Tour clampdown hits arrivals
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Tour clampdown hits arrivals

Foreign visitors down 10% month-to-month

There still are some Chinese tourists, like this group at Government house, but a Bank of Thailand expert says the industry cannot sustain the current plunge in tourist arrivals. (File photo)
There still are some Chinese tourists, like this group at Government house, but a Bank of Thailand expert says the industry cannot sustain the current plunge in tourist arrivals. (File photo)

The Bank of Thailand is voicing concerns about the impact of the government's crackdown on "zero dollar" tours after a significant decline in the number of Chinese tourists in October, says a senior central bank official.

The zero-dollar clampdown, which came into force in late September, and higher visa-on-arrival fees dealt a significant blow to October's foreign tourist arrivals, said Don Nakornthab, senior director of the Bank of Thailand's macroeconomic and monetary policy department.

Foreign tourist arrivals in October alone plunged by 10.1% from the previous month but grew by a mere 0.5% over the same period last year, according to the central bank's data.

Mr Don said Chinese tourist arrivals in October fell by 16% year-on-year.

The tourism sector has been one of the few bright spots in recent years while other engines comprising exports, private investment and domestic consumption remain tepid.

"According to the real figures, we expect the effect could be higher than earlier estimates," Mr Don said.

The Bank of Thailand earlier forecast that the government's crackdown could shave off 200,000 foreign tourist arrivals this year and 100,000 next year.

Mr Don said that the impact from the government's measure will be an important issue to be discussed at the Monetary Policy Committee's meeting on Dec 21, which will include a review of GDP growth, as the sector has a significant weight of the country's GDP.

"If the effect is prolonged over the next three months, it remains OK for next year [economic growth]. But if the impact is extended for one year and three months, it would seem like Thailand could lose one of its economic engines," he said.

But Mr Don said that the measure is the right approach for the sector in the long run.

In a related development, the economy in October expanded at a slower pace than the previous month as exports swung back to contraction after two straight months of growth.

Merchandise exports excluding gold in October registered at US$17.4 billion, falling 4.3% year-on-year and 3.6% month-on-month.

"Personally, I think the economy is still able to come in at 3.2% growth this year," Mr Don said.

He said that in the first nine months of this year, the economy grew at an annual rate of 3.3% and it needs at least 3% growth for the final quarter to achieve the central bank's forecast of 3.2% this year.

The National Tourism Policy Committee chaired by Deputy Prime Minister Tanasak Patimapragorn forecast the number of foreign tourists will marginally miss the target this year.

He said the government's zero-dollar tour crackdown has taken a marginal toll on Chinese tourists and the situation will improve in December and January.

The committee estimates that the number of Chinese tourists will reach 8.8 million this year following the measure, falling short of the earlier target of 9-10 million but still rising from 7.9 million last year.

For the first 10 months, foreign tourist arrivals rose by 11.3% year-on-year to 27 million and the sector's income surged almost 15% to 1.35 trillion baht. China was the largest tourist group, followed by Malaysia and South Korea.

Following the implementation of the measure to clamp down on zero-dollar tours, the committee also forecast that the number of foreign tourists will be 32.6 million this year, compared with the earlier estimate of 33 million.

They are expected to contribute 1.68 trillion baht this year, down from the earlier forecast of 1.76 trillion.

Meanwhile, Kim Eng Tan, senior director for sovereign and international public finance ratings at S&P Global, said the key risk for Thailand's sovereign credit rating is politics, which could disrupt policy and dampen the confidence of consumers and businesses.

"These uncertainties seem to have eased over the past few months and if the government can deliver the election as promised, we're likely to see an improvement in business and consumer sentiment," he said, adding that the economy could register a stronger growth than the past few years.

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