November data 'worse than thought'

The recent flood crisis hit November's factory production and exports harder than the Bank of Thailand had hoped, says a senior economist.

Mathee Supapongse said the central bank's economic indicators announced yesterday showed manufacturing contracted in every industry due mainly to the shutdown of operations in the flooded industrial estates.

That plus supply chain disruptions and damage to transport networks caused the manufacturing production index to shrink by almost 50% year-on-year in November compared with a 30% year-on-year contraction in October.

Farm production, which used to enjoy steady expansion, contracted to reflect rice losses in the Central region. A halt to automotive production caused rubber prices to decline in the month.

Overall, farmers overall suffered a 9.8% year-on-year decline in income.

"The economic impact from the floods may have peaked in November. It's the first time we've seen farm income contract by that much, and the industrial production index sank below our base year," said Mr Mathee.

But he expressed confidence that production of integrated circuits will resume in January and of hard-disk drives in the second quarter. Both products are key export earners.

Tourism was badly hit in November but is expected to recover in early 2012.

Exports contracted by 13% year-on-year to US$15 billion in November due to both the deluge and a slowdown in global demand, said Mr Mathee.

However, he said the contraction was still less than seen during the 2009 world financial crisis.

Imports at that time shrank by 19% year-on-year to 15 billion, a two-year low.

The central bank expects consumption to start showing a recovery in December and strengthen further in the first quarter thanks in part to government spending on future flood prevention.

November's economic losses could cause the central bank to downgrade its economic growth forecast for 2011 from 1.8%, said Mr Mathee.

However, its 2012 forecast is expected to remain at 4.8%..

Winning After the storm: Potential Government responses

In recent weeks, the government has announced several relief schemes aimed at helping people and businesses recover from the flood crisis. 

For example, compensation of 5,000 baht is being offered for each flooded house, while affected farmers and entrepreneurs will be eligible for soft loans. Changes in tariffs have also been made to promote recovery-related investment such as in machinery and auto parts. 

In short, positive first steps to help those most affected have been made. However, the challenge now is to address the very real issues of confidence and economic development brought about by the flood.

Various committees have been formed to address these and seek to prevent future flooding. These include the Flood Recovery and Restoration Committee, the Strategic Committee for Reconstruction and Future Development and the Strategic Committee for Water Resources Management.

Most immediately, action must focus on rebuilding confidence among local and foreign investors and other stakeholders. For example, some multinational corporations have begun to consider whether to diversify their production away from Thailand. Consumer confidence, at a 10-year low, also needs to be boosted.

Communication outreach activities must be carried out to address investor concerns. A number of roadshows have been conducted already, including a recent one to Japan. 

However, beyond communications it is clear that investors are still looking for robust plans to prevent future flooding. The need for this is all the more urgent as neighboring countries try to siphon off some of Thailand's foreign direct investment (FDI). In addition, the government must think about how best to reform its national disaster management. 

Thailand currently has several disaster management programmed in place. Gaps identified and lessons learned from this crisis should be incorporated into these. With only six months to the next rainy season, this will need to be done rapidly.

In our view, the government will also need to address a number of other priorities to restore the nation after the floods. Critically, decisions taken today will likely shape the nation's growth trajectory and competitiveness in both the medium and the long term. The following points highlight our view of the priorities:

Address the concerns of multinational corporations: The Economist Intelligence Unit reported the inflow of FDI into Thailand has declined by 5% per year on average over the past five years, dropping to 6.3 trillion baht from 8 trillion baht during that period. 

The decline has come from many countries and territories including Taiwan, Germany, Iceland, Hong Kong and Belgium. And while FDI from Japan, which accounts for about a third of Thailand's total, 

has actually increased slightly in the same period, there has been an uptick in FDI flowing to our neighbors.Vietnam, Indonesia, Malaysia and Singapore have been able to increase their FDI by an average of 10-33% per year over the past five years. All four countries already have more FDI than Thailand. 

The flood will inevitably change how companies think about investing in Thailand and as a result the trajectory of FDI inflow. These issues of confidence and their need of robust risk management must urgently be addressed.

Promote SME productivity: Thailand's robust SME sector accounts for almost 40% of our gross domestic product. However, even before the floods, when we looked at the profitability and growth of our SMEs, we identified significant room for improvement. 

Take the farming sector _ based on more than 400 SMEs we studied, almost half were either unprofitable or had no growth in recent years. Similar patterns are observed in other industries such as manufacturing of metal fabrication. The flooding has likely made this situation worse. 

Many SMEs operate in a single location. Even though some of the assets are insured, their profits and working capital are not. It will take months for them to recover fully. 

The question now is over and above the immediate crisis response of government agencies, should more now be done to promote productivity of Thai SMEs? 

Should there be more support in productivity improvement, taking best practices from other countries, such as those in Singapore being carried out by the city-state's Standards, Productivity and Innovation Board? We think yes.

Refresh our economic development plans: The multitude of activities to be carried out calls for a clear and unified economic development plan. In many other countries, governments have begun adopting the corridor concept to bring greater clarity to their economic initiatives. 

The plan for each corridor is grounded in natural competitive advantages, which are linked to the national growth plan. These focus on developing distinctiveness in chosen sub sectors and promoting synergies across businesses or investments within them. 

In contrast, Thailand has historically used industry-based development planning. The question now is with rising regional competition and the very particular challenges presented by the flooding, should we move to a more granular model of economic planning? 

We see this as a significant opportunity to change Thailand's growth trajectory and competitiveness as we come out of the flood crisis.

While the challenges ahead are clear, as the waters recede we see a significant chance to turn this crisis into opportunity.

PM promises flood plan

Prime Minister Yingluck Shinawatra said on Saturday morning that the water management plan will be seen early next year.

In her “Yingluck government meets people” talk show on NBT this morning, Ms Yingluck said the plan will show overall outlook on measures to be implemented to prevent recurrence of flood in the long term.

The government will regularly inform the public on the flood prevention plan. In the meantime, the flood affected small and medium enterprises must be provided with needed assistance accordingly, she added.

Asked about budget limitation that could affect the government’s plan to rehabilitate flooded provinces and to rebuild the country, Ms Yingluck said once the 2012 budget bill gets approval from parliament, the government will have a total budget of 120 billion baht to remedy all flood victims.

Media 'faced many obstacles'

Last year was one of the most challenging for members of the Thai media, who faced obstacles including state intervention, attempts to limit freedom of speech and the flood disaster, the Thai Journalists Association reports.

"Division of thoughts and ideologies continued to dominate the nation throughout the year 2011 and the media have been questioned over their neutrality in their coverage," the TJA said in its year-end report.

"Many people also viewed that the media were fuelling political conflicts."

The TJA listed six major incidents that affected the media last year.

The first involved the intimidation of Somjit Nawakruasunthorn, a female television reporter, by government supporters. They circulated the reporter's picture on the internet and threatened to harm her for asking tough questions of Prime Minister Yingluck Shinawatra.

Another scandal was the leak of two emails in late June claiming that Pheu Thai Party staff paid money to five reporters in exchange for coverage of the party's election campaign.

The National Press Council of Thailand launched an investigation and found no evidence to prove payments were made to the journalists.

The Culture Ministry's push for cabinet approval of the draft amendment to the Printing Act was seen by media professionals as an attempt to limit media freedom.

The bill gave sweeping power to the national police chief to censor and ban printed materials. The government, however, backed off with the bill following an outcry from media organisations.

The formation of the 11-member National Broadcasting and Telecommunications Commission on Oct 7 after years of delay was a milestone in frequency reform and regulation of broadcast media, according to the TJA.

The media played an important role in flood relief by setting up donation centres and distributing supplies.

"Last year, the media proved to be a key player in flood relief operations and also served as a complaint centre, which helped affected people get fast assistance," the TJA said in its report.

Two reporters died on duty last year. Channel 5 cameraman Sornwichai Khongtannikul was killed in a helicopter crash while covering the search and rescue operation of Black Hawk helicopters in Kaeng Krachan National Park in Phetchaburi province. 

Issarawan Chamlongpen, 23, a Thai PBS reporter, was killed in a car accident in Nakhon Ratchasima. Issarawan and her team were on their way back from Si Sa Ket province, where they had reported on villagers affected by the Rasi Salai Dam.

Rosana's water-pushing project 'united residents'

A Bangkok senator who spearheaded a move to have water-pushing devices installed in Thon Buri's canals to push floodwater into the sea has urged the public to learn from the project.

Rosana Tositrakul said the devices were able to direct the water towards reservoirs and high capacity pumps downstream, which helped relieve the deluge threatening Rama II Road.

The senator together with residents of western Bangkok started working on the project along the direct seaward canals on the western side of Bangkok following a meeting with residents at the House of Representatives on Oct 26.

Since then, the devices have helped push 116 million cubic metres of floodwater out to sea.

She said a lack of sloping land had held back efforts to drain water from western Bangkok, as gravity normally helps draw the water out to sea. Debris and sandbars also blocked water flow.

Ms Rosana, who briefed the media on the project recently, credited the idea to His Majesty King, who suggested the project along with creating flood ways and reservoirs during the last big floods in 1994.

Ms Rosana said she had asked the state and private sectors to donate the devices to drive water into the Gulf of Thailand.

A total of 23 machines were donated by the Royal Irrigation Department and the Naval Dockyard Department, with homemade versions supplied by residents using swan-off oil drums with propellers inside.

Each device is made up of two connected, 200-litre containers with their bottoms sawn off.

The pilot device was attached under a motorboat moored to the Ekkachai-Bang Bon bridge forming "a tunnel" which helped speed water flow.

"Residents cannot rely on officials to do all the work; they have to contribute themselves," said Ms Rosana.

"I would like this case to serve as an example of how residents can come together and unite to achieve a mutual goal," she said.

BMA readies ambitious recovery plan Compo, business help, drainage boost planned

City Hall is expected to rubber-stamp a flood recovery and prevention master plan this month to strengthen the capital's resilience.

Following approval of the draft plan by Bangkok Metropolitan Administration (BMA) executives, a committee will carry out a review and then allocate a budget, said Deputy Bangkok Governor Pornthep Techapaiboon.

In the short term, six key steps will be completed within three months. They include flood compensation payments, work placements for employees who lost their jobs in the crisis and financial assistance for business operators and repairs to public utilities and public areas. 

Details of the compensation are still being finalized, but farmers, for example, could qualify for 10,000 baht worth of fertilizer, livestock and crops.

The measures also comprise better healthcare for flood victims, and improved security in flood-hit areas to safeguard private property.

In the medium term, the measures deal mainly with improving Bangkok's flood drainage system, water management database, flood warning system, and cooperation with state agencies such as the Royal Irrigation Department and the Meteorological Department.

In the long term, the BMA intends to boost its flood prevention system by building permanent floodwalls alongside vulnerable waterways in residential areas.

Houses that were illegally built along waterways and the Chao Phraya River will be removed to improve water flow. The BMA plans to find an alternative location for the squatters to live in.

Embankments along the Chao Phraya river as well as other main canals in eastern and western Bangkok will be raised to between 3m and 3.5m.

Some roads in eastern and western Bangkok will also be heightened so they can better serve as flood barriers following advice from His Majesty the King, said Mr Pornthep.

Kaem ling water retention areas will also be increased in capacity and more pump stations will be built to improve drainage into the Gulf of Thailand.

Other long-term measures include improving canals and waterways to increase drainage.

The BMA also has a plan to build a flood drainage tunnel with sluice gates underneath a number of canals in addition to installing more water-pushing devices.

A new water management system will be put in place to prevent floodwater from mixing with sewage and causing health problems.

As some measures will involve large construction projects, planning laws will have to be amended and new ones drafted and passed to allow changes to the city layout.

City Hall will provide a compensation scheme for people affected by the construction works, Mr Pornthep said.

A new flood alert system will also be developed to keep members of the public informed about the water levels.

Some basic irrigation engineering knowledge will be provided so people can better prepare for future floods.

Mr Pornthep said an independent body comprising members of the media and local and international professional organizations will monitor and evaluate implementation of the plan.

Flooding brings grief to more southern provinces Tens of thousands of homes are inundated

People wade through run-off sweeping through Ban Phian village of tambon Thepharat in Sichon district of Nakhon Si Thammarat province yesterday.

As floodwater started receding in the four southernmost provinces, the flooding expanded to four other provinces yesterday.

Residents in some areas were put on high alert for mudslides triggered by torrential rains which have pelted the South during the past three days.

The floods have inundated tens of thousands of homes, forcing residents to seek shelter elsewhere and causing significant economic damage.

Nakhon Si Thammarat, Chumphon, Trang and Krabi were the latest four provinces to be hit by flash flooding and mountain runoff triggered by heavy downpours.

Thousands of residents in mudslide-prone areas, including Nakhon Si Thammarat's Nop Phi Tham district, have been evacuated to safe ground to prevent a repeat of last year's tragedy.

Mudslides hit the district in March 2011, killing several people.

But flooding in the southernmost provinces of Songkhla, Yala, Pattani, Narathiwat has eased and many affected areas have dried out. Officials said all would return to normal by today as long as the rains cease.

The continuing rain yesterday caused flash floods in three districts of Nakhon Si Thammarat, including Nop Phi Tham, Sichon, and Lan Saka.

Floodwaters cut off at least six bridges and roads in Nop Phi Tham district, leaving several villages isolated from the outside world, the Disaster Prevention and Mitigation Department reported yesterday.

Nop Phi Tham district chief Preecha Koomwong said tambon Krung Ching was the hardest hit area as floodwaters washed away temporary bridges built to replace the ones destroyed by last year's flash floods.

Mr Preecha said he feared there would be more flash floods and landslides if the rain continues this week.

In Sichon district, almost 200 families living in landslide-prone areas have been moved to evacuation centres after between 20 and 40cm of rain fell during the prior 24 hours.

Nakhon Si Thammarat governor Viroj Jiwarangsan said officials had been sent to disaster-hit areas to repair roads and bridges to enable the delivery of relief supplies.

Runoff from Banthad mountain also inundated some districts of Surat Thani, Trang and Phattalung provinces.

In 11 districts of Phatthalung, about 30,000 families' homes were flooded in tambon Kuan Saothong, where water reached two metres on Sunday night.

The waters began to recede yesterday afternoon.

Meanwhile, authorities have managed to contact the eight hikers who went missing during an excursion to Khao Lon mountain over the weekend. All of them were safe.

They said communication signals was down because of bad weather.

In Chumphon, Lang Suan Hospital in Lang Suan district was inundated yesterday afternoon. The water level rose rapidly, prompting medical staff to quickly move patients and medical equipment to higher floors.

In Thung Tako district, flash floods inundated a 200-metre section of Highway 41 linking Chumphon and Surat Thani yesterday, making it impassible to motorists, who had to use a bypass road instead.

The incident caused traffic congestion along the southern road which was already crowded with motorists returning home from the New Year holidays.

The Chum Phon-Lang Suan and Lang Suan-La Mae roads were also closed due to flooding.

Science and Technology Minister Plodprasop Suraswadi yesterday inspected Thung Wua Lan beach in Pathiu district which was damaged by high waves recently.

Mr Plodprasop said the ministry was planning to install a wave detection device to warn residents of high waves before they reach the shoreline.

He also ordered local authorities to take legal action against resort operators who have encroached on public beaches.

In other news, flooding in the southernmost provinces improved yesterday as the water quickly drained out to the sea.

Hat Yai's business district was spared from flooding, which affected only three communities in Hat Yai municipality.

Songkhla governor Grisada Boonrach said the Royal Irrigation Department has sped up the draining of water out of U-tapao canal.

He said the situation would return to normal shortly if there is no more rain, although authorities plan to keep a close watch for possible flooding today. On New Year's Eve, flash floods inundated the homes of more than 20,000 people in 12 districts of Songkhla, he said.

Public Health Minister Wittaya Buranasiri yesterday said three hospitals in Songkhla were slightly damaged by the floods. Three critical patients in flood-hit Sadao district were transferred to Hat Yai Hospital on Sunday.

In Pattani, floods receded in eight districts which were hit by flash floods over the weekend.

However, residents were told to stay on alert for more flooding, especially those near Pattani and Sai Buri rivers.

Residents in six coastal districts were also warned of high waves and turbulent seas today and tomorrow.

In Narathiwat, floodwater started receding in some parts of 10 affected districts.

Villagers living in landslide-prone areas were told to prepare for evacuation after five homes at the foot of mountains in Muang and Rueso were swept away by strong mountain runoff on Sunday, while 20 others were slightly damaged.

In Yala, floodwater receded in Muang, Raman, Bannang Sata, Krong Pinang, and Yaha districts. The water level of the Pattani River, which breached its banks and inundated a number of communities on Sunday, was also receding yesterday.