Foreign chambers of commerce in Thailand have raised serious concerns about this week's emergency decree affecting Bangkok and surrounding provinces, saying it will hurt the tourism sector and lead to a loss of investment opportunities.
Meanwhile, the Federation of Thai Capital Market Organisations yesterday urged the government to cancel the decree before its 60-day period ends, arguing that it will damage investors confidence, domestic trading, and the everyday life of people.
Tourism Council of Thailand president Piyaman Tejapaibul also said a special meeting of its members yesterday passed a resolution to ask the government to rescind the decree as soon as possible.
However, despite their concerns, many chambers still believe in Thailand’s basic economic strength, resilience, and other supporting factors such as its geographical location, in a perfect position to become a regional leader when the Asean Economic Community (AEC) is launched next year.
In normal times, hotels in Bangkok are fully booked during December and January. When the anti-government protests started, the cancellation rate was 30 per cent, and after the state of emergency was declared, it went up to 70 per cent, said Stanley Kang, chairman of the Joint Foreign Chambers of Commerce in Thailand.
"The current political situation will be costly if it is prolonged but currently the short-term problem that I can see is the missed investment opportunities from the postponement of exhibitions and business meetings by foreign investors who decide to hold their conferences and conventions elsewhere," Kang said.
Simon Landy, chairman of the British Chamber of Commerce Thailand, said the political situation was creating uncertainty, and businesses don’t like that, but the main effect of the declared state of emergency would be on tourism.
"The number of British visitors to Bangkok went down this month, but Phuket and Samui have no problem at all. Group tours will be the most affected by the state of emergency since it will be impossible for them to get travel insurance for their customers," he said. Phuket and Chiang Mai would benefit from the situation in Bangkok since many tourists would just go straight to other destination in Thailand instead of stopping in the capital for a few days as they usually do, he said.
Caretaker Tourism Minister Somsak Pureesrisak said yesterday that after the "Bangkok shutdown" reached its second week many countries had begun warning their citizens about coming to Thailand. Already tourist numbers are down by 5 per cent, dropping from the expected 28 million to only 26 million, which represents a loss of Bt20 billion for the country’s income, he said.
Kalin Sarasin, secretary-general of the Thai Chamber of Commerce, said he did not agree with the declaration of the state of emergency because it would lower investors’ confidence and lead to missed opportunities, since many big business events scheduled for February and March have already begun to be cancelled.
Darren Buckley, president of the American Chamber of Commerce in Thailand, said the emergency decree would mainly affect the tourism sector but would have only a small impact on investor confidence. He said many long-term foreign investors still believed in Thailand’s resilience to setbacks and he agreed with Bank of Thailand Governor Prasarn Trairatvorakul’s comment that the economic fundamentals are sound and should be able to carry the country out of this slump once the political conflict is resolved.
"Thailand is well positioned to play a leading role in this region. With a broader integrated Asean, the geographical [position] of Thailand will provide it with a tremendous [chance] to not only exploit the vast trading opportunities that will come with the launching of the AEC but also to play a leading role in it," Buckley said.
Ferdinand Gyula von der Luehe, vice chairman of the Thai Chamber of Commerce, said the country needed to update its trading rules and regulations to match international standards in order to compete within the AEC.
"All of its energy should be focused on modernising itself. Thailand also has to improve its financial-services sector, especially technology and engineering, while the government has to encourage this technological development by providing easy access to finance," von der Luehe said.
Setsuo Iuchi, president of the Japan External Trade Organisation’s Bangkok office, said it was too early to predict how the emergency decree would affect Japanese investors’ confidence but they were watching the situation very closely. However, the decree would have more effect on Thailand’s tourism industry since it is a little more sensitive.
Rolf-Dieter Daniel, president of the European Asean Business Centre, said he was most worried about the free-trade agreement between the European Union and Thailand, since currently there was no permanent government and no deal could be made between the two parties.
"If a new FTA deal does not happen, Thai goods will become more expensive for EU countries from the lost privileges," Daniel said, referring to changes in the EU’s Generalised System of Preferences.