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Impact may be worse than last year

By BUSINESS REPORTERS

THE NATION

BANGKOK: -- Businesses - particularly those in the tourism sector - have forecast tougher times with less trade and investment following the violent street clashes on Saturday night.

The Business and Economic Forecasting Centre of the University of the Thai Chamber of Commerce has suddenly slashed its estimate of Songkran spending from Bt96 billion to Bt85 billion, assuming the demonstration lasts through the weekend.

The escalation of violence has provoked a greater sense of urgency among trade associations, which have called on the government to end the violence and restore a peaceful environment as fast as it can.

They also provided a variety of suggestions to the government such as reopening negotiations and having Prime Minister Abhisit Vejjajiva step down.

Tourism has been the hardest hit, with little hope of attracting travellers in the usual numbers.

Key associations believe the political problems are unlikely to end soon, and fear that people abroad will be reluctant to visiting the Kingdom till the situation improves.

'NO WEAPONS' FAILED

Apichart Sankary, a tourism expert at the Federation of Thai Tourism Associations, said tourism operators could not see a solution to end the the political divide.

The violence would not end without talks, he said.

The private sector had no plan even for short-time management because the demonstration was still ongoing, he said.

However, renewed talks may be the best option at this stage to end the problem. Another option was for the prime minister to step down to allow His Majesty the King to appoint an interim prime minister, he said.

Many vacationers especially from Europe wanted to come to Thailand, mainly because of value for money, but they were afraid of violence, he said. Asian tourists also liked to visit Thailand all-year round.

Peter Van Haren, former chairman of the Joint Foreign Chambers of Commerce, said the violence and loss of life from the clashes between security forces and protestors have been news all around the world.

This crisis had hurt the confidence of both tourists and businessmen. Businesses at the flashpoints of violence were forced to temporarily shut down operations.

"We don't want to see violence. The government should ensure that law enforcement can control the demonstrators.

"However, the way that the government announced 'no weapons' has led them to failure," he said.

Who knew how long foreigners in Thailand could tolerate such serious protesting. The clashes had prompted newcomers to cancel investment plans in Bangkok, he said.

POSSIBLE SOLUTIONS

The situation was now beyond negotiations, but every party should concentrate on logic rather than emotions, he said.

"Once the government announces arrest warrants they should really arrest them," Van Harren said.

Thanit Sorat, acting vice chairman of the Federation of Thai Industries, proposed three solutions. They were for the prime minister to resign and and a vote held for a new premier; selecting a coalition party leader to head the Cabinet or setting up a national government with Pheu Thai Party also; or dissolving Parliament with a commitment from the red shirts to stop rallying.

The violence had created hardships. Confidence, consumption, tourism and investment would not recover if the political turmoil became protracted, he said.

Thanavath Phonvichai, director of the Economic and Business Forecasting Centre, said damage caused by the clashes had risen. It now predicts the Songkran Festival will see Bt12-16 billion less in trade, double which it forecast earlier.

With the crisis dragging out, spending over Songkran was likely to be the lowest since 2005, under Bt85 billion, he said.

Withawat Chaipranee, president of the Advertising Association of Thailand, said event cancellations had caused damage of over Bt1 billion so far.

The political impact on advertising should show up in May billings.

Ad spending this month would shrink 10 per cent on year, compared to the 10-per-cent growth seen in the first two months of this year.

"It's a deadlock as there is no negotiation. Still, Thailand should not deploy martial law as the government remains capable of handling day-to-day operations," he said.

SET PLUNGE LIKELY

Viriya Vorakittikun, president of the Thailand Marketing Research Society, said the violence has eroded the country's image.

The worst-hit industry is tourism, including the Meetings, Incentives, Conventions and Exhibitions (MICE) business. Foreign investors could not rely on the country as a venue for this sector at present.

Local consumer spending would soften despite the economic recovery.

The stock market today was tipped to fall off a cliff due to the clashes, she said. It would be hard to see the SET Index stand above 800 points this year, while foreign investors might shift their attention to other countries.

"April this year is worse than April last year because the government cannot control the situation," she said.

Boonyakiat Chokewattana, president of ICC International, said the situation was more serious than the company had thought.

"The dispersal, absolutely, will bring bloodshed. In my view, the political turmoil here is tamer than many countries.

"The government will try its best, but Saturday night's violence means they will have to consider third parties," he said.

ICC experienced a sales decline in Bangkok of 5 per cent since the rally started last month, but the company had sought to offset that by shifting its focus to the provinces and overseas market, he added.

-- The Nation 2010-04-12

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