Thailand: A viral wake-up call

• Mar 09, 2020

Managing a virus epidemic can be a daunting task for any administration, but inefficiency by the government for its perceived failure to contain the coronavirus outbreak in Thailand has drawn waves of criticism both online and offline.

From information transparency to a slow response on urgent issues, the latest conflicting statements on quarantine requirements is hopefully the last calamity for the Public Health Ministry.

Public Health Minister Anutin Charnvirakul had posted a ministry announcement on Facebook that listed 11 virus-hit places as “dangerous communicable disease areas”, and a two-week self-quarantine was mandatory “without exceptions”. His post, however, was later deleted.

The Public Health Ministry eventually clarified that those travelling from high-risk countries didn’t have to quarantine themselves and that such a measure was recommended but not compulsory.

As the coronavirus outbreak continues across the globe, the Bangkok Post talked to various sources involved in the tourism, retail and commerce industries to assess their views on the government’s response to the deadly epidemic.

TOURISM DEVELOPMENT BANK

Recurring crises have hammered the tourism industry from time to time in the past 20 years, from disease outbreaks and natural disasters to political turmoil.

When facing a crisis, financial issues are a critical point of discussion for tourism, which is mostly run by small and medium-sized enterprises (SMEs).

Chairat Trirattanajarasporn, president of the Tourism Council of Thailand (TCT), said that apart from the short-term financial measures approved by the cabinet last Friday, tourism operators still have concerns about inferior loan accessibility when compared with other sectors.

Mostly loan conditions don’t favour tourism businesses, which are seen as low-credibility enterprises.

The cabinet on Friday approved a stimulus package estimated at over 100 billion baht, comprising cash handouts, soft loans, a debt moratorium and tax benefits.

“Preparing the required documents such as cash flow statements and credit bureau is a pain point that prevent SMEs from accessing soft loans from government banks,” Mr Chairat said.

The TCT is pushing for the establishment of a tourism fund or tourism development bank as a long-term solution to ease financial difficulties immediately when uncontrollable consequences arise.

Mr Chairat acknowledged that in the past operators tended to focus on their business and neglect this agenda. When the situation returned to normal, most of them had to prioritise business restoration before thinking of any long-term plans.

“The cycle of new negative challenges will come and test our resilience every decade, but there is no sustainable development to strengthen operators in this industry,” Mr Chairat said. “We have to keep repeating the same practices by waiting indefinitely for the government’s help.”

A tourism-focused bank would require approval from other state agencies like the Finance Ministry and take more time than a commercial bank to set up.

Mr Chairat said most tourism operators are SMEs and lack the wherewithal to contribute to the seed budget for a new bank or fund.

He said he introduced the idea of collecting a tourism levy from both international visitors and local outbound travellers at 200-300 baht per person as a way to raise funds to develop Thai tourism.

Last year the Finance Ministry considered collecting a tourism tax, but the plan was derailed by the strong baht.

Mr Chairat said the idea has to be revived and started as soon as possible.

“Thailand already has Village Funds, a rubber development fund,” he said. “Why can’t the tourism industry, one of the biggest contributors to the country, have this kind of financial source as well?”

A financial institution designed for tourism would be useful in tackling the sudden impact on this sector, particularly when it seems on the brink of financial collapse, said Supawan Tanomkieatipume, president of the Thai Hotels Association.

She said the aid measures offered cannot cover the devastation that the tourism sector is confronting now.

“Average occupancy this month has fallen to below 30% in main destinations such as Bangkok, and we predict it’ll go lower than that next month, as most Songkran activities have been cancelled due to fear of the virus,” Ms Supawan said.

Last month, hoteliers were bullish about the domestic market and the budget of state agencies. But the announcement by many organisations to call off meetings and incentive activities spoiled those hopes.

ANSWER THE CALL

Tourism and Sports Minister Phiphat Ratchakitprakarn said the ministry will propose the establishment of a Tourism Fund at the next meeting of the National Tourism Policy Committee.

After listening to operators, he realised that an emergency fund is needed for SMEs during these tough times, since the conditions and long process of getting funds from the government always take a toll on operators.

“I raised the topic of a tourism fund to the secretary office of the ministry and insisted that we’re able to set up this fund, but we still have to hear the opinions of other ministries in the committee, particularly Deputy Prime Minister Anutin Charnvirakul,” Mr Phiphat said.

The most important details to discuss concern the source of funding the private sector will use for the tourism tax scheme — collecting from both inbound and outbound tourists — and the addition of other features that will raise the quality of the Thai tourism industry, such as providing insurance for tourists.

Meanwhile, the Tourism Authority of Thailand (TAT) supports the concept of setting aside an independent financial source for the tourism sector but insists that regulations and implementation should not create problems.

“We have Thailand’s Tourism Promotion Fund, but the complicated rules have prevented businesses from accessing this fund, and it’s almost impossible to use this fund for emergency cases,” said TAT governor Yuthasak Supasorn.

He said the option of setting up a tourism development bank may be hard in the beginning, but for the future growth it’s more sustainable for the private sector and the overall economy because tourism contributes about 20% of GDP.

Some leading and emerging tourism countries, such as Myanmar and Iran, have a specific bank for the tourism sector.

Those banks not only increase the liquidity of operators based on a better understanding of the unique type of business, but they can also provide loans for essential investment that other banks may not see, such as the development of second-tier cities nationwide.

“It’s true that some tourism operators can seek loans from existing financial institutions such as the SME Development Bank,” Mr Yuthasak said. “But as it was set up under the supervision of the Department of Industrial Promotion of the Industry Ministry, it may have to prioritise that sector before tourism during times of crisis.”

He said the spread of the coronavirus showed the tourism sector how the impact can cause damage to a fragile sector if required to wait for cabinet approval, which did not come as fast as expected.

INEFFICIENT QUARANTINE

“For the Covid-19 outbreak, in particular, the government has yet to have efficient and urgent quarantine measures, a ban on any political rallies or any action that may risk spreading the virus,” said Paiboon Kanokwatanawan, chief executive of The Mall Group, using the technical jargon for the illness. “The government should issue laws or ministerial regulations for such preventive measures, not just say vague guidelines.

“Anyway, don’t mention how to tackle the virus outbreak, now that the government itself is failing to tackle the face mask shortage that has resulted in blatant profiteering.”

In essence, the government has yet to come up with any substantial or concrete plans to tackle or remedy the existing problems, be it PM2.5 air pollution, the virus outbreak, the strong baht or the face mask shortage and profiteering, Mr Paiboon said.

Boonkiet Chokwattana, chairman of ICC International Plc, the fashion and marketing arm of Saha Group, said many stimulus measures, especially the Taste-Shop-Spend scheme, have not addressed the problems directly.

He said the process to exercise the privileges is complicated, with only tech-savvy people able to make use of such measures.

“I personally see the Taste-Shop-Spend scheme doing very little to help stimulate the economy,” Mr Boonkiet said. “It just creates excitement for certain groups of people. The scheme sounds much like playing ducks and drakes.”

Komsan Kwunchaithanya, acting president of the Thai Retailers Association, said the government should reinstate Shop Chuay Chart, a campaign giving shoppers personal income tax deductions with no limit on product or business category.

This programme helps stimulate spending by middle- and higher-end consumers more effectively, he said.

The association also called on the government to lower import duties as a way to boost consumption.

As Thailand’s import duties are relatively higher than elsewhere, a number of Thais prefer spending their money in other countries or on the black and grey markets, which are cheaper. Cutting import duties would provide an opportunity for both Thais and foreign tourists to spend their money in Thailand.

The association also urged the government to consider temporarily reducing value-added tax (VAT) from 7% to 5% from April 1 to Sept 30 to help consumers with the cost of living.

DEMAND OUTDOES PRODUCTION

On the other hand, a state official defended the government’s handling of the coronavirus outbreak and surgical mask production.

Whichai Phochanakij, director-general of the Internal Trade Department, said the outbreak is a new and urgent issue for everyone. In the initial stage, the department itself had no information about the country’s current face mask production and overall production capacity.

“We later found that Thailand could make only 1.2 million face masks per day, while demand is surging significantly and far outstrips daily production,” Mr Whichai said, adding that the Commerce Ministry has set up a face mask management centre to allocate masks to medical personnel.

In an attempt to end hoarding and shortages, the government via the Commerce Ministry earlier this month decided to take control of face mask production, requiring factories to supply 45% of total production or about 600,000 pieces a day to the mask distribution centre and let factories distribute the rest.

The centre will allocate 350,000 masks to the Public Health Ministry and the Government Pharmaceutical Organization for further distribution to hospitals that form the front line in the fight against the spread of the virus, with the remaining 250,000 pieces to be sent to retailers and the Thai Pharmacies Association.

Production of masks is being ramped up to meet demand.

There are 11 factories producing masks nationwide. The factories are increasing production from 36 million masks a month or 1.2 million a day to 38 million a month or between 1.3 million and 1.4 million a day.

Commerce Minister Jurin Laksanawisit on March 5 approved an order to cap the price of domestically made masks at 2.50 baht each, effective from today.

The regulation does not apply to old stocks, which retailers must clear by Sunday.

Vendors who sell face masks at a price higher than the fixed 2.50 baht per item face a jail term of five years and/or a fine of 100,000 baht.

Face mask importers are obliged to declare their import costs to the Internal Trade Department. The mark-up on the import price must not exceed 60%.

According to Mr Whichai, vendors who sell masks at inflated prices or hoard the face masks are also subject to up to seven months in prison and a maximum fine of 140,000 baht.

Phusadee Arunmas

Source: https://www.bangkokpost.com/business/1874529/a-viral-wake-up-call