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Thailand Faces Tough Times as Chinese Tourism Continues to Drop

A drop in Chinese tourism in Thailand will be difficult for a variety of companies. Poorly managed state enterprises may be in the worst position to endure a downturn.

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BANGKOK – Thais face tough times, figures released this month show that the economy grew by 2.3% in the year ending in June. Its slowest rate in almost five years, last year the economy expanded by 4.1%.

Exports are limp because of the US, China trade war and the strength of the baht, the local currency. It has risen by more than 5% against the dollar this year. Making it the best-performing currency in South-East Asia.

Farmers, meanwhile, are cursing the feeblest monsoon in a decade.

Thailand’s central bank, worried about the weakness of the economy, recently cut its benchmark interest rate. By a quarter of a percentage point, to 1.5%.

Tourism in Thailand is another source of concern. The industry generates more than a fifth of GDP. It has grown by leaps and bounds in recent years. But China’s slowdown and the weakness of its currency seem to be discouraging its citizens to visit Thailand. Chinese tourists made up More than a quarter of the 38m foreign visitors to Thailand last year.

The number of Chinese holidaymakers dropped by nearly 5% in the first six months of this year.

“I think we are still holding our own,” maintains Yuthasak Supasorn, the governor of the Tourism Authority of Thailand. But the strong baht means Thailand isn’t as cheap as it used to be.

Overall tourist numbers are slightly higher so far this year than last, but the growth is unusually meager.

Not all the industry’s problems are external. Last year the sinking of a boat in Phuket killed 47 Chinese tourists, horrifying prospective holidaymakers.

Chinese Tourists Feel Unsafe on The Roads in Thailand

Thailand

Thailand’s roads are also the most dangerous in Asia, despite government promises to improve them. And petty crime is rampant. The head of the tourist police in Bangkok recently described the scale of pick pocketing, as “unbelievable”.

Another factor in the slowing growth of tourism is overburdened infrastructure. Packed airports with long queues induce a sense of anything but relaxation among visitors. Even beaches are too crowded.

Last year the government closed Maya Bay, made famous in the film “The Beach”, to allow its ecosystem to recover. Its not expected to reopen until 2021.

A drop in Chinese tourism in Thailand will be difficult for a variety of companies. Poorly managed state enterprises may be in the worst position to endure a downturn.

Thai Airways already loses money and is struggling under more than 100bn baht of debt. Even so, the transport minister has given permission for the carrier to purchase or lease 38 new aircraft.

Politicians are eager to ensure that Chinese tourism picks up again. Thailand’s tourism minister believes more should be spent on marketing and incentives to attract visitors.

On August 16th the government announced a stimulus package of 316bn baht to boost the economy. Among other measures, it extended free visas on arrival for tourists from countries including China and India.

Thailand also offers 1,000 baht of spending money and a 15% rebate on hotel accommodation to domestic tourists who travel outside their home province.

Yet the stimulus package may help only at the margins. In a country riven by coups and political conflict, tourism has succeeded in spite of the government, not because of it.