business as a special growth opportunity and thus special focus by Thai tourism officials. However, according to the head, other ASEAN countries have also identified the market for special focus such as Singapore and Vietnam. Thailand strategy is in trying to to jointly develop the MICE market with other ASEAN countries as a package.
SMEs Hit Hard:
Meanwhile, the Thai unit in charged of developing Thailand’s small to medium enterprise (SMEs) reported that for the first time this year, the number of SMEs closing is higher than opening, many of them involved in tourism business.
“I was shocked by the latest figure that saw 12,000 SMEs closing down in June alone, and for the year so far, about 12,000 had closed down,” said the unit head. He said it was because of Thai politics and a lack of revolving fund.
Major Tourism Loss so Far:
The closure of Thailand’s main airport last year, cost the Thai central bank estimate loss to GDP of about US$5 billion, much of that in the tourism business where tourist numbers to Thailand just evaporated. The the ASEAN head of state meet that was disrupted earlier this year, cost another US$3 billion is damages according to the tourism council.
Abhisit Slow to Solve Political Conflict:
While all agree that Thai politics have been and continues to cost the Thai economy significantly, few Thais are criticizing the right wing Abhisit government for not supporting a quick re-draw of the coup drawn constitution that many says is one major problem that is causing political conflict in Thailand. The coup constitution is seen as un-democratic and anti liberty and freedom.
Funds Not Getting to Business:
The Abhisit government has been trying to make funds available to SMEs. However, most SMEs lack loan collateral and thus have little access to the the funds. The Thai central bank and the Ministry of Finance had been trying to broker a deal to see lending standards lowered to make fund accessible.
However, latest reports from the Thai banking industry, indicates continued contraction in business loan extension. many economist have warned the government against going to commercial banks for loans to finance the government deficit spending and the stimulus, since it would attract the banks to the government business instead of lending to the private sector.
Central Bank Worsen the Situation:
The Thai central bank have also been issuing bonds to soak excess liquidity from the financial system, at a time the government is also issuing massive amount of bonds to help finance its spending. The combination of less liquidity and banks targeting to lend to the government, have pressured local interest rates up, with many banks now have increased their savings rates and most economist says as early next year, lending rates will start to head up.