Tuesday, April 20, 2010

Thailand's prolonged Red Shirt rally may cost B100bn

Retail, tourism and investment all at risk

Thailand could lose approximately 70 billion to 100 billion baht, should the anti-government rally carry on until the middle of May, according to businesses who have reiterated their support for the government to take action.

Soldiers are deployed at Bangkok Bank headquarters and the Silom Road area as a protective measure against protesters. ALISA SUWANRUMPHA

According to private sector estimates, consumption is forecast to drop by 20-30 billion baht, with tourism losing about 40-50 billion and direct investment falling 10-20 billion.

This would cut between 0.3 and 0.5 percentage points off 2010 growth, currently forecast at 3.3% to 3.8%, said Puttipong Punnakan, vice-minister to the Prime Minister's Office, after two meetings of the government's economic committee and the joint public-private consultative committee chaired by Prime Minister Abhisit Vejjajiva.

"Protests by the red shirts damage large businesses such as hotels and department stores by 140-350 million baht per day, while small and medium enterprises (SMEs) are affected by 60-150 million baht per day," he said. The private sector also expressed concern that should the protests become prolonged this will cause problems for the business sector in the future.

Most businesses do not support dissolving the House or changing governments because it will delay planned investment projects, he added.

"[Dissolving the House] will affect consideration of the fiscal 2011 budget that takes effect in October 2010, which will delay the disbursement of government funds," said Mr Puttipong.

The tourist sector estimates hotel occupancy rates are now around 30%, down from 60-70% earlier, causing a loss of around 200-500 million baht per day.

This year it is forecast that tourists to Thailand will total 12-13 million, down from a previous estimate of 16 million. In January and February tourists totalled 1.6 million per month, but that number is expected to drop substantially from April, said Mr Puttipong.

Moreover, hotels and other business operators near the Ratchaprasong area are being asked not to provide accommodations to the anti-government protesters.

"We ask for co-operation from business operators to not provide support to protesters, who are violating the law," said Mr Puttipong.

Santi Vilassakdanont, acting chairman of the Federation of Thai Industries, said the business sector at the Ratchaprasong intersection was estimated to be losing 500-600 million baht in revenue a day from the occupation.

Asked whether the committee would hold direct talks with the protest leaders, Mr Santi said the talks would be held by businesses that are directly affected, such as retailers and hotel operators.

Finance Minister Korn Chatikavanij said new measures would be developed to help businesses affected by the red-shirt protests. State-controlled banks could be directed to offer low-interest loans to affected SMEs, he said, adding that numerous details remained to be worked out.

Hundreds of small businesses and thousands of entrepreneurs and daily-wage workers at shopping malls and sidewalk markets at Ratchaprasong have been hit hard since the red shirts took over the square earlier this month and forced the shutdown of CentralWorld, Gaysorn, Siam Paragon and other malls.

Mr Korn said the economic damage from the protests was by no means limited to businesses operating in central Bangkok, but would be felt throughout the country.

Tourism and investment are expected to fall over the next several months due to the negative image overseas from political tensions and the bloody clash on April 10, he said.

The Finance Ministry previously estimated the conflict could cut economic growth by a percentage point or more from its forecast of 4-5% for 2010.

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