thegreglowe.com

By GREG LOWE
IN BANGKOK

DOMESTIC political unrest dealt a severe blow to Thai business sentiment, driving it to an all-time low last month, recent reports reveal.

Surveys published in January show local confidence is eroding faster than in other regional markets. And the Industries Sentiment Index plunged to 62.9 per cent in December – its lowest point since the Federation of Thai Industries introduced the survey to monitor manufacturers’ outlook in 2003.

Thailand’s political turmoil and airport blockades by anti-government protesters last year crimped already shaky investor sentiment, according to the ING Investor Dashboard Survey. The survey measures the outlook of mass affluent investors in 13 Asia-Pacific economies on a quarterly basis. The index ranges from zero to 200, with higher figures reflecting greater optimism.

Thailand’s index fell by 30 per cent to 59 in Q408 from 84 in Q308, while it declined by 56 per cent on a yearly basis. This contrasts with a 46 per cent year-on- year drop for the rest of the region.

More than half of Thai investors are worried about job security, while 46 per cent plan to preserve cash and invest less this quarter.

The spectre of last year’s turmoil dampened sentiment more than external factors, said Maris Tarab, CEO, ING Funds (Thailand). ‘There is real concern about the near-term future of the tourist industry, declines in local and inbound investment, export growth as well as further demonstrations,’ he said. ‘Thai investors are retrenching and becoming increasingly more conservative.’

Pessimism also reigns in other parts of Thailand’s business community, according to research published this month by Grant Thornton, a global management consultancy.

Its International Business Report 2009 – which surveyed senior executives in more than 7,200 private businesses in 36 economies – revealed that businesses across the world expect weak export growth (4 per cent), limited opportunities to increase revenues (11 per cent) and prices (14 per cent), but only a marginal drop in profitability (minus 5 per cent) this year.

The percentage is the difference between the most optimistic and most pessimistic responses.

Falling consumer demand outweighed all other business leaders’ concerns in Thailand, where senior executives are significantly more negative on revenue growth, with an overall balance of minus 14 per cent. They are the gloomiest on export growth, at minus 11 per cent, and among the most pessimistic in the world, said the consultancy.

Thai business leaders’ optimism fell to minus 64 per cent at the beginning of 2009, from 30 per cent in 2007. Only Japan and Spain recorded lower levels.

Such pessimism may be more realistic, said Peter Walker, senior partner, Grant Thornton (Thailand).

‘Generally, Thai businesses see things in a more negative light than many of their regional neighbours,’ he told BT. ‘This may not be so bad in the current economic situation, and it may enable them to plan a more realistic response than others who are overly optimistic.’

‘Anecdotal evidence suggests that the mood among business leaders, while still negative, has improved in recent weeks,’ he said. ‘If we don’t have any major glitches in the coming months, the political situation should be back to ‘business as usual’.’

Published January 28, 2009
© The Business Times