In the Red
covering burma and southeast asia
Friday, December 02, 2022
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In the Red


By WILLIAM BOOT JUNE, 2010 - VOLUME 18 NO.6


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Two months of Redshirt protests in Bangkok—and the aftermath of a bloody crackdown to end them—have taken an enormous toll on Thailand’s economy.

When anti-government protesters started gathering in Bangkok in mid-March, Thailand was making a roaring recovery from the effects of the global recession, posting 12 percent growth in the first quarter of 2010, according to official figures.

A firefighter douses Central world, Thailand's largest shopping complax, after it was torched by anti-government protesters on May 19.

Two months later, however, the Thai capital looked more like a war zone than the commercial center of a thriving economy. By the time the military moved in to shut down the demonstrations once and for all on May 19, at least 88 people had been killed and nearly 2,000 injured. As a final act of defiance, hardcore Redshirt protesters torched upmarket shopping centers and the Stock Exchange of Thailand building.

The price of eight weeks of dislocation in the Thai capital, coupled with globally televised scenes of street fighting involving armed soldiers, will be difficult to assess in the short term, say economists. However, it is likely to shave at least 1 percent off earlier projected gross domestic product (GDP) growth for this year, they predict.

Even before the standoff reached its deadly climax, losses to Bangkok’s retail sector alone were estimated at well over US $1 billion in April. The forecasting center of the University of the Thai Chamber of Commerce estimated that figure would reach $4.3 billion by the end of May—but that was before the Redshirts went on the rampage, destroying dozens of buildings, including several landmark properties.

The country’s key tourism industry—which employs 1.8 million people and normally contributes about 6 percent of GDP—is already bracing for the loss of several million overseas visitors in 2010. The Tourism Authority of Thailand (TAT) is now revising down expectations from a previously anticipated 16 million visitors to 13 million.

The TAT said it is confident, however, that with a return to normality the industry can bounce back in the second half of this year with the help of a multimillion dollar promotion. That confidence isn’t shared everywhere, however.

The Thai property development group MBK announced it would delay hotel construction projects valued at more than $90 million for one year because of the likely reduction in tourism. MBK will also put on hold a new 200-room hotel in Koh Samui and a 50-room hotel in Phuket.

The unrest has also seriously dented the confidence of foreign firms investing in Thailand. According to the Joint Foreign Chambers of Commerce in Bangkok, some foreign investors have already begun shifting out of Thailand to other Southeast Asian countries.

The president of the Thai-Taiwan Business Association, Preston Chang, said Taiwanese businesses from shoe to furniture manufacturers are moving to Vietnam. Chang has already transferred some of his fruit-exporting business to Vietnam, which is seen as more stable with a tough but pragmatic Communist government.

“The reputational damage [to Thailand] of the crisis is considerable, and it is expected to take a long time before foreign travelers’ as well as investors’ confidence returns,” said IHS Global Insight, the US-based international economic and political forecasting agency.

Thailand’s image as a friendly and sound investment destination has been “severely tarnished,” said Nandor von der Luehe, the chairman of the Joint Foreign Chambers of Commerce in Bangkok, according to IHS in a Thailand assessment study.

“Serious challenges remain ahead as the government tries to stabilize the situation and to return the country back to normalcy,” said the study, made in the wake of the May 19 crackdown.

“While Thailand has seen numerous anti-government mass rallies taking place since the 2006 coup, this time is different.



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