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Tourism, economy reel under prolonged uncertainty

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October 10, 2008

Thailand Political Stalemate:
Govt plans to set up panels to probe fatal clashes
Tourism, economy reel under prolonged uncertainty

Two days after bloody clashes between police and anti-government demonstrators at Thailand’s Parliament, Prime Minister Somchai Wongsawat said the government would start an investigation and conciliation process by setting up two committees to probe Tuesday's clashes and to help rehabilitate those who were injured in the incident, reported state news agency TNA.

At a meeting Thursday, the prime minister said the government is seeking responsible public-spirited persons for the task, with committee appointments to be made within days. Help and rehabilitation will be offered to injured police officials and protesters alike, and also handle damage to government and private property.

On Wednesday, Somchai Wongsawat told foreign ambassadors and representatives of various international organisations that his government intends to improve the Thai economy, promote trade and investment in line with market mechanisms, and restore business confidence in the Thai economy.

In a separate report, Reuters quoted Thai tourism officials as saying that the country’s worst street violence in 16 years has already started to hurt the lucrative tourist industry and will do nothing to help an economy feeling the effects of the global credit crisis.

Two people died and over 400 were injured on Tuesday when police clashed with demonstrators intent on toppling the government. That ended a period of comparative calm after a short state of emergency in response to previous unrest in September.

"Bookings have recovered since the lifting of the emergency rule. But there have already been some cancellations from Asian travellers since the incident yesterday," said Apichart Sankary, president of the Association of Thai Travel Agents.

"The impact is unavoidable, but the extent of the damage depends on how the situation ends ...Will it be a happy or a painful ending? Of course, another coup will be bad," he added.

Thailand had a military coup in September 2006. An elected government that took office at the start of this year has been contested in the streets since May.

Apichart said there were no additions to the list of countries that issued travel warnings because of emergency rule.

However, Thai Airways International said on Wednesday that it would cut flights to Asian countries from next week because of a fall in passenger numbers due to the political unrest and the global financial crisis. Thais have also been less willing to leave home because of the trouble.

"Yesterday's events were real sad," said Maiyarat Pirayakoset, president of the Association of Domestic Travel.

"Domestic travel has recovered to 60 percent of normal since the emergency was lifted. But new bookings after the clashes are a worry, especially because we are in the money-making high season."

Thailand is banking on 600 billion baht ($17.4 billion) in revenue from 15.5 million tourist arrivals this year. The sector directly employs 1.8 million people and brings in the equivalent of 6 percent of gross domestic product.

Business seemed to be holding up in Bangkok's Khao San Road, a popular destination over the years for low-budget tourists and not very far from parliament, where Tuesday's clashes occurred.

Home to some of Asia's best beaches, Thailand has remained a top tourist draw despite the SARS epidemic, the Indian Ocean tsunami, bird flu and the 2006 coup.

But the long-running protests have hurt, and the appointment of new Prime Minister Somchai Wongsawat last month has done little to help, despite his initial talk of reconciliation.

"People had hoped things would get better after we had a new premier. But the clash is taking us to the same old political situation," said Aat Pisanwanich, head of international trade studies at the University of the Thai Chamber of Commerce. "Nobody knows what will happen and that's hurting confidence and the economy," he said.

Consumer confidence in August was already at its lowest this year.

In September the Chamber of Commerce said the political turmoil, if prolonged for another month, could cost the economy as much as 62 billion baht and might drag growth below 5 percent this year after 4.8 percent in 2007.

Foreign investors have sold a net $3.8 billion of Thai shares this year, and the value of foreign investment applications slid 44 percent in the first eight months compared with a year earlier to 179 billion baht, according to the Board of Investment.

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