Updated: 01/29/2014 12:30 | By Agence France-Presse

Tourist snubs and investor jitters as Thai rallies bite

As protests grip Bangkok and bitter controversy hangs over upcoming elections, Thailand is facing battered investor confidence, lower growth and millions of dollars of lost tourist revenues, experts say.     

Tourist snubs and investor jitters as Thai rallies bite

Thai anti-government protesters shout slogans as they gather outside the venue of a meeting between Prime Minister Yingluck Shinawatra and election officials at the Army Club in Bangkok on January 28, 2014 - by Christophe Archambault

The Southeast Asian nation has been dubbed "Teflon Thailand" for its ability to recover quickly from numerous economic knocks associated with political turbulence that has beset the country since a 2006 coup.

But the latest unrest has raised fresh concerns that businesses and visitors could tire of repeated rounds of protest and regime change in the polarised kingdom, a regional manufacturing and tourism hub.

"We have suffered again and again -- we have to heal and build up our image again and again. It is a waste of time," Piyaman Tejapaibul, president of the Tourism Council of Thailand (TCT), told AFP as hotels, shops and restaurants complain of reduced revenues after weeks of rallies. 

Protesters, backed by the Bangkok middle classes and powerful elements in the elite, have embarked on a self-styled "shutdown" of the Thai capital in their latest push to topple the government.

Prime Minister Yingluck Shinawatra has called a snap February 2 election in an attempt to staunch the political tensions, but the main opposition Democrat party is boycotting it and demonstrators have vowed to block voting.

Protesters want the poll postponed for a year or more and an unelected "people's council" imposed to help erase the political might of ousted former premier Thaksin Shinawatra -- Yingluck's brother.

While the government has insisted on pressing ahead with the vote, observers see scant signs that the country can begin to heal fractures between the anti-Thaksin opposition and the billionaire tycoon's huge electoral base of rural and urban working class communities from the north.   

"Until a long-term resolution is found, Thailand's deep political divide will remain, leaving the country susceptible to political upheavals that will constrain its growth potential," said Capital Economics recently, predicting economic growth was unlikely to exceed 3.0 percent this year.

Thailand has lost an estimated 200-500 million baht ($6-$15 million) every day in trade, investment and tourist revenues since the demonstrations began three months ago, according to the Thai Chamber of Commerce.

"Forget about investment for now until we have a new government," vice chairman Pornsil Patchrintanakul told AFP.

Fears were heightened when the embattled government announced a 60-day state of emergency last week owing to fears over violence in the capital, where several people have been killed and hundreds injured in grenade and gun attacks and street brawls.    

"It sounds scary. Psychologically it makes people, including foreigners, afraid and nervous about the chance of more unrest," Pornsil said. 

Some 40 countries have issued travel warnings, with tourists advised to avoid protest sites and take extra care in Bangkok.

TCT estimates the country has already suffered a 22.5 billion baht loss in revenues from visitors.

Bangkok has taken the brunt of the tourist snub, with arrivals at the main international airport down nearly 6 percent year on year in the first three weeks of January as they head straight to the country's unaffected beach destinations.

Roadblocks studded with lines of tents have snarled traffic at several key Bangkok intersections.

And newly pedestrianised streets have been transformed into ad hoc markets selling protest-themed accessories -- from "Bangkok Shutdown" t-shirts to elaborate headwear adorned in the Thai flag.

But more traditional retailers have suffered.

"Fewer tourists and office workers have come to buy products and services in the area," said a statement from Ratchaprasong Square Trade Association, which represents businesses in a key retail and hotel area of the city.

Thailand's central bank last week said the political situation posed a risk to growth as it left its key interest rate unchanged at 2.25 percent.

The credit rating agency Moody's has lowered its gross domestic product (GDP) growth forecast for Thailand last year to around 3.0 percent, down from 3.7 percent, because of the impact of the protests on the final quarter of 2013. Full-year GDP data is due to be released next month.

Seven years of political turmoil, along with the destruction wrought by devastating 2011 floods, have raised fears that long-term investors such as Japanese carmakers, could look for alternative production bases. 

But Thai businesses said exports are expected to be resilient to the crisis -- with many manufacturing areas based outside the protest's sphere. 

Tanit Sorat, vice-chairman of the Federation of Thai Industries, said strong economic foundations and infrastructure would persuade manufacturers to stay put.

"Where else could they have it all like here?" he told AFP, adding that political conflicts are "part of Thai society".

"If you want to invest in Thailand, you have to take political risk into account," he said.

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