Thailand To Turn Tragedy Around

[george]

Thailand to turn tragedy around

INDEED the tsunami's destruction offers a chance, which the government says it will seize, to rebuild a new tourism that preserves the environment's beauty and bounty for generations to come.

Though the tsunami was undeniably an immense human tragedy, the effects it will have on Thailand's diverse economy are negligible. Even tourism, 12 million visitors in 2004 accounting for 6.0 per cent of the economy, which vies with agriculture as Thailand's biggest industry, may not suffer as much as some fear.

"It would be quite localised. I don't think it's going to scare tourists away. Even Bali came back after a couple of years, and that [the 2002 terrorist bombing that killed 202 people] wasn't a once-in-a-century natural event," said David Cohen, Action Economics' Asian economic forecasting director.

Many tourists, especially those familiar with the country or confident traveling overseas, are moving to the Gulf of Thailand's Samui and Chang islands or heading for the northern mountains. Ironically the disaster could be just what Chang's promoters need.

Mountainous Chang remains relatively unspoiled and thickly forested. Thailand's second-largest island, lying in an archipelago next to Cambodia, has seen resorts proliferate since Prime Minister Thaksin Shinawatra's government "discovered it", heralding it as a "second Phuket" and leaving environmentalists aghast.

Hotels on Samui and in Bangkok and Chiang Mai in the north are booked solid. Airline seats or train tickets are hard to come by on northern services. Of course, that is partly attributable to the New Year's break.

"Anecdotally, some travel agencies suggest the cancellations are much less than believed. People are switching out of plans to visit Phuket to [go to] other places. The potential impact on tourism could more modest," said Lian Chia-Liang, JP Morgan's Thailand economist.

Though many hoteliers and travel merchants are glum, predicting rack and ruin, they are, whether by ignorance or design, overstating the situation. This is no Bali bombing nor an outbreak of severe acute respiratory syndrome (SARS) with long-term consequences, but a freak one-off.

It should be no surprise if some play up their woes, hoping to draw government compensation or access to the US$750 million soft-loan package the Finance Ministry is putting together for Thai-owned businesses in the six Andaman coastal provinces -- Phuket, Phang Nga, Krabi, Ranong, Trang and Satun.

During the late 1990s financial depression, it was not uncommon for profitable businesses or their wealthy owners to cease paying loans, claiming hard times. These strategic non-performing loans compounded local banks' bad-loan portfolios.

A bigger problem comes from competing destinations such as Bali and Vietnam stepping up promotions that target tourists who were booked for Thailand but have been scared off by television coverage of corpse-strewn beaches and warnings of disease.

And so the wheel turns. Ironically, it is Thailand's safe image that has lured many visitors over the last few years, as terrorism, political upheaval and typhoon damage tarnished neighbours Indonesia and the Philippines.

Of course, the view from the beaches lining the Andaman Sea differs starkly.

Pundits forecast a 10 billion baht ($256 million) hole in tourism receipts over the coming months. Tourism is a big earner for the local economies, pulling in almost 80 billion baht ($2.0 billion) in 2003, around 1.2% of gross domestic product. This is not about to evaporate, much will simply shift elsewhere in Thailand.

A significant slice of that money flows straight into the hands of Bangkok tycoons and their foreign partners, bypassing the local economy. Nevertheless, thousands of maids, receptionists, masseuses and guides, many of them migrants from poorer provinces, face tough times ahead with hundreds of hotels and resorts ruined.

Hotels and guest houses lie smashed along Phuket's Patong beach, on the hard-hit west coast. The same is true in overdeveloped Phi Phi Island, where the Tourism Authority of Thailand claims 4,000 rooms are a wreck. Worst of all is up-and-coming Khao Lak beach on Phang Nga's rugged and isolated coast, favoured by the wealthy as an escape from Phuket's hoi polloi, with 6,000-10,000 rooms, some only just completed - now ravaged.

One source, driving along the coast from Phuket to Khao Lak, reports utter devastation. Still, with at least some if not many hotels in these sought-after locations encroaching on national parks, the opportunity presents itself to roll-back such ill-suited development. That could be a long-term plus.

Despite the pictures of devastated hotels, more escaped unscathed, only to suffer cancellations. That situation is likely to change quickly. "It's a very resilient economy. Even for the tourism business I would not be surprised if the rebound comes earlier than expected. The fears over tourism could be overdone," said Lian, JP Morgan's Thailand economist.

Green shoots are already sprouting. Not all tourists have fled, more are still arriving. Sunbathers, swimmers and hawkers are out once again on Phuket's relatively unscathed beaches.

Divers, foreigners anyway, are still coming, with operators sticking to their dive trip schedules. Thais are more wary, no doubt shaken by devastation to their homeland, plus a little superstitious about the death and bad karma they believe to be lingering in the area.

Of more serious concern is the pollution to the sea caused by the flooding of streets and buildings up to 300 meters inland. With sewage plants knocked out, fouled water is flowing from Patong's sewers into the sea.

Phuket's booming holiday home and villa market may pause for a quick breath as buyers take a harder look at new locations. They will see however that few -- in fact only those with million-dollar plus price tags -- are right on the beach. Otherwise, housing developments are usually a little inland or up on hillsides.

Some borrowers are in dire straits, while a few will plead disaster, hoping for easier terms, which could see some loans turn sour. Commercial banks have lent about 70 billion baht in affected provinces, though it is hard to gauge just how much of this is to businesses along the coast.

--Asia Times Online 2005-01-07