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Published on July 30, 2007

Companies in the deep South are battling for survival amid plummeting trade and tourism activity, as well as a higher financial burden due to an increase in property insurance.

Economic activity in the five southernmost provinces of Yala, Pattani, Narathiwat, Songkhla and Satun is likely to see flat growth this year because of escalating violence by insurgency groups, Somkiat Anuras, vice chairman of the Thai Chamber of Commerce in charge of the economy in the area, said last week.

The violence in the South has adversely affected local businesses, due to the sharp fall in tourism and business activity. New businesses are keeping away from the region, fearing violence.

The government has issued a series of measures to support business in the South, but these have not been enough to restore confidence.

More than 10 medium-sized hotels in the region have gone out of business, while an unaccounted number of related enterprises have also shut down. Domestic and overseas tourists are shunning the region because of the regular news of violence in the area.

"The hotel occupancy rate remains only 20 per cent, against the previous rate of 60-70 per cent, while many small retail businesses have had to close down their businesses as they were facing a high financial burden and lower consumer spending," said Somkiat.

 The chamber forecasts that the economy in the whole of the southern region will grow by 4.05 per cent this year. However, the five provinces of the deep South will experience flat growth.

Enterprises in the five southernmost provinces also face an increased financial burden, as insurers have raised the additional premium for property coverage in the area to 10 per cent - the normal rate is 0.52 per cent - in response to the higher risk of damage from the ongoing violence.

While the financial burden of companies has gone up, their incomes have gradually dropped, he added.

In an attempt to help enterprises in the affected areas, the chamber urges insurance companies to lower their premiums.

Most enterprises also called for the Commerce Ministry to organise a National Economic Drive Expo in Hat Yai, Songkhla, to stimulate the economy in the deep South.

Worried about the economic slow-down, the ministry has initiated the project to stimulate trade in each region. It has already launched a fair in the Northeast and the North, and will soon hold a third in Phuket.

Somkiat described Songkhla as a centre that drives growth in the deep South. The government should consider organising a fair in the province to help support businesses in the problem areas.

Thailand, in cooperation with the Indonesian and Malaysian governments, will hold a tourism and trade fair in Hat Yai early next year.

The event aims to help increase trade and tourism by 30 per cent from the downsized figure this year, said Somkiat, adding that it will also enable enterprises to continue their businesses in the deep South.

The fair will be held from January 11-20. About 100-150 tourism companies will attend and 800 traders from the local area, Indonesia and Malaysia will participate.

Leading firms such as Siam Cement Group, Charoen Pokphand Group and the Saha Pattanapibul Group are also considering participating, he added.

Petchanet Pratruangkrai

The Nation