By GREG LOWE
BUSINESSES that have been hit hard by months of protests and deadly clashes on the capital’s streets say that it is too early to assess the full impact of the recent violence on their operations.
Protesters rampaged across Bangkok on Wednesday, torching more than 30 buildings, after leaders of the red-shirt United Front for Democracy against Dictatorship surrendered to police, ending more than two months of anti-government rallies in the city.
Parts of the CentralWorld shopping mall collapsed after a fire started by protesters raged for more than 10 hours. The extent of the damage to Asia’s second-largest shopping centre was not yet known, a spokesman for operator Central Pattana said yesterday. But the adjoining Zen department store was completely gutted by the inferno. ‘The damage caused by the fire needs to be carefully inspected in detail by concerned authorities and also for security reasons,’ the company said.
The impact on local tourism, a bedrock of the Thai economy, will be severe if political instability continues. Clashes between security forces and protesters in the past two months have left more than 80 people dead and more than 1,300 injured.
‘All our inbound clients are being relocated out of Bangkok, we are seeing many cancellations,’ said Michael Lynden-Bell, general manager of Exotissimo Travel Thailand, a destination management company. ‘Our prime concern is the safety of our clients and staff.’
During one of the recent firefights, a bullet shattered a window at the company’s office, located on the Silom-Rama IV intersection, which has been closed since last Thursday.
Fears that Wednesday’s unrest could spread to other parts of the country were a significant concern, but Mr Lynden-Bell said that he was optimistic that Thailand would eventually bounce back. ‘Though I think business will be very slow until the peak season in November/December,’ he said.
While the situation in Bangkok has calmed since Wednesday, the government must act swiftly to ensure that the peace is sustainable.
‘The only action we can take now is to be on the defensive and try to cut costs and wait for the tide to pass,’ said a Singaporean business owner, whose firm services the commercial and factory property sector. ‘If the current situation does not improve, we are expecting a fall in sales revenue of up to 40 per cent in 2010.’
While the central bank has ordered a bank holiday, some establishments have already taken a hit. A spokeswoman for UOB (Thai) said that business had declined significantly with most customers taking a wait-and-see approach to the situation, which was too volatile to predict.
‘Effort must be made to regain investor confidence,’ she said. ‘Overall, we believe that the well-diversified Thai economy is a resilient one, and business opportunities remain favourable in the long-run.’
Tan Yhi Hua, a Singaporean executive at HRG, a corporate travel agency, echoed these views, saying that Thailand has recovered from other political upheavals including the 2008 airport blockade by yellow-shirt protesters from the People’s Alliance for Democracy.
‘This recovery for Thailand may be faster than expected because all companies are geared towards to quickly overcoming the business they lost during recent weeks,’ she said.
The unrest has delayed fund-raising plans and continued to erode investor sentiment, however, said Panaikorn Chartikavanij, a partner at local venture fund Lakeshore Capital.
‘Foreign investors are questioning the stability of Thailand as an investment destination,’ he said. ‘However, investors with a three to five-year horizon are likely to be less concerned.
‘While the frustration from the general public and business community on how the government is handling the situation is completely valid, we also have to understand its constraints and the context of the situation.
‘In my opinion, the prime minister has demonstrated extraordinary tolerance and shown restraint in handling the red-shirt protesters to avoid casualties. Casualties are inevitable given the guerrilla tactics of a small group of protesters. It is unfortunate, but the rule of law must be upheld to avoid Thailand slipping further into anarchy.’
Published May 21, 2010
© The Business Times