Thailand: Business baffled by gaffes

• Jul 05, 2021

As both new daily infections and deaths caused by Covid-19 continue to set records, concerns regarding the administration’s ability to govern the country have almost reached a critical point.

The third outbreak, the largest since the pandemic emerged early last year, is undermining the public health system and slowing economic recovery. As doubts over the government’s management of the crisis grow, the outbreak threatens to shake the administrative power of Prime Minister Prayut Chan-o-cha’s government.

Business leaders are gripped by uncertainty, even as key figures in the government continue to insist that disease transmission will not spiral out of control.

STRUGGLING FOR SURVIVAL

A rate of more than 5,000 new Covid-19 infections a day is causing alarm in the manufacturing sector as the pandemic leads to labour shortages in many factories, according to the Federation of Thai Industries (FTI).

Factory workers comprise a significant number of the patients requiring hospitalisation, affecting the country’s production lines at a time when exports are Thailand’s only economic lifeline.

If the number of new infections soars to 10,000 a day, this would overwhelm the country’s public health capacity, said FTI vice-chairman Kriengkrai Thiennukul.

He said an urgent task for the government is to flatten the curve to prevent the country from facing the same situation as India, which was severely impaired after recording a massive amount of infections.

In April, during the height of the crisis in India, hospitals ran out of beds and oxygen to treat seriously ill patients. Even as fatalities skyrocketed, public health officials felt the figures were underreported because of the lack of health infrastructure.

“The government must decrease infection numbers and increase the vaccine rollout at the same time,” said Mr Kriengkrai.

The third wave of the pandemic caused many migrant workers to return to their home countries, which may cause a setback to plans to increase production for export, he said.

Mr Kriengkrai estimated the labour shortage had already increased to 100,000, especially affecting factories that rely on labour-intensive processes.

The factories are trying to solve the problem by “borrowing” workers from other factories in the same industry in a desperate bid to shore up their production, he said. They are paired with one another and sign short-term contracts, allowing workers to be employed in other factories.

“It’s a temporary solution to keep production for export going,” said Mr Kriengkrai.

FTI chairman Supant Mongkolsuthree said earlier exports provide some hope to drive the economy as tourism and agriculture have been slammed by the pandemic.

The Joint Standing Committee on Commerce, Industry and Banking recently reduced its GDP growth forecast to 0.5-2% from 1.5-3% as daily infection rates remain high. The group believes exports will grow by 5-7% this year, up from its earlier estimate of 4-6%, however manufacturing for the domestic market is still a worry.

“Factory owners must accept that purchasing power among Thais remains weak,” said Mr Kriengkrai.

LARGE PROJECTS SHUTTERED

Somsak Pejthaveeporndej, chief executive of VST ECS Thailand, a major IT distributor, said Thailand’s Covid-19 outlook is getting worse and could plunge the country towards the worst-case scenario if the government fails to control the number of the infections this month.

Consumer spending is tepid due to dwindling purchasing power among food merchants, construction workers, small and medium-sized enterprises (SMEs) and people whose salaries have been cut as a result of the impact from Covid-19.

“Large IT projects scheduled for the third and fourth quarters remain on the back burner and one of the reasons is the instability of the government,” he said.

Mr Somsak said rumours have emerged that the House of Representatives may have to be dissolved, resulting in state officials becoming reluctant to pursue large projects.

The first priority, he said, is to vaccinate up to 70% of the country’s population to try and achieve herd immunity.

“We should allow private entities to source and pay for alternative vaccines for their employees to speed up the rollout,” Mr Somsak said.

Referring to the government’s stimulus programmes, he said the “Ying Chai Ying Dai” (the more you spend, the more you get) e-voucher cashback scheme is too complex, and instead the government should bring back its “Shop Dee Mee Khuen” tax rebate scheme.

Mr Somsak said stimulus schemes should provide the option for people to receive cash so they have greater flexibility in how they spend it, rather than simply a digital payment.

“The government must make sure the assistance is easy to use so it reaches as many people as possible. It should go beyond collecting people’s data through an assistance app,” he said.

Sutida Mongkolsuthree, chief executive of SET-listed IT distributor Synnex Thailand, said the government should focus on tackling the root cause of the problem — sourcing sufficient vaccines and curbing infections.

This is better than creating confrontation by forcing businesses to close or devising hasty measures that throw unprepared businesses into disarray, said Ms Sutida.

She said the government’s stimulus schemes are unfavourable, particularly the Ying Chai Ying Dai scheme, which has attracted few subscribers.

Household and business debts remain worrisome, Ms Sutida said. Businesses are closing because of debt and still cannot find ways to repay it, she said.

Demand for IT equipment is firm because it is necessary for work and is in short supply, but the government should step in to assist, said Ms Sutida.

Sompop Manarungsan, president of the Panyapiwat Institute of Management, urged the government to maximise its ample fiscal ammunition to bring relief to those affected by the pandemic and reform the economy.

He said the Thai economy remains strong with low foreign debt and public debt, while the private sector still has cash in hand.

CONSTRUCTION CONSTRAINTS

Pornnarit Chuanchaisit, president of the Thai Real Estate Association, said a lockdown of all camps housing construction workers was a bad idea because of poor hygiene standards at the camps.

“Developers and contractors must improve standards to protect against the spread of Covid-19 at workers’ camps,” he said. “The lockdown measures should be classified for camp sizes — small, medium and large to minimise the impact.”

Wasant Kiangsiri, president of the Housing Business Association, said the lockdown of all camps housing construction workers was unfair to those following the government’s public health policies. The damage from the shutdown is so large the government’s remedies do not offer fair compensation, said Mr Wasant.

“There are direct and indirect costs for developers, such as rented machines, fines from delays and interest, representing roughly 20% of the project development value,” he said. “Bubble and seal would have been a practical strategy.”

Apa Attaboonwong, president of the Thai Condominium Association, said the government should screen workers for infections and supply vaccines to workers to prevent clusters.

“The worst-case scenario is locking down and unlocking repeatedly, as restaurants have done. This unpredictability causes a kind of never-ending damage,” she said.

NEED FOR SPEED

Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the chamber is increasingly worried about the rising number of infections and fatalities. The group urges the government to review its vaccine distribution plan to align with outbreaks in each area, especially Greater Bangkok.

“The private sector agrees with the government’s partial lockdown, but such measures should not last too long or it will cause a long-term negative impact to the country’s economy,” he said.

Mr Sanan suggested the government continue rolling out more stimulus measures to shore up consumer purchasing power. Existing relief measures have proven insufficient to offset the damage to the business sector, he said.

To prevent the rate of infections from worsening and ease the shortage of hospital beds and staff, Mr Sanan proposed the government issue guidelines for some patients to be detained at home, while looking to convert hotels to temporarily become medical facilities.

“Speeding up inoculations and procuring more vaccines is the most important issue right now,” he said. “The public must strictly follow public health measures.”

Mr Sanan said with exports the main economic engine, the government should prioritise curbing infections among the manufacturing sector.

“The chamber and FTI have held discussions with the Industry and Labour ministries about campaigns to convince factories to upgrade their preventive and protective measures,” he said. “The most worrying factor is SMEs have been affected repeatedly by outbreaks, with no new income. If there are no additional aid measures, many businesses will certainly have to close and this will affect employment.”

CRISIS UNLIKELY

Deputy Prime Minister Supattanapong Punmeechaow said he remains confident the government can contain the infection surge within this month.

“The government needs more measures to monitor new infections and accelerate vaccinations to cover as many people as possible,” said Mr Supattanapong. “More stimulus measures to boost domestic consumption are planned for the second half this year.

Danucha Pichayanan, secretary-general of the National Economic and Social Development Council, said his agency has been monitoring the infection rate and preparing spending guidelines for the new 500-billion-baht loan decree to rehabilitate the economy. The loan is intended to help people burdened by the impact of the pandemic.

Source: https://www.bangkokpost.com/business/2143499/business-baffled-by-gaffes