Acting Deputy Prime Minister and Commerce Minister Somkid Jatusripitak yesterday called a meeting with key economic agencies to evaluate the impact of the current political polarisation on the economy. This followed reports of a large number of travel cancellations to the Kingdom.

The agencies included the Tourism Authority of Thailand (TAT), the Board of Investment (BoI), the National Economic Social and Development Board (NESDB) and the Export Promotion Department.

"The conflict should end soon or it could affect cash inflows," said Somkid.

TAT governor Juthamas Siriwan expressed her concern yesterday after hearing that 65,000 Singaporean and Chinese travellers had cancelled trips to Thailand this month due to the political tension.

Singaporean and Chinese travellers have lost confidence in Thailand, she said. Of the total cancellations, 5,000 were Singaporean and 60,000 Chinese.

Japanese travellers, who are key visitors to Thailand, have also delayed their tours and flight bookings.

"Political conflict has directly affected visitors' confidence," Juthamas said.

Anti-Singapore investment sentiment has also intensified recently.

Heightening the sentiment was the burning of Singapore Prime Minister Lee Hsien Loong's poster in front of the Singaporean Embassy last week.

The agencies believe that economic growth is at risk in the short term, although the impact is not obvious. Somkid instructed the BoI and the TAT to immediately schedule overseas visits to boost confidence among foreign travellers and investors.

According to the BoI, foreign direct investment has remained intact over the past two months. BoI secretary-general Sathit Sirirangkamanont said that in that period, the investment value from 46 projects was Bt54 billion against 36 projects in the same period last year.

 "Industrial plants are still expanding their business," he said, adding that the BoI will this year visit Japan, the United States and Asean and European Union countries to create a better understanding of the political confusion.

NESDB secretary-general Ampon Kittiampon was concerned that the prolonged tension could have a serious impact on future investment. So far, it has not had a huge impact on the economy.

Customs-based data from the Commerce Ministry showed that last month, export income rose 22.8 per cent year on year to US$9.51 billion (Bt368 billion) against a 19-per-cent increase in imports to $9.8 billion.

Director-general of the Export Promotion Department Chantra Purnariksha said that exports last month grew in every sector and market. The electronics sector expanded the most by 30 per cent to $3.86 billion. Exports of air conditioners grew 21 per cent as a result of more concentration on the quality market, instead of competing with China in the lower market.

Export growth in both old and new markets also increased - only India's decreased by 14.9 per cent as it stopped importing oil from Thailand.

Shrimp exports to the EU increased with the return of special privileges. In Germany, shrimp exports grew 76 per cent, in the UK by 256 per cent, and in Belgium by 220 per cent.

The department is this year targeting to increase agricultural exports by 15 per cent.

Exports have been the main engine driving the economy. Still, income from the service sector, particularly tourism, could help narrow the trade deficit, which is widening due to high fuel bills.

Somkid also noted that disappearing tourism income could hurt the trade deficit.

Rachane Potjanasuntorn, director-general of the Foreign Trade Department, said February's oil imports increased 78.3 per cent year on year. Steel and gold imports decreased last month by 20.1 per cent and 26.8 per cent, respectively.

The country posted a trade deficit of $286.7 million for the month, narrowing from $442 million in January. The deficit in February is attributed mainly to the Bt287.4-million import of aircraft by Thai Airways International, said Rachane.

The combined trade deficit for the first two months were $728.7 million, down 60 per cent from $1.82 billion in the same period 12 months earlier.

The TAT targets to attract 13.8 million tourists this year, who should generate Bt427 billion, equivalent to 18-per-cent annual growth. In the first two months of this year, tourist arrivals increased by 34 per cent to 2.34 million. In the same period last year, a large number of tourists shunned Thailand and other countries around the Andaman Sea following the tsunami disaster.

Juthamas said that to achieve its goal, the TAT will hold arrange special seminars to attract visitors. The first will focus on the Chinese media.

Promotional campaigns will also be directed at Thais, in an effort to persuade them to holiday at home to prevent money from flowing out of the country, she said.

Petchanet Pratruangkrai

The Nation