This story was updated at 10:33 Nov 9, 2011.
Edited text in green type
For the second consecutive weekend residents of Bangkok have been alerted to prepare for wide-spread flooding as an estimated 12 billion cubic meters (12 trillion liters / 3.17 trillion gallons) of water from months of rain in Thailand’s central and northern provinces rushes towards the Gulf of Thailand in what has come to be known as the 2011 Thailand flood crisis.
While the government of recently elected Prime Minister Yingluck Shinawatra has attempted to put on a brave face, the lack of ministerial experience, along with old political rivalries, have done little to ease the situation with the destruction left in the wake of the 2011 Thailand flood threatening to be more severe than the early stages of the 1997-98 Asian Economic Crisis.
When the Asian Economic Crisis hit Thailand in 1997 the country was still heavily reliant on its agriculture industry and while it remains the largest industry for employment and Thailand remains the world’s largest exporter of rice and rubber and the second-largest exporter of sugar, agriculture today contributes only about 8 percent to the country’s GDP.
Since the Asian Economic Crisis of the late 90s Thailand has grown less reliant on agriculture, with about 34 percent of GDP now coming from the manufacturing sector, with industrial output as a whole contributing about 44 percent of GDP, but employing only about 14 percent of the workforce.
Today Thailand is just as well known as a manufacturing base for machinery, automobiles and automotive parts, electric appliances and electronic components, as it is for shrimp, canned fish, coconuts, soybeans, and tapioca.
1997 Asian Economic Crisis
When the Asian economic crisis started in 1997 Thailand sent more than 600,000 workers back to their home countries, while there was a mass exodus of workers back to the provinces as misguided IMF policies of the time resulted in a record number of bankruptcies.
There is ample evidence that the 2011 Thailand flood is having a similar affect with the country’s workforce, with border crossings to Burma and Cambodia reporting large numbers of people returning home.
Thailand’s Ministry of Labour says more than 700,000 workers are now without employment, more than 14,800 businesses, including those located in seven industrial estates ‚Äì Bang Kadi, Lad Krabang, Bangchan, Nava Nakorn, Rojana, Ban Wa Hi-Tech, Bangpa-in ‚Äì are affected by the 2011 Thailand flood, and more than eight million people are displaced or affected.
An inspection of the companies included in the seven industrial estates now under as much as three meters (about 10 feet) of water reads like a who’s who of the industrialized world, with brands such Toyota, Honda, Toshiba, Sanyo, Canon, Nikon, Panasonic, Western Digital, Seiko, Hoya, Nestle and ON Semiconductor just a few of those affected.
Foreign investors hold more than $16 billion insurance
Last week Thailand’s Central Bank estimated losses from the 2011 Thailand flood could top Bt100 billion (about $US3.232 billion) and said companies operating in five of the submerged industrial estates owed about Bt60 billion ($US1.9 billion) to Thai banks, about 0.75 percent of all borrowings, while the Federation of Thai Industries (FTI) said the cost in the Central Plains alone could be in the vicinity of Bt190 billion ($US6.2 billion).
Thailand’s Insurance Commission (TIC) said claims totaling Bt100 billion ($US3.232 billion) have already been submitted and said losses from the 2011 Thailand flood could well top Bt20 billion (US$650 million) for the Ayutthaya industrial estates alone.
According to the TIC the 820 businesses from six of the seven flooded industrial estates alone hold more than Bt376 billion ($US12.154 billion) in cover, with a further 48,000 smaller businesses in 2011 Thailand flood affected areas holding policies worth more than Bt56 billion ($1.8 billion).
Chantra Purnariksha, secretary general of the Thailand Insurance Commission said there was about Bt500 billion ($US16.162 billion) in policy coverage for areas so far affected by the 2001 Thailand flood and said Thai insurers carried a combined reserve of Bt1.14 trillion ($US36.85 billion).
With figures like this already being cited before factory owners have a chance to inspect the damage and prior to any inundation of Bangkok and it’s clear to see the cost to the Thai economy from the 2011 Thailand flood will be more devastating than the 1.4 percent drop experienced in 1997.
43% drop in GDP forecast due to 2011 Thailand Flood
Barclays Capital has cut its forecast for Thailand’s annual GDP growth by 21.6 percent ‚Äì from 3.7 percent to 2.9 percent ‚Äì while Thailand economic analysts are predicting a 43 percent drop for the 2011 year from 4.4 percent to 2.5 percent. (Ed: See updated details on page 2)
For the past 10 days or so Bangkok governor Sukhumbhand Paribatra has fought a relentless battle attempting to divert the 2011 Thailand flood water around the Thai capital, up until October 20 refusing to open more than 200 sluice gates that regulate Bangkok‚Äôs 1,682 canals to allow the water flow into the Gulf of Thailand, for fear of turning Bangkok into a modern day equivalent of Atlantis.
Although the capital has to date been spared, the actions have created a bottleneck slowing the draining of the central and northern provinces and resulting in an ever increasing mass of water building up. ( Continues … )
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