Thursday, 23 September, 2021

Thailand sees structural damages to economy

Thailand sees structural damages to economy

BANGKOK: Former Bank of Thailand Governor Veerathai Santiprabhob said in a late-night social media workshop that the current government must be more proactive in its policies to repair the damage to the economy because the impact of Covid-19 could have long-lasting ramifications for the economy.

Veerathai, who was the central bank chief until his term ended in 2020, said that the country could see permanent damage to its all-important tourism sector, report agencies.

“If there is anyone who thinks that Thailand would be able to see 40 million tourists in the near future then they should rethink, it is unlikely they will return in such high numbers,” Veerathai said in a late-night Clubhouse talk under the topic – Thailand After Covi-19 ‘Thai Economy would not be the same’.

Veerathai said that the cost of traveling has become so enormous that it is not easy for people to travel as they used to in the past. There will be considerations for vaccination and testing requirements as well as the quarantines in place in numerous countries around the world.

Businesses that are reliant on things such as meetings, conventions, and exhibitions (MICE) are likely to suffer heavily as companies are unlikely to allow big groups of their staff to travel to a different country.

Overall tourism, he said, was going to suffer as some businesses simply will not outlast the pandemic.

As an example, Veerathai pointed to the overabundance of hotel rooms. He said that the lower number of tourists would mean that these hotels may not be able to sustain their business model.

Thailand, one of the world’s most popular destinations for foreign tourists, saw nearly 40 million tourists at its peak in 2019. This generated some 1.93 trillion baht in revenue for the country and amounted to 14% of the gross domestic product (GDP).

That number has all but dried up due to the pandemic. The government says this year that only 150,000 tourists will be arriving. Just over a week ago the current BoT Governor Sethaput Suthiwartnarueput, came out to warn the government on the current economic problems and suggested to the government to raise the Value Added Taxes (VAT) to 10% from 7%.

He also suggested that the government borrow up to 1 trillion baht to bail out the economy.

The government of Prayut has already borrowed 1.5 trillion baht (1 trillion in 2020 and 500 billion baht in 2021) to try to revive the economy but so far, the impact has been minimal and many businesses are yet to see any of the money.

Businesses that have been suffering, especially small & medium-sized enterprizes (SME) have seen their liquidity dry and a sharp decline in disposable income. The prospects of alonger pandemic has also kept consumption low.

Domestic consumption is another key component of economy, but Veerathai came out to say that at times the government needs to try to balance the need of economic growth and the spread of the virus.

“In April we gave priority to economy and allowed people to travel all across when the country was witnessing an outbreak of the Alpha variant,” Veerathai said adding that such moves needs to be considered because the country needs to build ‘immunity’ via vaccine and prevention.