As businesses across Thailand reopen, economic recovery may depend on support for domestic tourism and efforts to break up monopolies. Though foreign tourism is on pause, tourism brands in Thailand are still attractive to foreign investors.
While there aren’t many success stories when it comes to dealing with and eradicating COVID-19, Thailand has decidedly bucked this trend. After all, fewer than 3,200 cases have been reported in the country to date, while just 58 deaths have been reported since January.
Further good news has emerged from Thailand recently, after the nation confirmed it has gone one month without a locally transmitted COVID-19 case. This has created an opportunity for the nation to fully reopen its economy, although this may be more challenging than it initially seems.
Then and now: Thailand’s main challenges for COVID recovery
Thailand was the first country in the world outside of China to record a coronavirus case back in January, and there were genuine fears that it would initially be one of the hardest hit countries.
One of the main reasons for this was the large number of visitors that Thailand received from Wuhan at the beginning of the year. Neighboring nations like Vietnam and Malaysia face similar concerns.
However, Thailand’s quick and proactive response has stood the nation in good stead and the government was also able to draw on the well-established systems that were already in place following the SARS epidemic in 2002. These factors helped to both curtail the spread of the virus and aid health care efforts, boosting Thailand’s recovery rate from the virus and lowering the death rate in the process.
While Thailand is looking to build on this foundation and is reopening its economy, the nation may be hindered by its heavy reliance on tourism. Tourism accounts for an estimated one-in-six job opportunities in Thailand, while it also drives up to 14% of the nation’s economy as a whole.
A large number of visitors also come from China, and it remains unsafe for Thailand to reopen its borders to international travellers. So, what steps can Thailand take to rebuild its economy in the near and medium-term?
Driving domestic tourism and demonopolization
Interestingly, tourism brands in Thailand are also attractive to foreign investors, so a decline in this market can cause a decline in capital inflows from overseas.
However, one response from the Thai government has been to approve a 22.4 billion baht (US$718 million) domestic tourism stimulus, which will focus on encouraging citizens to take their holidays within the country’s borders for the foreseeable future.
This package was proposed by the Ministry of Tourism and Sports in conjunction with the Ministry of Finance and it comprises three distinct aspects to support hotel stays, investment in domestic transportation as well as funds to offer frontline medical personnel a chance to take a holiday.
If successful, there’s little doubt that this will deliver a viable return on investment and help the nation’s tourism sector to at least begin its recovery during the summer months.
From a longer-term perspective, the Thai government may also need to focus on demonopolizing the economy as a whole, as a high degree of centralization contributes to the country’s poor distribution of wealth and opportunity.
This is prominent across a number of markets (particularly the liquor industry), and such monopolies undoubtedly create large wealth inequality that can be exacerbated during times of economic austerity.
By focusing on challenging these monopolies and opening up the economy to newcomers, the government can rebuild more successfully both now and over a concerted period of time.