Hotel occupancy rates in central Bangkok have plunged. Conventions have been canceled. Business deals have been postponed. Tourist bookings for coming months are way down.
The latest spasm in Thailand’s near decade of political upheaval is taking an economic toll as anti-government protesters barricade Bangkok’s major intersections and confrontations between protesters and supporters of Prime Minister Yingluck Shinawatra periodically flare into deadly clashes.
Since a 2006 coup ousted Yingluck’s brother Thaksin Shinawatra as prime minister, Thailand’s economy has bounced back from several episodes of violent political conflict. However, the underlying failure to resolve deep divisions in Thai society has diminished its reputation as a reliable country for foreign business and raised the prospect of ever increasing instability.
Anti-government protesters in Thailand vowed Monday to stage larger rallies in central Bangkok and push ahead with efforts to nullify an election they disrupted, preventing millions of people from voting.
Despite fears of violence, voting proceeded peacefully in 90 percent of polling stations Sunday. The protesters forced polling booths to close in Bangkok and southern Thailand, leaving some legislative seats unfilled. As a result, a series of special elections are required to complete the balloting, extending the country’s political paralysis for months.
Election results will not be announced until all areas have successfully voted.
After sabotaging the election process, the protesters and their allies said they will go to court to try to get the polls nullified on several grounds, including that they were not completed in one day.
The opposition Democrat Party, which backs the protesters and boycotted the vote, said Monday it is studying other legal justifications to invalidate the election as well.
The struggle to hold the balloting was part of a 3-month-old conflict that has split the country between supporters of Yingluck and opponents.
Southeast Asia’s second-biggest economy could wallow below 3 percent growth this year, if the anti-government protests continue into the second quarter, the University of the Thai Chamber of Commerce projected. That is far below potential for Thailand, one of the world’s top tourist destinations and a base for global companies in industries from autos to hard drives. As recently as 2012 the economy grew 6.5 percent and growth of nearly 4 percent will be reported for 2013 when official figures are released.
“It’s terrible. It’s worse than ever. We can’t see an end to it,” said Virat Jaturaphutphitak, vice president of the Association of Thai Travel Agents. Reservations from European and North American travelers to Bangkok through April are down 70 percent. Bookings from Asia are down 30 percent. “If this situation continues, we will have to close many businesses.”
Corporate leaders fret that foreign investors planning new factories and business ventures will turn to neighbors such as Malaysia, Vietnam and Singapore if the conflict drags on.
Since the end of November, 10 people have died and more than 570 have been injured in the conflict. Protest leaders want Yingluck’s elected government replaced with a “people’s council” that would implement reforms such as rooting out corruption.
“The perception from foreign clients is pretty bad. They don’t want to come. Business stops and is put on hold,” said Thinawat Bukhamana, a managing partner at law firm Baker & McKenzie Ltd. in Bangkok. He said some corporate financing deals his firm is involved in have been put off.
Tourism and Sports Minister Somsak Phureesrisak said hotels near the protest sites in Bangkok, as well as in hotels in nearby provinces that cater to foreign tourists, have suffered dramatic falls in occupancy rates to about 30 percent, far below normal for this time of year, considered Thailand’s high season.
Political stability is a factor in whether Toyota Motor Corp. invests further in Thailand, the automaker’s Thailand chief Kyoichi Tanada said at a press conference earlier this month.
Thailand is a production and export base for the Japanese automaker, whose four factories here churned out nearly 800,000 vehicles last year. Tanada hoped production could reach 1 million in three to four years, a goal that would probably require another 15-20 billion baht ($455-$610 million) of investment, he estimated.
Seven businesses organizations including the stock exchange and tourism council have banded together since December to play a mediating role between Yingluck and protesters, but have been unable to get the two camps together.
“It’s very difficult because each side seems like they cannot pull back even one step,” said Vichate Tantiwanich, senior vice president of Thai Beverage PCL, maker of Chang beer.
The coalition has tried to serve as a “middle ground,” said Kalin Sarasin, secretary-general of the Thai Chamber of Commerce. “At the moment, they don’t talk.”
Lack of success at mediation might not be surprising. Business leaders are perceived to be more sympathetic to the protesters, so some experts question whether they can be a neutral mediator.