Protests Over Thailand Government Formation Threaten Tourism Again

With Thailand in the throes of choosing a new prime minister, the tourism industry again fears political turmoil will scare away visitors just as the country recovers from the Covid-19 pandemic.

Fears loom about the adverse impacts on the national economy that a delayed government formation might trigger.

Economic Implications of Thailand Government Formation

Sanan Angubolkul, chairman of the Thai Chamber of Commerce and Board of Trade of Thailand, said the current political stalemate and the subsequent delay in Thailand government formation could jeopardize economic stability and growth.

“If a Thailand government formation is delayed, the appointment of the cabinet and the announcement of policies to the parliament may occur in August or September,” Angubolkul forewarned.

The effects of this delay could push the finalization of the national budget to as late as the second quarter of 2024. This uncertainty could be detrimental, shaking the confidence of domestic businesses and foreign investors who play a crucial role in Thailand’s economic vitality.

History of Political Demonstrations in Thailand

Thailand has a long history of political demonstrations, dating back decades, but the recent surge in activity has raised international eyebrows. Peaceful protests, while a legitimate expression of freedom under the law, have often escalated into violence, affecting daily life and economic activity.

In 2010, Thailand witnessed its worst political violence in decades when anti-government protests turned violent, resulting in more than 90 deaths and thousands injured. The country’s economy was severely impacted, with the stock market and currency both experiencing significant drops.

Nevertheless, all political parties seem to be demonstrating a heightened respect for this freedom of expression under the law.

Angubolkul is optimistic that the current political demonstrations will remain peaceful in the short term and won’t significantly impact the overall economy. He is confident that despite the political uncertainty, the Thai economy will grow by 3-3.5% this year.

Impacts on Tourism Amidst Political Uncertainty

Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association, spoke of the interplay between politics and tourism. She voiced her concerns that protests following the vote for Thailand government formation, if not peaceful and closely monitored, could cultivate negative perceptions among the international community, significantly affecting the tourism industry.

Tourism, a primary engine of Thailand’s economy, accounting for nearly 21% of gross domestic product in 2019, was heavily impacted by past political unrest.

The protests of 2014, which lasted several months and eventually led to a military coup, caused a noticeable drop in tourism figures. International arrivals dropped by 6.6% in 2014 compared to the previous year, with a significant decline in tourists from East Asia.

However, despite this background of political uncertainty, the THA president expects an improvement in hotel occupancy rates for July and August. This optimism is driven by the summer holidays, and the rate is expected to rise from the 46% recorded in June.

Necessity of Swift Thailand Government Formation for Tourism Industry

Both Nunbhakdi and Adith Chairattananon, honorary secretary-general of the Association of Thai Travel Agents, emphasized the importance of swift Thailand government formation for the health of the tourism industry.

A functioning government, they believe, is crucial to drive demand and stabilize the industry, which has been sluggish due to the present political uncertainty.

“The sooner Thailand government formation can be established, the faster it can help companies improve their business and attract more inbound demand,” Chairattananon urged.

As for the Chinese market, expected to be a major source of tourists this year, Chairattananon expressed his belief that political activities would not discourage their decision to visit Thailand. Instead, he suggested that crimes against tourists, such as abductions and scams, pose greater threats to Thailand’s image than political protests.