Thai Confidence At 10-Year Low; Floods Hit More Firms
Author: Alan Raybould and Kochakorn Boonlai
Thai consumer confidence fell to a 10-year low in October because of flooding that has taken 533 lives and shut thousands of factories, with another industrial estate threatened on Thursday as water spread in the east of the capital, Bangkok.
"The flooding has dragged down consumer confidence and it will probably fall further if the economy is severely affected and the government can't speed up rebuilding within 3-6 months," said university economist Thanavath Phonvichaisaid.
The consumer confidence index from the University of the Thai Chamber of Commerce (UTTC) slumped from 72.2 in September to 62.8 in October, its lowest level since the aftermath of the September 2001 attacks on the United States.
The flooding began in the north of the country in late July, ruining a quarter of the main rice crop now being harvested and overwhelming industrial estates north of Bangkok in October.
Now the capital itself is in danger. Residents in a third of its districts, mostly in the north of the densely populated city of 12 million people, have been advised to get out.
Water has seeped into parts of Bang Chan industrial estate in the eastern suburbs, home to 93 factories run by local and international companies including Nestle SA, instant noodle maker YumYum and President Bakery Pcl, which makes buns for McDonald's and Farmhouse bread.
Yongyuth Thongsuk, deputy permanent secretary of the Industry Ministry, said 16 companies had temporarily shut.
"Most operators who have stopped are in the painting and industrial glue businesses," he said. "Major food producers like Nestle, Farmhouse and YumYum are still operating as normal.
Industry Minister Wannarat Channukul told Reuters factories had been advised to raise machinery from floor level but the estate was only at flood alert level one, meaning firms could decide for themselves whether they should continue operations.
Wannarat said 10 more pumps would be brought in on Thursday to add to the 44 the estate already used to push water into a nearby canal. "If all goes as planned, we should still be able to defend this estate," the minister said.
Idthipol Patimavirujh, deputy managing director of Daily Foods Co Ltd, the third-biggest milk producer in Thailand, said its three plants at Bang Chan were still working.
"We can't stop producing. Bang Chan is now the only big kitchen left for Bangkok people," he said.
The central bank has slashed its economic growth forecast for this year to 2.6 percent from 4.1 percent and may have to cut it further if the flooding spreads right across Bangkok, which accounts for 41 percent of the country's gross domestic product.
"We still cannot tell the exact damage, but it will be higher than 120 billion baht ($3.9 billion)," Deputy Governor Suchada Kirakul told reporters.
The UTTC put the damage at 300-400 billion baht and forecast economic growth of 1.5-2.5 percent this year. If rebuilding did not start quickly and Europe's debt crisis worsened, it may be just 0.5 percent, it said.
The floods would cut foreign tourist arrivals this year by up to 800,000 from the 18 to 19 million expected, at a cost of more than 20 billion baht ($651 million), Suchada said.
Suvarnabhumi international airport in the east of Bangkok is functioning normally inside a reinforced dike at least 3 meters (10 ft) high, but the old Don Muang airport in the north of the city, used mainly for internal flights, is closed.
In streets south of Don Muang, stagnant water chest-high in places was starting to leave dark stains on buildings in places, a Reuters reporter said. Many locals have refused to evacuate, some getting around on bamboo rafts, others waiting at flooded bus stops for transport provided by the military or aid groups.
Workers are trying to hold the line at the city's Bang Sue canal running from east to west, pushing water into the Chao Phraya river and stopping it from overflowing to the south.
Reuters reporters in the area said workers had largely managed this so far. But highways to the north of the country are inundated and Rama II Road, the main route to the rubber-producing south, which has not been flooded, is under threat.
Thursday sees the Loy Krathong festival, when Thais like to float offerings of food, flowers and candles on rivers and lakes, a symbolic pushing away of bad feelings and bad luck.
But Bangkok Governor Sukhumbhand Paribatra has canceled a big event on the fast-flowing river and urged people not to float their offerings in flooded areas. That would add to the tonnes of rubbish lying in sodden piles in the streets, he said, and the candles were a fire hazard.
The Chao Phraya river snaking through Bangkok has another phase of high tides from Thursday to Monday but a navy official said water should not reach the record high levels seen at the end of October, when banks overflowed in places.
(Editing by Kim Coghill)