Anti-Government protesters shut down Bangkok International Airport UPDATE: PAD to end all protests, claims its goals were achieved.
Update – 12-2-2008, 08:15 PST: With the Prime Minister stepping down and his political party dissolved by the Constitution Court, the PAD (anti-government protesters) have claimed victory – for now:
Within a few hours after the Constitution Court dissolved People Power Party, People’s Alliance for Democracy, which had led seizures of the Government House and two Bangkok airports, declared an end to their demonstrations.
“We have won a victory and achieved our aims,” media mogul and PAD founder Sondhi Limthongkul said, reading a statement to reporters.
Cargo and military flights have resumed as of today, so that’s good for the trade community. However, passenger flights remain grounded and previous reports from authorities in Thailand indicated it would take some time before the airport was fully operational again. That being said, I imagine they will work quickly and most likely allow some planes to start ferrying long-stuck tourists out of Thailand.
Re: Threat of seaports closure: Obviously since the PAD has announced that they will end all protests there is no longer a threat of closure to the seaports. However, the PAD has indicated that they will protest again should the now ex-PPP (People Power Party) come back to power again.
I did hear back from my carrier contacts in Thailand. They both indicated that the PAD threatened to seize the seaports only if they were attacked at the airports. They also emphasized that this was more rumor than fact, despite news reports of a PAD spokesperson threatening the seaports. Currently all ports are operating as normal and they do not expect any disruption to operations.
Update – 12-1-2008, 23:15 PST: Breaking development – the Constitution Court of Thailand has dissolved the ruling People Power Party (PPP) and banned the executive board members from politics for 5 years. This means the current Prime Minister, Somchai Wongsawat, must step down. Hat tip to blogger Thailand Jumped the Shark, who links to this piece from Bloomberg:
Crowds at Suvarnabhumi Airport, which has been occupied for eight days by anti-government protesters demanding Somchai’s resignation, erupted in cheers after the ruling was announced. Somchai is in Chiang Mai attending a cabinet meeting.
One of the many goals of the PAD (anti-government protesters) has been the dissolution of the ruling PPP and the resignation of Somchai. This move by the court was widely predicted, since the members of the court were picked by the military government in power after the coup of 2006. It remains to be seen whether the PAD will pack up and leave or continue to stay at the airports.
Update – 12-1-2008, 17:30 PST: Here are two separate reports fresh from the Bangkok Post about the economic toll the closing of the airports is doing to Thailand.
First, orchid exporters say their losses could be as high as THB 800 million (roughly USD 23 million) if the Suvarnabhumi Airport remains closed through December 10th:
Suwan Hiranworawuttikul, president of the Royal Horticulture Association of Thailand, said orchid growers were losing between 50 million and 100 million baht a day because their flowers cannot be shipped out of Suvarnabhumi Airport.
“Orchid demand peaks in December and about 20-30% of orchid sales come from this period. Moreover, orchid prices during the peak season are about 300% higher than in normal periods,” he said.
Thailand each year exports orchids worth four billion baht and market demand has been rising by an average of 20% a year. The busiest time of the year for shipping orchids abroad by air is between Dec 10 and 21.
Basically, the orchid export industry is being ruined. And as the article points out, it’s just a matter of time before overseas buyers look to other countries instead of Thailand. Once that happens, unless the quality and service is vastly inferior to Thailand’s, it will be some time before that business returns to Thailand.
In another report the Transport Minister claims that they can get the cargo terminal up and running again by tomorrow:
He also stressed that three related agencies – Airports of Thailand (AoT), the Civil Aviation Department and the Customs Department – were told to be ready to start operations in two days.
He said that King Kaew Road had not yet been blocked by protesters and police officers needed to be stationed there as soon as possible, adding that police would take responsibility to protect the road from the PAD and ensure a clear path for cargo.
The Thai Airfreight Forwarders Association (Tafa) asked the Department of Civil Aviation yesterday to co-ordinate with AoT to allow freighters to land at Suvarnabhumi. It also asked the government to rent aircraft from neighbouring countries to serve its temporary needs.
The PAD seized both Bangkok airports last Tuesday. The damages to the Thai economy to date are estimated to have been at least three billion baht a day in lost shipment value and opportunities.
I say don’t hold your breath – I’d be surprised if this happened tomorrow, if at all. The government, for all intents and purposes, is in exile up north in Chiang Mai and is largely ineffectual. Neither the police nor the military prevented the PAD (anti-government protesters) from taking over the airport and shutting down flights. Not to mention that it serves PAD interests to continue to maintain control over the airport and prevent cargo operations from returning to normal. They might be convinced to allow “emergency” cargo shipments, such as medicines, to be ferried in and out under their supervision, but allowing police and customs officials to re-enter and take control of a key part of the airport? I highly doubt it.
Update – 12-1-2008: Protesters threaten to seize sea ports.
The news is coming fast and furious regarding the ongoing political strife in Thailand. There’s too much to link and excerpt to, but needless to say the airports are still shut down; perishable and high-value exporters are getting killed since they can’t air freight anything out of Bangkok directly. Perishables traders are being especially hurt since they can’t utilize the cold storage facilities at Suvarnabhumi Airport and simply can’t get product out. I’ve read reports that even if the airport siege was lifted immediately and they were allowed to get back to business it would take a minimum of a week just to get the IT systems tested and back online, not to mention that there are reports that some of the protesters have wrecked equipment.
But the worst news I have heard yet for the trade community comes buried in this lengthy article from The Nation newspaper in Thailand, where the PAD (anti-government protesters) have threatened to seize the Eastern sea ports, where the vast majority of sea-borne trade in and out of Thailand is handled.
The PAD may also try to seize seaports on the Eastern Seaboard if the takeover of the airports fails to force the premier out of office, Suthi Atchasai, a PAD leader from the East, told protesters at Suvarnabhumi yesterday.
If this happens Thailand will truly be cut off from the world. While the closing of the airports is a major blow to their economy, the vast majority of trade to and from Thailand is conducted by sea. Seizing and shutting down the major sea ports to the country will literally strangle trade and choke the country as goods will be unable to enter or exit the country. The situation on the ground is constantly changing and this is just a threat at this point – so take it with a grain of salt – but considering these are the same people who have managed to seize and shut down both major airports, it’s not unrealistic to think it could happen. I’ve reached out to a couple of my contacts in the shipping line industry as well as one of the major consolidators there to see what their take on the situation is. Once I have an answer I’ll report more tomorrow.
Original Post:
And with it’s closure, these thugs (because that’s exactly what they are) have assured Thailand’s economic destruction. Tourism is one of the biggest industries in Thailand, employing roughly a million people and accounting for 6% of the economy, according to this report from CNN. The airport these protesters have shut down is the still fairly new international gateway to Thailand, the giant Suvarnabhumi Airport, which handles 45 million passengers and three million tons of cargo per year, according to the same report from CNN. 370 flights a day normally go through Suvarnabhumi Airport, all of which are now stopped.
Best way to tarnish your country’s image, scare off current and potential investors, crimp international trade, kill your tourism industry, and completely obliterate any hope for an economic recovery during the impending global economic slowdown? Try storming the main international gateway for your country and shutting it down, stranding thousands of economically valuable tourists and international businessmen making front page news worldwide and earning travel warnings from major trade partners and tourist origin countries during the peak tourism season which runs from October to February. Congratulations, idiots, you’ve succeeded!
The English language newspaper Bangkok Post issues an editorial critical of the protesters’ (known as the PAD) move to shut down the airport.
Beyond the day’s immediate chaos, the impact of the PAD’s reckless action on the country’s tourism industry will be immense and difficult to rectify.
Even before the PAD attempted its boneheaded move to partially block access to the civil airport yesterday, up to 14 countries had already issued advisories warning their citizens to avoid non-essential travel to Thailand, and to exercise caution if they do visit.
According to Apichart Sankary, president of the Association of Thai Travel Agents, the protracted political tension is estimated to be costing the country 400 million baht each day in lost tourist revenue.
The National Economic and Social Development Board (NESDB) has a similarly gloomy story to tell.
Due to the higher cost of travelling and our domestic disturbance, foreign tourist arrivals were down 16.5% while the average rate of occupancy at hotels around the country dropped to 45%.
Tourism-related revenue accounts for about 6% of the national economy, and had been forecast to reach about 700 billion baht this year – a goal that is unlikely to be met now.
Some of the countries that have issued travel warnings to stay away from Thailand: The Philippines, Taiwan, Singapore, UK, China, Japan, France, New Zealand, and Australia.
The BBC has reports on UK citizens stuck at the airport, including one traveler who said that the protesters were checking luggage at gunpoint.
Meanwhile, authorities and the Tourism Authority of Thailand are taking responsibility to evacuate the thousands of tourists from the airport and put them up in neighboring hotels.
Thai authorities evacuated about 3,000 tourists from Bangkok’s international airport, more than 15 hours after anti-government protesters seized its main terminal, forcing the airport’s closure.
“The airport is just a scene of chaos,” said John Watson, chief executive officer of Diethelm Travel Group in Bangkok, Thailand’s biggest inbound tour operator. “Communication has basically broken down. Passengers are feeling very intimidated seeing people walking by with masks, knives, wooden clubs and iron bars.”
The Economic Times from India says Thailand will be hard pressed to meet their USD 17 billion target for tourism in 2008. And this report from the Bangkok Post says the latest events could push many tourist operators into bankruptcy, adding further pressure to the economy:
The latest tensions could force many operators into bankruptcy, coming just weeks before the peak of the tourist season over the year-end holidays.
Apichart Sankary, president of the Association of Thai Travel Agents (ATTA), said the PAD protest Tuesday would have a massive impact on the industry.
“Don’t think that the Thai tourism business will grow next year. It’s dying now because of the political problems. In the best case, we might just see flat growth,” Mr Apichart said.
Another tourism expert said the attempts by the PAD to close Suvarnabhumi airport reflected the “lawless society” in Thailand.
“Do you know when the country’s image is destroyed, it’s very difficult to revive it in a short period? What does Thai hospitality look like now, when there are clashes and violence inside the country?” he said.
Bloomberg says that the Thailand Stock Index rose on perceptions that the chaos may end soon, but ends with the troubling news that hotel and resort operators are falling.
Forbes points out the obvious, that the urban support protesters have generally enjoyed may disappear as the economy continues to suffer amidst the global downturn.
But “in Bangkok, the middle classes are politically very, very fickle,” and with the weakening bhat and rising job losses, they may be increasingly worried about the economic impact of the instability, said Michael Montesano, professor in Southeast Asian politics at the National University of Singapore. Popular support could shift toward harsher expedients by soldiers and police to bring to an end the airport occupation and demonstrations in the capital. “One of the reactions of the Thai middle classes to economic insecurity is to be very intolerant of disorder and to be willing to tolerate fairly extreme measures against the disorder,” Montesano noted.
Asia Sentinel labels the protesters “fascist thugs” and openly questions whether they have had help from the Thai military, who should be providing security to the airport and to international travelers.
How did the PAD thugs manage to seize Bangkok International Airport? Airports are supposed to be high security areas. Thai airports are controlled by the Thai military. It is obvious that the Thai military, who staged an illegal coup in 2006, have quietly supported the PAD’s actions. It is obvious that the military is unwilling to provide basic security to air travelers and air crew. But they are happy to rake in huge salaries associated with their control of the Airports Authority. Foreign governments and airlines should reconsider whether the authorities in Thailand are willing to provide international standards of safety and security.
For the best blogosphere coverage on the crisis, at least in my opinion, check out Bangkok Pundit. Just keep scrolling.
Vietnam forecasts slower export and import growth in 2009
Many people commonly mistake Vietnam as the next China, a second factory to the world, when in fact Vietnam has a growing trade deficit, importing more than they export, MUCH different than China. It’s a problem that Vietnam’s government watches closely, particularly in regards to what they refer to as “luxury goods” such as cars and mobile phones, which are flooding the country as the economy booms. Despite consistently raising the import tax on automobiles and auto parts, sales continue to rise and imports along with them.
While Vietnam is forecasting lower export and import growth for 2009, it’s important to note that it’s still solidly in the double digits. However, they expect their trade deficit to slightly widen as well:
Vietnam’s trade deficit is expected to widen to US$19.9 billion next year from US$19 billion this year as growth in both imports and exports slow sharply from current rates, a government trade report said.
Hanoi has been striving to boost exports and curb the import of luxury goods such as cars and mobile phones to help limit the trade deficit to below US$20 billion.
Growth in exports is expected to slow to 18 per cent in 2009 from an estimated 32 per cent in 2008, while growth in imports is seen slowing to 15 per cent from 31.8 per cent this year.
U.S. Imports and Exports both down in September – trade deficit narrows
The good news, as widely reported by just about everybody, is that the trade deficit in September decreased to $56.5 billion from $59.1 billion in August. The bad news is that both imports AND exports were down, it’s just that imports decreased more than exports. According to the JOC, the main reason for the narrower trade deficit is due to lower imported oil prices and auto/auto parts imports.
On a brighter note, or possibly curious note, I thought it’d be interesting to highlight who our trade surplus partners are – that is, countries where we export more to them than the other way around. Most of the time it seems all that is reported is the countries where we have a trade deficit. Here are the top 10 countries with which the U.S. has a trade surplus (year to date figures):
1. Netherlands – $14.2 billion
2. Hong Kong – $11.9 billion
3. Singapore – $10.4 billion
4. United Arab Emirates – $9.9 billion
5. Australia – $9.1 billion
6. Belgium – $8.7 billion
7. Turkey – $5.1 billion
8. Switzerland – $4.5 billion
9. Panama – $3.6 billion
10. Netherlands Antilles – $1.6 billion
Sure, these numbers pale in comparison to our deficit partners, but I figured it would be nice to see some of the bright spots in U.S. trade numbers. And speaking of those deficit countries, it’s interesting to note how many of them involve oil imports: Venezuela, Saudi Arabia, Nigeria, and Russia. That’s 4 out of the top 10, and our deficits with Canada and Mexico can also be partly chalked up to oil as well.
Letters of Credit : Credit crunch affects U.S. exporters
Peter Leach in the JOC and highlighted in their sister publication Shipping Digest reports on the latest effects that the global financial crunch is having on international trade – buyers are having a hard time getting letters of credit from banks:
The credit crunch is starting to hit U.S. exporters, especially smaller ones. Already squeezed by their bankers’ reluctance to provide trade finance for shipments overseas, they’re being hurt by the inability of their foreign buyers to open letters of credit with their own banks. The crunch is particularly acute in developing markets such as China and India, where buyers lack access to more sophisticated forms of trade finance.
Chinese banks, whose doors have been open for trade financing in past years, have tightened standards for issuing letters of credit in the last few months. On top of this, there have been a few cases where some banks are refusing to honor existing letters of credit issued by other banks. All of this is having a severe impact on global exporters whose business is already suffering from a slowdown in Chinese demand.
It’s not just a Chinese or developing market problem, either, it’s just especially acute in those regions. According to this article the dry bulk trade is being hit especially hard:
With the acceleration of the credit crunch around the globe, some banks are refusing to honor letters of credit issued by other banks, which could have severe repercussions for international trade if the trend continues. Not only that, but HSBC, a leading trade finance bank, has said that the cost of guaranteeing a letter of credit, a routine instrument used for payment of goods, has doubled.
The credit crunch has already hit the dry bulk trade with China, driving freight rates to record lows and forcing some dry bulk carriers to lay up their ships. Rates are so low that Zodiac Maritime Agencies Ltd., the line managed by Israel’s Ofer family, which also controls Zim Integrated Shipping Services, announced that it may idle 20 of its largest ships.
