Government battling on all fronts to tame the latest virus wave while the loss of foreign tourism income has begun to bite even harder as tourism concerns experience a fraction of 1% of normal inbound tourist numbers. A Bank of Thailand economist last week identified uncertainty about the timeline in defeating this virus as the critical factor right now. This is dependent on vaccinations as the latest outbreak highlights.
Business analysts and economic experts are becoming concerned at the scale of loss to the kingdom being caused by the ongoing closure of the foreign tourism business and the lack of certainty, at this critical juncture, as the fight rages against the Covid-19 virus. It comes as the country’s dependence on foreign tourism is being laid bare during what would normally be the high season for the industry and when official government figures for December 2020 show that only 6,556 tourists arrived from abroad compared to 3.95 million the year before.
Official figures released by the government show that in December last, the kingdom saw inward footfall of only 6,556 tourists during what is traditionally the peak season for the industry which accounts both directly and indirectly for up to 20% of Thailand’s GDP when all revenue streams and ancillary economic activity are factored in.
The figure represents just 0.17% of the number the kingdom welcomed in 2019, a staggering drop.
Loss of income is unprecedented in modern times
While the government talks about 2020 being the worst year for Thai tourism in 12 years comparing last year’s figures to 2008, this is a bit disingenuous. The key difference is that nearly all last year’s foreign tourism traffic had arrived in early April when the decision was made to close the country’s borders.
This loss of income is, in fact, unprecedented in modern times or since World War Two.
Property firm links the end of current strict entry criteria to the kingdom’s vaccination programme
The latest analysis comes from Knight Frank Thailand, a leading property consultancy in the Huai Khwang area of Bangkok.
Over the last two decades, the boom in the Thai property sector has been underpinned and boosted by interest from abroad and buyers drawn to the kingdom through the country’s huge foreign tourism sector.
Foreign tourists to Thailand, more than any other tourist market, are attracted to long term residency in the country because of its climate, culture and relatively low cost of living.
An update was provided by the property firm this week in which it linked the reopening of Thailand to mass foreign tourism again to the implementation of a vaccination rollout with an estimated timetable towards the end of the year.
More vulnerable foreign tourism firms will go to the wall resulting in distressed property sales
It also forecasts that many more vulnerable tourism firms, struggling since April last, will go out of business.
A recent Tourism Authority of Thailand survey earlier this month showed that 30% already had. The property firm highlighted this as an opportunity for distressed sale purchases.
‘We may see the closure of less competitive hotels and investment transactions of distressed hotel assets,’ reported Carlos Martinez, the director of research and consultancy.
Tourism Ministry’s estimate of tourists in 2021 is nearly double what the Bank of Thailand predicts
He drew attention to the Bank of Thailand’s current projection of 5.5 million visitors to the kingdom by the end of 2021 which would have to see wider access to mass-market tourism and the elimination of strict entry criteria such as the now mandatory 14 day quarantine period.
Both the Minister of Tourism and Sports Phiphat Ratchakitprakarn as well as Tourism Authority of Thailand Governor Yuthasak Supasorn, have predicted 10 million foreign tourists for the year.
Concern mounts over losses and uncertainty
Both economists and tourism operators themselves are, however, becoming concerned at the lack of certainty while the kingdom is facing a challenge to contain the second outbreak of the disease and is experiencing a total loss of foreign tourism income at a time of year when it contributes most to the economy.
In 2019, the industry, purely in direct terms, brought in over ฿2 trillion to the country’s financial and business system reaching all levels of society but particularly the less well off.
At a seminar last week, Chayawadee Chai-Anant, a director at the Bank of Thailand, identified uncertainty as to how long this pandemic will impact the kingdom as a key factor while Pisit Puapan of the Fiscal Policy Office admitted that government borrowing may soon approach its legal borrowing limit.
The Ministry of Public Health and other government agencies are currently battling a second virus outbreak centred on Samut Sakhon and the eastern provinces which appears to be coming under control but nothing is certain yet. This threat has the potential to further damage the kingdom’s economic prospects and draw on already extended support budgets.
Solution is the vaccination programme
The only solution in sight is a comprehensive and effective vaccination programme.
Thailand is to commence its vaccination programme on February 14th using 50,000 doses of the AstraZeneca vaccine. This jab has been approved by the Food and Drug Administration for use in Thailand.
Plans have been announced for the use of 2 million doses of the Chinese Sinovac vaccine from February but the Ministry of Public Health is still awaiting approval on this from the oversight agency.
The second stage of the vaccination plans of the kingdom runs from May to December and will see up to 50% of the population inoculated.
A third phase to cover the entire population is to begin in 2022.
Knight Frank Thailand is predicting that normal levels of foreign tourism will not return to the country until 2024 while its top tourist authorities are suggesting, on the other hand, that it can rebound to record-setting levels in the last quarter.