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Thailand's private sector concerned about emergency decree's impact
Publication Date : 23-01-2014
Business organisations have expressed concern that the government's 60-day emergency decree will have an impact on Thailand's image and affect many sectors, especially tourism, though the impacts will vary and may not last long.
Some businesspeople are also worried that the decree will backfire and spark further violence. They are urging the conflicting parties not to resort to violence to achieve their political ends.
Isara Vongkusolkij, chairman of the Thai Chamber of Commerce (TCC) and the Board of Trade of Thailand, said that while it was too soon to assess the long-term impact as yesterday was the first day of the decree, the repercussions of the measure might be seen soon.
He said that although gross domestic product now was expected to grow by 3-4 per cent this year along with a global economic recovery, the prolonged protests could dash that hope.
The World Bank has raised its estimate for this year's global economic growth from 2.4 per cent to 3.2 per cent. China's GDP is expected to expand by 7.7 per cent.
The latest estimate for Thailand's growth is down from a previous forecast of 4-5 per cent. Now that anti-government protesters have "shut down" Bangkok in their quest for an unelected "People's Council", their activities are expected to cost the economy 500 million baht to 700 million baht (US$15 million to 21.24 million) per day.
The TCC will ask its members to outline their needs for assistance before the chamber launches relief measures.
Isara said the seven business organisations that had offered to mediate the political dispute had temporarily withdrawn their proposals, citing failure by both the government and its foes to treat those ideas seriously. Those private-sector groups now will concentrate on their core roles of supporting the business sector and the economy.
Chidchai Sakornbadee, vice president of the Association of Thai Travel Agents (ATTA), expressed concerns over the billions of baht in revenue that the emergency decree will cost the tourism industry. The number of foreign arrivals has consistently decreased since the political protests began in November, he said. The decree will surely aggravate that decline.
Chidchai said many Chinese tourists had cancelled their trips to Thailand after their government issued a travel warning, particularly to Bangkok, which remains the centre of the political unrest.
He conceded that small operators, particularly those directly in tourism and restaurants, would be adversely affected, with tours being postponed and many flights cancelled.
He said the TCC expected the emergency decree to erode the confidence of the nation's trade partners.
ATTA president Sisdivachr Cheewarattanporn said tour operators were watching to see if the emergency decree would prompt the China National Tourism Administration to consider ordering operators in that country not to bring customers to Thailand for fear of escalating violence. If it does before the fast-approaching Chinese New Year, that will cause serious damage to the Thai tourism sector.
He said ATTA is losing hope of realising its earlier forecast that arrivals would expand by 7-10 per cent from last year's 4.5 million. Now 5-per-cent growth looks more realistic.
Phunut Thanalaopanich, president of the Thai Hotels Association's Northern Chapter, said that so far the protracted protest in Bangkok and Tuesday's declaration of an emergency decree had yet to have a serious impact on the tourism and hotel industries in the North. Hotel occupancy rates are 75-95 per cent as advance bookings for Chinese New Year, mostly by Chinese nationals, remained in effect.
The SET Index yesterday dropped by 2.61 points to close at 1,290.49, to total trading volume of 31.76 billion baht. Foreign investors showed net sales of 861.64 million baht and institutional investors showed net buys of 1.09 billion baht. In the morning, the index fell by 7.91 points to 1,285.19.
Analysts at Thanachart Securities said the Stock Exchange of Thailand had responded to the decree in the morning before rebounding in the afternoon after violence failed to flare up. Still, foreign investors were biding their time, keeping an eye on the situation before deciding to buy Thai stocks again.
Chatrchai Tuongratanaphan, director of the Thai Retailers Association, said the Bangkok shutdown so far had no significant impact on the country's retail sector. Retail outlets trying to operate in the rally sites in Bangkok account for only 5-7 per cent of the nationwide total.
"We cannot predict the impact to the retail sector caused by the current political problems. The implementation of the emergency decree, if it ends quickly, will not have a strong impact on the retail market, or on people's shopping and spending sentiment, thanks to strong fundamentals of retail businesses in Thailand.
"We hope that all stakeholders involved in this political conflict will negotiate a solution and end this problem and avoid any loss of life and assets for our country," he said.
Boonchai Chokwatana, chairman of Saha Pathanapibul, believes that the decree will not significantly affect the Bangkok shutdown. The government previously imposed the Internal Security Act (ISA) but was not able to reduce the number of protesters.
"I myself am concerned that the enforcement of this emergency decree will lead to some violence, and I would like to urge all involved parties not to [attempt to] solve the problem with violence," he said.
Thamrong Panyasakulwong, president of the Thai Condominium Association, said the decree would intensify the pressure against political protesters and might lead to violence. The decree will worsen the situation for the business sector and the economy, especially real estate, which has already suffered from the significant decline of consumer purchasing power. Many businesses have also delayed new investment and expansion over concerns about the political unrest.
Issara Boonyoung, adviser to the Housing Business Association and chief executive of Kanda Group, doubted the decree would have much impact on the property sector, as there did not seem to be much difference between this measure and the earlier imposition of the ISA.
"The number of customers visiting our projects is normal," he said.
However, he accepted that the political turmoil that began late last year had prompted property firms to revise their business strategies and delay the launch of new residential projects this quarter.
Aliwassa Pathnadabutr, managing director of CBRE Thailand, said the announcement of the emergency decree would have an impact on the sentiment of property investors, especially foreigners who have been warned by their governments not to travel here.
However, she believes that the situation is nothing new for Bangkok or for Thailand. Over the past several years, the country has gone through coups, a global financial crisis, domestic political deadlocks and natural disasters, and while this latest situation requires caution, her agency had not seen any negative impact on property values through these experiences.
"We believe that it will be a short-term impact and the situation will rebound in terms of transaction volume as soon as the political situation is over. Now Thailand's real-estate fundamentals remain good and set for growth. There are other positive factors backing up [expectations] for future demand in both the commercial and residential sectors.
"It is a challenging time, but one Thailand, CBRE and our clients will pass through," she said.
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