Thai protests: the economic impact

The night market at Patpong is usually packed with tourists

As clashes between Thai forces and anti-government protesters in Bangkok continue, there are growing fears about the impact the protests are having on the Thai economy.

The protesters, called red-shirts after the colour they have adopted, converged on Bangkok in March. They want Prime Minister Abhisit Vejjajiva to resign, with many supporting former prime minister, Thaksin Shinawatra, who was ousted in a coup in 2006.

The latest round of violence has left 36 dead and some 250 injured.

The crisis has left the city a virtual no-go zone for tourists with hotels, shops and restaurants faced with a sharp drop in the number of visitors.

Some businesses in Bangkok's shopping district had to close their doors altogether when anti-government protesters occupied the area last month.

And there are now fears that the political unrest could harm Thailand's economic growth and put off foreign investors.

Fewer tourists

Tourism makes up about 6% of Thailand's economy, but accounts for 15% of the country's workforce.

The British Foreign and Commonwealth Office currently advises against all but essential travel to Bangkok, but Abta, the UK travel association, says that while British tourists are rearranging their holidays, they are not cancelling altogether.

RED-SHIRT PROTEST

Continue reading the main story

• 14 Mar: Red-shirts converge on Bangkok, occupy government district
• 16 Mar: Protesters splash their own blood at Government House
• 30 Mar: Talks with government ends in deadlock
• 3 Apr: Occupy Bangkok shopping district
• 10 Apr: Troops try to clear protesters; 25 people are killed and hundreds injured
• 13-17 May: 36 killed in Bangkok clashes

Bangkok protests day-by-day Thai protests: Eyewitness accounts

"The majority of the country is not a problem at all," Abta says. "Places like Ko Samui and Phuket - seen as the 'real' Thailand - are not affected by this.

"Many people may have been planning on just going to Bangkok for a couple of days of their trip. What we suggest people do and what they are doing is amending their itineraries so they don't go to Bangkok now."

But while the island resorts may still be attracting the tourists, the capital certainly is not.

Following clashes last month between soldiers and protesters, hotel occupancy in Bangkok was down to 20% at a time when it is normally at 80% or 90%, government spokesman Puttipong Punnakan has said.

Shops and mall operators have not only had to deal with fewer tourists, but the red shirts' occupation of the Rachaprasong shopping district has also forced many to shut up shop.

"Shops and department stores in the red zone have now lost about 1bn baht ($31m; £21m) a day," Thanapol Tangkananan, president of the Thai Retailers' Association said after April's clashes.

Growth revisions

Thai Finance Minister Korn Chatikavanij has forecast economic growth of between 4.5% and 5% this year, but the civil unrest is threatening to reduce that figure.

After meeting with business associations, Mr Chatikavanij has said the protests could cut 0.3% off his forecast.

Analysts have said growth could be as much as 2% lower than the government estimate if the clashes continue.

Protesters have been holding rallies in Ratchaprasong shopping district

Thailand's economy relies heavily on exports and how the economy performs this year will largely depend on whether or not exporters are hit.

Richard Han, chief executive of electronic components manufacturer Hana Microelectronics, said in a recent interview that as long as the airports are open, business would be able to continue.

But he did voice longer-term concerns as to what customers would think about dealing with Thai companies in the future if the situation is not resolved.

Foreign investor fears

Meanwhile, Amata Corp, Thailand's biggest industrial land developer, is already having to deal with customer concerns.

It has revealed that some Japanese clients have delayed signing contracts because of the unrest and warned that sales might suffer.

Foreign investors have already shown some signs of withdrawing from Thailand - since violence broke out last month, foreign investors have sold $584m in Thai shares, leaving Thai stocks among the cheapest in Asia.

Investment firm Fidelity had said that should the ongoing crisis affect corporate earnings, it would reconsider its investment decisions.

"Our decisions around investing in Thailand are more driven by the underlying fundamentals of the companies," Gregor Carle, investment director at Fidelity, said.

But he went on: "If we feel that there is an escalation in events in Thailand that threatens the corporate environment, obviously we will adjust the portfolio to reflect that."

Source : BBC
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Tourists to Thailand may hit 4-year low in 2009

Thailand may see its lowest number of tourist arrivals in four years in 2009 after the blockade of Bangkok's airports late last year that stranded thousands of holidaymakers, the Bank of Thailand said in a report. 

The week-long siege of Suvarnabhumi airport from Nov. 25 by anti-government protesters caused massive damage to the important tourist and trade sectors. Don Muang airport, a big domestic hub, was also closed by protesters. 

The central bank said foreign arrivals probably fell 3 percent to 14 million in 2008 and could drop nearly 9 percent to 12.8 million this year. 

That would be the lowest since 2005, when visitors dropped slightly from the previous year to 11.5 million after the December 2004 tsunami, which killed more than 5,300 people in Thailand. 

The blockade of Suvarnabhumi, which handles more than 100,000 travellers a day, could not have come at a worse time for Thai tourism, since November is the start of the peak season. 

Illustrating the immediate impact on tourism, the report said that arrivals in the first 11 months of 2008 were 3.7 percent higher than in the same period the previous year at 13.4 million. 

Without the airport blockade, arrivals could have totalled 14.6 million in 2008 as a whole and 15.6 million in 2009, the report estimated. 

Revenue from tourism -- which employs 1.8 million people out of a population of about 65 million -- could fall 14 percent to 484 billion baht this year ($14 billion) after a projected 2 percent drop to 564 billion baht in 2008, the report said. 

In total, the airport closures could eventually cost the economy 290 billion baht, or 3 percent of 2009 GDP, with the tourist sector the hardest hit, it said. 

Of those projected losses, 120 billion baht was in the service sector, 90 billion baht in the transport sector and 60 billion baht in industry and other sectors. 

Thai Airways, the national carrier, said this week it wanted to delay the delivery of six A330 aircraft and had agreed with Airbus to defer payments for three months because of the downturn in its business due to the global economic slowdown and the airport closures.. 

Prime Minister Abhisit Vejjajiva has warned that the country could slide into recession and says his government plans aggressive measures to help the export-led economy, which the central bank expects to grow just 0.5-2.5 percent this year. 

Exports fell nearly 18 percent in November, the first monthly drop since 2002, due to the airport blockade and falling demand in the face of the global economic crisis. 

Source : LSEUK
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Western Digital announces job cuts for 2500

Western Digital has announced plans to reduce headcount worldwide as well as the closure of some of its manufacturing facilities.

John Coyne, chief executive officer of the hard drive manufacturer, has been quoted by BetaNews as saying that he expects the poor demand for storage products “to last well into the middle of the 2009 calendar year,” and has advised a new projected revenue for Q4 2008 at $1.8 billion – a significant drop from the $2.15 billion the company had previously forecast for that period. Coyne goes on to say that the company will be “taking additional steps to immediately reduce production capacity and operating expenses on a longer-term basis across our entire business as we approach the seasonally weaker second half of our fiscal year.”

Due to the declining demand for storage products – and overproduction that has resulted in excess stock in the channel – the company has announced a freeze on production between 20th of December and the 1st of January in order to minimise losses.

This is far from the only cost-saving measure the company is taking, however: top-flight executives – cinluding the board of directors – will see their annual bonuses severely curtailed, employees will be called upon to cut their billable work hours by at least twenty percent, and various cutbacks will result in a projected reduction of around $250 million from capital expenditure.

As if that wasn't enough to keep shareholders hopeful, Western Digital is also to close one of its manufacturing plants in Thailand, along with the sale of a substrate factory in Malaysia. These closures, along with reductions in other areas, will leave around 2,500 jobless – about five percent of the company's overall workforce.

With the company seeing increased competition in the market along with a pricing war that has left it with ever-decreasing margins, investors must be hoping that tightening the company's belt now will save it from disaster further down the line.



Source : Bit Tech
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Holiday season in crisis as Thai tourism plummets

The palm-fringed island of Samui normally fills up for the holidays, but what stands out these days is its emptiness.

The sprawling Tongsai Bay resort, where guests are shuttled around in golf carts, has reduced hours for staff and even installed lower-wattage light bulbs to reduce electricity bills to cut costs amid the slowdown, said assistant manager Chonlatee Nakamadee.

"We can't believe how quiet it is here," said Karen Jack, a 37-year-old secretary from London. "There's been a couple of nights when we've been the only people in the restaurant."

The hangover from political unrest including an eight-day blockade of Bangkok's airport is not going away: Cancelations are pouring in from around the world — just as the high season is starting and the economy is slowing amid the global financial meltdown.

Tourism authorities predict business will be worse next year than after the tsunami in December 2004. Airlines and luxury hotels have slashed rates, some offering two nights for the price of one. High-level staff at one Bangkok hotel have taken 25 percent to 30 percent salary cuts.

The slowdown could push Thailand's economy into recession. The government forecast a contraction of up to 1 percent in the first quarter of 2009 and zero growth in the second quarter. Tourism brought in about $16 billion in revenue last year, about 6.5 percent of the country's gross domestic product.

Bangkok, the capital city, is especially hard hit.

The loudest sound in the elegant lobby of The Peninsula is a toy train chugging through a gingerbread village near a 28-foot (8.5-meter) Christmas tree. The hotel has temporarily closed its bar and two of its six restaurants.

"The decorations are beautiful. It's just a pity there aren't more people to see it," said Charles Morris, general manager of the 370-room hotel, where the occupancy rate sank below 10 percent earlier this month.

The lebua hotel, where occupancy is 16 percent compared to 80 percent this time last year, has stopped all advertising until June. "All expatriate staff working here have taken 25 to 30 percent salary cuts — all of us," said Deepak Ohri, chief executive of the luxury hotel.

Thai hotels typically average 85 percent occupancy during the holidays, but many in Bangkok are less than 20 percent full, said Juthaporn Rerngronasa, a deputy governor at the Tourism Authority of Thailand.

Her agency has devised a two-part strategy to revive Thailand's image as a laid-back paradise.

First: a big apology. The tourism authority is compiling a list of e-mail addresses of stranded passengers, collected from airlines and hotels. It plans to send a message "to express our regrets," Juthaporn said.

Second: big discounts. The authority has asked hotels and airlines to reduce high season rates and fares. Its "Amazing Thailand" campaign is being redubbed "Amazing Thailand, Amazing Value."

Southeast Asia's top budget carrier AirAsia is collaborating with an offer of 100,000 free tickets to Thailand under a regional marketing campaign — "Get Your Baht to Thailand."

Thai Airways and Bangkok Airways, which were crippled by the airport closures, are offering domestic roundtrip fares in the $100 range to the country's most popular beaches — Phuket, Krabi and Samui — and the northern city of Chiang Mai, famed for its elephant treks and Buddhist meditation retreats.

The tourism authority estimates the number of tourists will decline over the next six months by 2.5 million, costing the industry 100 billion baht ($3 billion).

That's in addition to 1.9 billion baht ($54 million) spent by the government to lodge and feed stranded tourists during the airport shutdown — and the millions lost by airlines and exporters.

The biggest falloff is among Asians, who accounted for more than half of the 14.8 million visitors to Thailand last year. Some 90 percent of Japanese and Chinese travelers have canceled upcoming trips, said Apichart Sankary, president of the 1,300-member Association of Thai Travel Agents.

Many hotels are trying to lure domestic travelers to fill some of the gap by halving room rates.

"While overseas tourists aren't coming, our strategy is to have more promotions for Thai people and residents," said Juthaporn of the tourism authority.

Andrew Herdman, director of the Malaysia-based Association of Asia Pacific Airlines, remains optimistic for the long-term, noting Thailand has bounced back from the tsunami and other earlier crises.

"We've seen dips in the past and Thailand has always come back very strongly, because there is an underlying reservoir of trust and good feeling about Thailand," he said.

But as the sun set over the island of Samui recently, happy hour faded to dinner time without a single customer at the Lunar beach bar. Even moving happy hour up to 2 p.m. hasn't brought in business, said the bar's owner, Pannipa Sritawan.

"It's supposed to be the high season," she sighed.

Source : AP
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Thailand Hotel struggle as occupancy rate plunges 19%

Employees of luxury hotels in Bangkok, Chiang Mai and Phuket have seen a cut in their working days as operators try to reduce operating costs without having to lay off workers in the light of plunging tourist arrivals.

Prakit Chinamourpong, president of Thai Hotels Association (THA), said on Tuesday that luxury hotels in Chiang Mai had reduced employees' working days to five days a week due to fewer customers.

Many hotels in Phuket and Bangkok have also cut working days to four and five days per week.

"Some luxury hotels are running with a single-digit occupancy rate, sharply down from the average 70 per cent rate recorded in the same period last year."

"For the overall hotel industry, the average occupancy rate this month alone has declined 19.1 per cent," he said, adding that the impact of the Bangkok airports' shutdown was greater than the 2004 tsunami.

From January to early this month, the average occupancy rate is 65 per cent, down from 68 per cent over the same period last year.

Prakit said some luxury hotels in Bangkok had also decided to cancel their gala dinner packages already booked for New Year's Eve after customers cancelled reservations.

THA forecast that the hotel sector would slow until June 2009,with small and medium sized hotels suffering the most, so THA is asking the government to help by granting soft loans.

He said that about 30 per cent of workers in the hotel sector are expected to lose their jobs next year.

The closure of the Bangkok airports caused damage which could amount to Bt130 billion as the country could lose up to 2.3 million foreign tourists.

Airports of Thailand (AOT) said about 15,000 flights had been cancelled during the eight-day closure of airports, but all airlines had resumed operations at Suvarnabhumi International Airport with the total number of flights now close to the usual 547 flights per day.

However, Phornsiri Manoharn, governor of Tourism Authority of Thailand (TAT), remains optimistic, saying the tourism sector's growth could be revived as TAT and six other industry bodies plan to launch a series of post-crisis promotional campaigns.

TAT also plans more sales and marketing activities to boost domestic tourism next year.

Meanwhile, industry sources said Starwood Hotels and Resorts, the world's largest international hotel chain operator, is considering the shut down of its regional Asia Pacific office in Bangkok, following the work-hour cutback at some luxury properties in major tourist cities.

The regional office was part of a world wide business expansion covering its multibrand management of hotel properties, including Le Meridien, Westin, Sheraton, St Regis and W Hotel.

Source : HotelsMag
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Bangkok Factories to Layoff 1000 Workers and posibly 100,00 jobs in 2009

Factories in Ayutthaya, one of the major industrial areas in the vicinity of Bangkok, have started to see the affect of the economic downturn, with about 1,000 workers being laid off and a large number of employees at risk of becoming unemployed next year.

The Federation of Thai Industries, Ayutthaya chapter estimated about 100,000 employees or 50 per cent of the workforce in 1,700 factories in Ayutthaya were vulnerable of losing their jobs in 2009 due to slowing export orders. To survive the imminent crisis, entrepreneurs are likely to cut overtime pay and lay off workers. The provincial labour chief admitted the situation was worrisome.

"Nine businesses have laid off about 1,000 employees so far," said Pongthai Musikapong,
chief of Provincial Labour Protection and Welfare Department.

Negative signs are also seen in the job recruiting business, as there is now no demand for labour from factories. The recruitment companies might have to close down.

"Slashing overtime pay and stoping recruitment of new employees are the first doom signs. Normally, there is demand for labourers every month, but since October, we haven’t received any request for recruitment of new employees from factories," Siam Interbusiness Co.,Ltd Managing Director Manus Sabmeechai.

Pressured by on uncertain future of their career, many factory workers struggle to survive by taking courses at a vocational college, which has seen the number of students triple this month. All courses were full with around 10,000 people.

Apinya Chumwapee, an electronic factory worker, said she feels insecure as she can lose her job anytime, so she enrolled in a make-up course to create her own opportunity of a new occupation if she is laid off.

Waewduan Phoyai and her factory colleagues are learning to bake, so they can open their own shop at home if they are forced to leave their current jobs.

"I could be one of the workers laid off soon. I need some skills to help me earn a living,"
Waewduan Phoyai, a factory worker said

Echoeing the voices of these concerned workers, relevant agencies in the province called a meeting to gather details on the unemployment situation. It will be submitted to Deputy Prime Minister Olarn Chaipravat who’s scheduled to visit Ayutthaya next week to address the potential mass lay-offs, also likely to occur in other provinces as well.

Latest statistics by the labour ministry disclosed that 166 firms had terminated about 18,000 workers. Another 81 companies with 29,000 employees were expected to be affected later.

Source : MCOT
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession]