Living over troubled waters In the urgent interest of flood control most residents of makeshift homes built above Bangkok's clogged canals will be moved, the only question is how?

WATERFRONT PROPERTY: Bangkok’s canals attract crowded squatters’ communities and often stretch beyond the water’s edge.

Obstructions along canals in Bangkok and nearby provinces are commonly cited as a major factor behind this year's flood disaster. 

However, clearing them has proved a thorny issue for authorities as it means not only removing debris and sediment, but also tearing down people's makeshift homes.

The extensive canal system offers drainage during heavy rains and flooding. But most area canals, or khlongs, remain severely clogged in part due to squatters' houses along and especially directly over them, obstructing the flow of water to the river.

Authorities have been struggling with the problem of khlong encroachment for decades. It starts with poor people building homes on public land alongside canals and then spills onto the polluted waterways with structures built on stilts. 

As more poor people come to live in Bangkok, the original encroachers allow newcomers, mostly relatives and friends, to build houses in the water in front of their houses in return for a small amount of money.

Authorities have tried in the past to evict or relocate squatters living directly over the canals, but these efforts invariably stall and fizzle after a failure to find other suitable living quarters. 

This year's flood disaster has brought a new sense of urgency to the problem and there is now little doubt that these structures obstructing water flow will be removed _ the only question is whether this will be done easily or with difficulty.

Leaders of squatter communities generally agree that houses built directly over waterways need to be removed, but they also say that most of the people living in them have nowhere else to go and cannot afford to relocate.

A Bangkok Metropolitan Administration (BMA) official, who asked not to be named, pointed out that individual districts are authorised to solve problems with canal squatters in their areas. 

''Under the Public Place law, the Local Administration law and other regulations, the district administration can evict them,'' said the official. 

But he added that the districts ''prefer negotiation and lawsuits, which take time''. Meanwhile, the BMA continues to build dykes along canal banks, not only to stave off erosion but also to prevent encroachment along the water's edge.

A survey by the BMA's Irrigation Office in June of this year found that there were 6,239 houses encroaching into Bangkok's canals. Of these, 1,736 were in Chatuchak district, 1,469 in Sai Mai district, 363 in Watthana district, 269 in Saphan Sung district and 248 in Don Muang district.

Over the years a loosely organised network of canal communities has emerged, with members trying hard to prove that they can improve the waterways by collecting garbage, installing small waste water treatment facilities, and other measures.

Accident rate on flood-hit roads alarms

Authorities are alarmed about the rising number of accidents on roads damaged by flooding.

Sittipol Sangiem, chief of Ayutthaya's disaster prevention and mitigation office, said many roads in the province were severely damaged during the flood crisis.

Many roads were riddled with pot holes and others did not have functioning traffic lights.

Careless driving on the damaged roads was causing accidents, he said.

Ayutthaya was one of the provinces hardest hit by the deluge late last year and is among five provinces where flooding still remains.

The Transport Ministry earlier reported more than 18,000 roads were damaged by the July-December floods.

Disaster Prevention and Mitigation Department director-general Wiboon Sanguanpong said police and provincial staff had stepped up their road safety prevention campaigns.

A total of 165 deaths and 1,782 injuries have been reported within three days of the seven-day danger period over New Year.

Only two provinces _ Chaiyaphum and Trat _ reported zero accidents over the past three days.

An accident in Chai Nat province yesterday left four dead and one seriously injured.

The accident happened in the early hours of New Year's day as a car smashed into a direction signpost on Chai Nat-Suphanburi road. A 39-year-old female driver and three passengers including a 14-year old male teenager died, said Pol Col Saneh Panyareung, chief inspector of Chai Nat's Sankhaburi district.

A casualty of flood Patravadi Theatre quits Bangkok and moves to Hua Hin for good

Patravadi Mejudhon, founder and director of Patravadi Theatre.

The water comes to Patravadi Theatre every year, like to everyone else in soi Wat Rakang. This year it arrived in much greater quantity and stayed there longer than usual, but long enough to force Patravadi Theatre to close its door for good. 

The damage is too great to turn the place back into a functioning theatre once more. But its owner Patravadi Mejudhon is least sentimental about the loss.

"I'm not attached to anything. And we have one [a school as well as a theatre] in Hua Hin now. When I think of that place, it's more about the people who grew up there," she said over the phone. Then she listed a few of her students who have made a solid career in theatre and on the art scene.

The artist has placed the theatre, and her home opposite it, in the care of her eldest daughter and businesswoman, Waewadee Sritrairat, who has a project in mind but will not yet reveal the details.

The venue in soi Wat Rakang, in fact, had ceased to stage Patravadi Theatre's productions for approximately a year before it finally closed. The artist merely rented out the space to other theatre companies. 

Her heart is in Hua Hin now, with the students and teachers at Patravadi High School, a boarding school that integrates arts into its curriculum and the students' daily life. 

Vic Hua Hin, located in the same compound as the school, is the new home for her productions, as well as the Fringe Festival, which for years was a leading occasion for Bangkok theatre-lovers with a predilection for experimental work.

Founded in 1992, Patravadi Theatre not only boasted an elegant outdoor stage just a few steps from the Chao Phraya River, it also created large-scale theatre productions with an aesthetic reflective of its founder's famed stylishness. Moreover, Patravadi did something that was considered bold and novel at the time _ she brought the East and the West together.

This may sound like a superficial conceit nowadays, but Patravadi sometimes sent her entire production overseas to study dance. She invited artists from abroad and local veteran artists to train her performers in various forms of arts, and to collaborate on productions.

Patravadi was always on the lookout for young talents she could welcome on board. Patravadi Theatre was a fertile ground for experimentation. It also groomed its performers with strict discipline and demanded perfection. And what beautiful results it produced.

From the very beginning, Patravadi adapted and refashioned classic literature into stage spectacles that were appealing and digestible for the modern audience. 

Shining examples include the poignant musical that featured superb dancing, Ngoa Pa, the rock opera Inao Joraka, and Sahassadecha, in which the rarely staged episode of the Ramayana unfolded in the form of khon and shadow puppetry.

There were also simple productions. The dark and difficult Kong Kao Noi retold the folk tale of the same name through butoh and video interviews of real-life mothers. Patravadi's solo performance, Rai Phratraipidok, which took its inspiration from the Tripitaka Buddhist scripture, proved what a daring artist she could be.

"For me the golden age of Patravadi Theatre was during our first two to three years. I went back to watch some of the videos of our old productions, and I was amazed at how we pulled it off back then. We didn't have as many people. 

We didn't have a lot of financial support. We gained so many new sets of knowledge in that place. We really lived and worked to the fullest there," she recalled.

As Patravadi's interest in Buddhism deepened, her productions pared down and grew more spiritual, philosophical, an even didactic. "I've matured. My students have matured. So my work becomes simpler. The noisy spectacles are for the young ones. For us adults, they feel excessive," she said.

What grew instead in that venue were spaces for the younger generation of artists. The premises of Patravadi Theatre eventually came to house Studio 9, a restaurant by the river where diners could enjoy performances by young artists, a gallery, a library, a semi-outdoor stage Studio 1, 

which was used for staging productions, rehearsal studios where inexpensive dance classes took place on weekends, and apartments for Patravadi Theatre's artists and guest artists.

In an open space at the entrance of the theatre, there were once youngsters and adults taking weekly Thai dance lessons from respected dance instructors, and even a national artist. 

The fee never went over 100 baht. This spirit of teaching and learning has always been a major part of the theatre of Patravadi. These days, she couldn't be happier being a full-time teacher in her new home.

"When we were at soi Wat Rakang, I could see changes in my students' performances, but I didn't get to see how their thinking changed, nor what they were like as people in the society. Some of them were already grown-ups. In Hua Hin, we spend the whole day together. 

The changes I see in the students are much greater, and they happen faster. When you're 12 or 13 years old, you have so much ahead of you."

Mortgage sector faces major changes in approval criteria

The mortgage sector, both pre- and post-finance, will likely change significantly following the flood crisis as banks re-adjust their debt-approval criteria.

Project location, appraisal prices and home insurance will all be scrutinised more closely.

For property developers, criteria covering debt-to-equity (D/E) ratios and presales will be tightened for project financing.

Piya Sosothikul, executive director of the Seacon Group, said banks will require a higher presales ratio for pre-financing.

Generally, banks set the ratio at about 20% of each residential project, and this could increase to 30% after the flood crisis. Before the crisis, banks did not need the proportion from good customers.

D/E ratio is another key factor for pre-financing of projects. But large developers, most of them SET-listed companies, have no problem with the financial data due to a low D/E level of no more than 1.5 times each.

However, banks will pay more attention to the ratio, mainly for small developers, said Mr Piya.

"Location and project potential will still be the key factors in pre-financing approval. Banks will be more concerned about submerged areas with long-term problems, and this will affect financing approval for projects," he added.

Separately, Chatchai Payuhanaveechai, secretary-general of the Housing Finance Association and an executive vice-president of Kasikornbank, said location has normally been the main factor in property projects, corresponding positively to the cost estimate and in turn affecting banks' credit-line approvals.

Developers have favoured areas outside Bangkok proper, especially Pathum Thani and Nonthaburi provinces. However, with these areas largely submerged during the recent deluge, developers may now want to invest in additional infrastructure that can guard against inundations.

"Inner Bangkok's non-flood zones such as the Srinakarin, Bang Na and Rama IX areas will become more popular, leading to higher residential prices," he said.

Conversely, appraisal values in flooded areas will decline by 10-20% this year.

Credit-line approval in submerged areas will also decline from 80-90% of the current home price.

Developers may also call for a higher down payment than the present 10-20%.

Demand for residences in flood-free areas upcountry will spike as well. Pattaya, Hua Hin, Nakhon Ratchasima, Phuket, Chiang Mai, Hat Yai and Khon Kaen have all gained in popularity as areas for second homes.

Developers have also started increasing investment in these locations.

Details of Bangkok's new city plan that took effect yesterday, governing population and residence density and higher valuation of land banks, is cited as another main reason for diversifying upcountry, said Mr Chatchai.

He also listed mortgage insurance as another area to be considered.

The Office of the Insurance Commission requires banks to offer two options for fire insurance with mortgages.

The first choice is fire insurance alone, while the other is fire and five other types of coverage _ floods, storms, earthquakes, hailstones and rioting/terrorism _ known as a 1+5 policy. Which policy is selected is up to the homebuyer.

"Homebuyers pay 279 baht a year more on average for the 1+5 policy. Fire insurance generally goes for 0.05% per million baht of the collateral price per year. 

For example, if a house is priced at one million baht, then the fire insurance premium will be 500 baht a year and the 1+5 policy 779 baht," said Mr Chatchai.

He predicts the recent floods will result in mortgage sector growth of only 6% in 2012, a 10-year low. This year's growth rate for the consumer finance sector is now forecast at 7% to 7.5%, down from an earlier projection of 8% to 8.5% due mainly to the flood crisis.

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.