Painful economic transformation begins

Painful economic transformation begins

No customers: Staff at a traditional massage shop wait for customers on Khao San Road. Tourism-related businesses are continuing to suffer losses despite the lifting of the lockdown.
No customers: Staff at a traditional massage shop wait for customers on Khao San Road. Tourism-related businesses are continuing to suffer losses despite the lifting of the lockdown.

Life for many has not really returned to normal as intended after Covid-19 restrictions gradually eased on July 1.

Now a panel under the Centre for Covid-19 Situation Administration (CCSA) is eyeing further loosening by allowing normal-sized classrooms, crowds in sports stadiums, all seats to be taken in public transport and meals on flights.

However, one month on, life for many has not really returned to normal as intended.


Sanga Ruangwattanakul, president of the Khao San Business Association and CEO of Buddy Group, said most businesses in the Khao San area are still struggling to shore up their cash flow even though the lockdown of all businesses and activities has been lifted.

"During the daytime, Khao San is still like a ghost town because there are only a few visitors. At night business activities are a little better due to local tourists. However it is a long way from what you might call a normal level," he said.

Mr Sanga said 70-80% of business activities on Khao San Road rely on foreign tourists, so as long as the country's borders remain closed to international arrivals, business operators can only count on the support of domestic travellers to survive.

"For some businesses such as massage shops and souvenir shops, there are no customers at all. Many of them have decided to shut down and switch to doing something else," he said.

Kriengkrai Tiannukul, vice-chairman of the Federation of Thai Industries (FTI), a core member of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), said purchasing power also dropped partly because people lost their jobs in tourism and related business.

Almost 40 million foreign tourists visited Thailand last year and generated about 2 trillion baht, compared with around 1 trillion baht from Thai tourists. The foreign tourist figure is likely to drop to 8 million people this year while domestic tourists are reluctant to spend money.

Spenders have been cautious, as they are unsure whether they would be laid-off or whether their businesses would survive or not, due to the impact of the pandemic.

"The people came out just to relax after having to stay at home during the Covid-19 lockdown. They choose to visit only nearby provinces and eat out only at the restaurants that provide the meals that are good only in restaurants [not at home]," he said.

''Only some categories of non-essential goods are still selling well, such as home decoration and gardening products," he said.


A tourism planning expert of a state-run university, who asked not to be named, said tourism businesses were only slowly recovering. Shops and street vendors were still suffering.

Take for example the popular Bang Saen seaside attraction in Chon Buri. Fewer vendors traded in designated spots because of social distancing rules.

It was also observed that visitors were mostly families who come on long weekends. Many packed their own lunch and snacks rather than buying from vendors, he said.

The expert warned the tourism section remains mired in a massive slump which is expected to get worse before it sees any silver lining.

"Although the lockdown is pretty much behind us, it hasn't been of much help to the industry which is struggling to get back on its feet," the expert said.

The second half of the year could be tough for the sector.

For the rest of the year, however, the pace of rebuilding the sector will be held back by the continued proliferation of infections in other parts of the world, which takes away people's will to travel, he warned.

Despite the government's economic stimulus package aimed at boosting domestic tourism, the employment situation in the hotel and hospitality sectors in Phuket remained unimproved, said Chamrat Thotthing, secretary-general of Phuket Federation of Hotel and Service Labour.

"None of those who have lost their jobs since April have found new work. The situation is hopeless as the Covid-19 pandemic situation in other countries such as the US, Europe and Japan remains serious," he said.

Because Phuket's tourism relies largely on foreign tourists, if they can't return any time soon, job cuts will surge after job suspension assistance ends, he said.


Ratthawit Charoenwat, a manufacturing supervisor with Bogart Lingerie (Thailand), said the company had called its workers to return to work since mid-June. This month it began paying workers overtime again as more orders have been received.

Chalee Loysoong, deputy chairman of the Thai Labour Solidarity Committee, said orders in the auto, electricity and electronics making sectors have risen to 30% to 40% of their usual levels, which prompted a number of workers to be called back to work, he said.

However, many more workers still need help and he wonders if the government will be able to extend those financial assistance programmes -- the 5,000 baht given from April to June, for another three months, he said.

Yongyuth Chalamwong, a director for labour research with the Thailand Development Research Institute (TDRI), said the actual unemployment rate is now lower than expected. However, the minimum number of job losses projected for the entire year is 2 million.

The impact of the Covid-19 pandemic on businesses actually varies from one to another, he said.

"More concerns now lie with 2021 when clearer signs as to whether the country's economy will recover are expected," he said.


Meanwhile, Suwannachai Wattanayingcharoenchai, chief of the Department of Disease Control, said he applauded the government's efforts on Covid-19 disease control after the lockdown order had been lifted, saying infections are only being found among returnees staying at quarantine sites. No local transmissions have been found for some time.

Dr Suwannachai said that on the bright side, people know how to protect themselves and medical staff are now experienced in treating the virus. The rate of mortality is still low with 58 cases and only 139 cases being hospitalised.

"We can't avoid the domestic transmission cases from now on. But what we need to see is the public free from fear and panic," he added.

It is a challenge to strike a balance between health and economic affairs because shutting down the country is no longer the right answer, he said.

A helping hand

To help the people economically, Mr Kriengkrai said it is important the government expedite the 400 billion baht budget, part of the loan money set aside to relieve the economic impact of Covid-19.

"A lot of people have lost their jobs and returned to their home provinces. The money must be used to create jobs. The money must be allocated sufficiently for each particular project to create the desired impact, and the spending must be effective without any leakage," he said.

At the same time, the government must help small and medium enterprises access the capital with low-interest rates. Debt repayments should also be halted and businesses should keep workers employed, he said.

In the medium term, the government should support and promote industries that still work.

In his opinion, food, health and agriculture-related industries such as bio-energy and bio-economy must be developed, in addition to digital and robotic and logistics industries.

In the long run, the structure of the economy must be reformed, he said. As wages are likely to hike, workers' skills must be enhanced and technologies must be used to reduce costs and add to the value of products.

"The economy must be reformed to be more self-reliant. Recently 65-70% of the GDP came from exports and 10% from tourism," he said.

"A lot of our income came from foreigners. This proportion [of the money generated from foreign and domestic consumption] should be changed to 50-50."

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