Q+A: How have Bangkok riots hurt the economy, business?

By Ploy Ten Kate

BANGKOK (BestGrowthStock) – Thailand’s economy was recovering well this year from the global financial crisis, as first-quarter GDP data on Monday showed, but violent protests since April have taken their toll and the outlook is uncertain.

The “red shirt” anti-government protests were finally broken up by the military on May 19, sparking riots and arson that destroyed part of the country’s biggest shopping mall and closed down banks for two days.

The full extent of the damage was still being worked out as Bangkok got back to work on Monday.

Below are details so far available of the impact on companies, tourism and the $264 billion economy, dependent on exports of manufactured goods but also the world’s biggest shipper of rice and rubber.


Monday’s data showed the economy grew 3.8 percent in the first three months of 2010 from the previous quarter, but economists and the government are worried the second quarter will see a contraction.

The violence has scared off tourists, dented consumer confidence, rattled investors and caused huge damage in Bangkok, effectively closing down much of the central commercial district for over six weeks from April 3.

Finance Minister Korn Chatikavanij told Reuters on Friday he would be “very surprised” to see any growth at all in April-June.

He estimated the unrest had already cut 0.3 to 0.5 point off growth this year. He had been looking for 4.5 to 5.0 percent.

The state planning agency (NESDB) that compiles GDP data maintained its forecast of 3.5-4.5 percent growth for 2010 and was optimistic there would be some growth in the second quarter.

Economists were less sure. Pimonwan Mahujchariyawong at Kasikorn Research Center said the economy could shrink by at least 4 percent from the first quarter. David Cohen at Action Economics in Singapore forecast it could be about 2.5 percent.


Images of the worst political violence in modern Thai history and travel advisories by Western and Asian governments will make foreigners think twice before coming to Thailand, where tourism accounts for 6 percent of the economy and employs at least 15 percent of the workforce.

Last year, also marred by political violence, 14.1 million tourists arrived.

The state Tourism Authority of Thailand has cut its target for arrivals this year to 13 million from 15.5 million and slashed its revenue target by a fifth to 480 billion baht ($14.8 billion).

The Tourism Council of Thailand, a private sector body, has cut its target for arrivals to 13 million from 16 million.

Official arrival statistics for April and May are not available but data from Airports of Thailand give some guide.

The number of passengers using Bangkok’s main Suvarnabhumi airport from May 1-18 dropped 7.8 percent from a year earlier to 1.62 million, before plunging on May 19, when the military moved in to end the protest in the early hours.

On May 19 and 20 passengers dropped by around half from a year earlier to 50,000 and 62,000 respectively.

Occupancy rates in the budget hotels in the Khao San Road area popular with backpackers plummeted from a normal 80 percent to, at best, 10 percent at the weekend.

At the other end of the price scale, the 420-room Sheraton Grande Sukhumvit Hotel has seen occupancy fall to 30 percent from 80 percent earlier in the year.


The biggest loss has probably been suffered by Central Pattana PCL, whose Central World shopping mall — the second-biggest in Southeast Asia — was set on fire as the troops closed in on the protesters on May 19.

Shares in Central Pattana dropped as much as 8 percent on Monday when the stock market reopened after an enforced two-day break.

The company said it had $100 million of insurance cover for terrorism and riots, plus industrial cover of 13 billion baht ($400 million), which included business interruption insurance.

Central World was at the heart of the Rachaprasong area where the “red shirts” set up camp from April 3, closing several malls from that date. Luxury hotels in the area also had to close.

Central Plaza Hotel said it would reopen its Centara Grand at Central World hotel and conference center on June 1. It expected 2010 revenue to rise 10 percent at most after the riots, down from its previous estimate of 12-15 percent.

Hotelier Erawan Group said it had cut its 2010 revenue estimate by 20 percent.

Combined revenue at two hotels — the Grand Hyatt Erawan and Courtyard by Marriott — in April and May would drop 150 million baht ($4.6 million) from last year because of the protests.

BEC World, operator of Channel 3 TV, said it lost about 120 million baht ($3.7 million) in advertising revenue due to an arson attack that forced its television station off the air.

The various malls in the area had combined revenue of around 5.2 billion baht ($161 million) in a normal month, said Fafuen Temboonkiat of the Rachaprasong Square Trade Association.

The central bank told the banks to close on Thursday and Friday for security reasons. At least a dozen bank branches were burned during the riots.

The banks are still assessing the cost. The second-largest, Krung Thai Bank, has said both profit and loan growth would be hit by the unrest.

It had planned to raise its 2010 loan growth target to “double digits” from 7 percent after a strong first quarter but that is now under review.

Stock Market Money

(Editing by Alan Raybould)

Q+A: How have Bangkok riots hurt the economy, business?