BANGKOK: Traders in the Pratunam area of Bangkok famous with foreigners and even small Thai retailers seeking wholesale bargains are reporting catastrophic trading conditions linked with the coronavirus outbreak in China and its impact now being felt across the world with no end in sight.
The depth of the economic crisis being caused in Thailand as a result of the coronavirus will not be seen for some time until the government’s economic data emerges. Last week, one analyst with Krungsri Bank, Somprawin Manprasert, predicted a drop in GDP for the first quarter of the year. However, reports this week from two of Thailand’s largest shopping centres in Bangkok indicate at least for Thailand’s retail sector linked with foreigners and tourism, the impact of the virus has been both cataclysmic and unprecedented.
On February 26th, Thailand’s MBK Shopping Centre offered its tenants a 10% to 20% reduction in rents from March to September this year to help alleviate the economic pain. Striking retailers, however, were demanding a 30% drop.
The Thai King on Tuesday approved the annual budget for the government of ฿3.2 trillion which is a 4.2% rise from the previous year. It was some good news but the situation has already been overtaken by events.
The enormous drops seen this week on stock markets throughout the world including the SET in Bangkok could well herald a global recession in a world that was already moving in that directions even before the disaster struck in Wuhan China.
And make no mistake, all talk about fake news and the necessity of not panicking aside, this event is going to have a dramatic impact not just on Thailand but on the world.
The death knell of unbridled globalism
It is the death knell for a period marked by unbridled globalism and the shift of global production on a vast scale to the east. This has already alluded to by top officials in the Trump administration even before this week’s nightmare on the markets which appear not yet to have fathomed the full extent of the disaster economically.
For now, governments are just beginning to understand that scale of this challenge and quite rightly, that preservation of human life must be placed first and foremost as the priority. Ironically, it is left-leaning politicians who appear to have been slow to grasp this.
Thailand faring well in fights against coronavirus
In Thailand, government authorities are faring pretty well in combating the threat with only 42 infections and so far no deaths.
This week, figures for the Tourism Authority of Thailand which are questioned many sceptics, even suggested that tourism numbers were up in January.
TAT’s tourism marketing efforts frustrated
In fairness, there have been some reports of certain parts of the country which have seen a moderately good with many western visitors seen this year but the situation in places like Phuket and Pattaya is dire.
The Tourism Authority is accepting that it may lose 5 million visitors in 2020.
TAT was ready to launch a discounted fares promotion with national airline Thai Airways and Thai Smile at the world’s biggest travel show in Berlin this March aimed at spurring on the European markets when news came through on Saturday that the huge IT Berlin exhibition had been cancelled by authorities.
Another casualty of the Convid 19 coronavirus.
Pattaya – now a tourist ghost town except for US sailors this weekend who gave it a fillip
The Thai national newspaper Thai Rath this week visited Pattaya and published a report with footage of quite deserted beaches, tied up motorboats and interviewed business owners whose staff are laid off, have been put on part-time work hours or have simply headed back home to the provinces.
Over the weekend, there was reported to be a temporary pickup of activity in the resort city when American sailors and servicemen stationed nearby due to the annual Cobra military exercises with the Thai military took some time off to enjoy the nightlife. A back to the future moment.
Factory output down 4.59% in January
The Thai Ministry of Commerce’s Office of Industrial Economics revealed this week that factory production in January was down 4.59% compared to last year with plant utilisation of just about 66%.
The figures paint a picture of an industry trying to get back to normal. Thongchai Chawalitpichaet of that office suggested that the country’s car production sector had been severely hit as had sugar and palm oil production.
There were rises in hard disk drive production and the output of air conditioners. The figures support an earlier report of a surprise pickup in exports for January.
Jurys is out on prospects for February
However, Mr Thongchai was optimistic about February pointing to a weaker baht and demand in the healthcare industry driven by demand caused by the coronavirus.
This must be tempered by reports today from Beijing where the Purchasers Manager Index tumbled to 35.7, the lowest level ever recorded.
The Chinese economy is still in a state of paralysis due to the coronavirus and this may be added to by the worsening situation South Korea and Europe where following the outbreak in Italy, countries like France and Germany are taking measures which may hamper or curtail economic activity.
Rebellion by Bangkok shopping centre tenants
A sure sign that the economic impact being caused by the coronavirus on the retail sector is a heavy one was a rebellion by small retailers this week at the famous MBK Shopping Centre, long famous as a mecca for foreigners when visiting Bangkok and Thailand.
There is also a crisis at the famous Platinum Shopping Centre in the Pratunam area of Bangkok which specialises in computer and technology gear.
Sales down by as much as 80% in February
One 35-year-old trader told the press this week that trade at her fashion shop in the adjoining fashion mall, which also serves trade customers, was down by 50% for January.
Palm said that she anticipated that her trade would be down as much as 80% for February.
Technology traders cannot get stock from China
Next door, at the giant-sized Platinum technology shopping centre, the situation was even more desperate.
‘Some shops on the third, fourth and fifth storeys of Platinum were closed because they don’t have products to sell, as traders from China cannot send their products to Thai partners,’ Palm explained to reporters.
The trader said that things in Bangkok have not been as bad as this since the 2010 political protests which brought trade in the inner city at times to a standstill.
Shopping Centre executive – trade in 2020 is the worst he has ever seen since his career began
An executive with The Mall Group, a shopping centre operator, Paibul Kanokwatanawan, said that the current downturn in trade was, in fact, worse.
‘In the several decades I’ve been in the retail business, 2020 is the most difficult year,’ Mr Paibul told reporters. ‘Chinese shoppers have shunned our country, while locals aren’t going shopping. Revitalising the retail market is difficult because I don’t know when the virus outbreak will be brought under control.’
It is being reported this week that management teams at some malls are considering an accommodation with tenants on rent payments following a representation by traders.
MBK Shopping Centre offered a package of rents reduce rents over a 6 month period from March
This week traders at the MBK Shopping Centre in Phaya Thai protested and demanded a reduction of 30% to help them survive the crisis.
Management at the centre is reported to have offered traders a reduction in rents of 10% to 20% for the next 6 months running from the 1st March to the 1st of September next.
The concession gives a strong indication of not only how serious this crisis is but how long it may endure.
From boom to bust overnight over the coronavirus
One retailer spoke to Thai language publication Khaosod this week.
Meya has been a trader at the MBK Shopping Centre for over 23 years. Her rent for a small 2-metre square holding is ฿4,000 per day or ฿120,000 per month. She told reporters that her daily profit before the outbreak was at least ฿10,000 per day with ฿50,000 on holidays and bumper periods.
Since January, she claims that she has begun to lose money earning between ฿2,000 to ฿3,000 and not able to cover her rent payments.
Her economic situation is similar to businesses around the world who in the space of six weeks have been plunged into chaos leaving Thailand and the world in unchartered territory.