(Saharatana Nakorn, Rochana, Hi-tech, Bang Pa-in, Factory Land, Nava Nakorn and Bangkradi), but also caused extensive damage to investment capital, supply chain disruption, trade opportunities and caused widespread job losses.

The total damage to the Thai economy cannot yet be clearly estimated but will surely exceed one trillion baht. Hardest hit were some 60,000 SMEs located in the flooded areas. Food and agro-processing factories halted production due to machinery damage, higher raw material prices and supply shortages. Transport operators and retailers were also affected as small trucks could not reach flooded areas, while dwindling orders caused revenue decline.

Delayed packing and delivery of Less-than-Container Load (LCL) also affected shippers and the entire import/export sectors. To ease the immediate supply shortage, Port Authority of Thailand (PAT) allocated 10 rai of land adjacent to the Check Point on the Western coast to be used as a temporary depot, from November 9 until the situation is back to normal.

Mr. Paiboon Ponsuwanna, Chairman of the Thai National Shippers’ Council (TNSC), admitted that total damage to the export sector had not been quantified but major shipping lines may reduce shipment capacity for Thai cargo during the first half of 2012 in anticipation of production shortfall, even though some local plants may be able to resume full capacity by December 2011.

Mr. Tavich Techanavakul, Secretariat of the Industrial Estate Association, CEO of Thai Industrial Estate Co., Ltd., and developer of Hi-tech Industrial Estate, admitted that the current flood had affected investors’ confidence at home and abroad, in particular Japanese enterprises that had relocated to Thailand after the tsunami in their own country. It is hoped that investors who had already made plans to invest in Thai industrial estates will not move away. At the same time, the Government needs to restore confidence by providing incentives to existing investors who may wish to expand investments in Thailand. This policy could prove to be more effective than launching roadshows to attract new customers.

“From now on the government needs to give top priority to systematic water management, including a 30-day advance warning system in flood-prone areas. A previous proposal to manage 25 river basins should also be urgently reviewed, taking into account the impact of global warming. Industrial estate developers also require support to build strong dykes and dams that can protect thousands of manufacturing plants from future floods. However, such vital infrastructural projects do not generate any income,” Mr. Tavich urged.

On November 8 the Cabinet approved a 15-billion baht loan from the Government Savings Bank to finance development of a flood warning system for local industrial estates.

An efficient water management system and effective rehabilitation of various business and industrial sectors are prerequisites for restoring foreign investors’ confidence and fulfilling Thailand’s aim to become the ASEAN Logistics Hub, the World’s Kitchen, and a significant contender in the global trade arena.

Towards this end, Prime Minister Yingluck Shinawatra has appointed two committees, the Strategic Committee for Reconstruction and Future Development (SCRF) and the Strategic Committee for Water Resources Management (SCWRM) to formulate a framework and guidelines for preventing and solving short and long-term flood problems, along with measures to rehabilitate the local economy. Mega investment projects will focus on water management, logistics and development or upgrading of SMEs.

“This flood has eroded investors’ confidence, particularly foreign investors who may decide to relocate their production bases to other countries. In this event, Thailand’s future growth will be directly affected – hence the urgent need to develop flood prevention and water management systems and to restore confidence in Thailand’s overall economic capability, monetary and fiscal sustainability, investment opportunities, energy sufficiency as well as linkages with neighboring countries that have developed modern infrastructures close to Thai borders,” said Dr. Virapongse Ramangkura, Chairman of the Strategic Committee for Reconstruction and Future Development. 
And since any investment project involves some degree of risk, investors need to consider potential returns versus risk. The Strategic Committee (SCRF) is therefore responsible for formulating a comprehensive reconstruction plan that will restore investors’ confidence in Thailand’s investment prospects.

SCRF will work closely with the Strategic Committee for Water Resources Management (SCWRM) to maximize investment returns and fiscal discipline. Direct and continuous communication will ensure that investors have sufficient and timely information on the status and progress of both projects.

During his visit to Japan in November, Dr. Virapongse met with Japanese investors who were directly affected by the flood and reassured them that his committee would form an effective action plan that would be submitted to the government for approval and early implementation.

Based on previous discussions between the Ministries of Finance and Agriculture, the Undersecretary of Finance estimated that investments in water management and irrigation systems within 25 river basins and/or the alternative proposal to channel water to/from neighboring countries would top exceed 1 trillion baht. Project implementation will be overseen by the Strategic Committee and will take 10 years to complete.

 
The Ministries of Finance and Transportation have also prepared a joint logistic master plan which will involve setting up a Public-Private Partnership (PPP) to develop and operate a dual-track railway system and high-speed train services, in line with the national goal of developing an ASEAN Logistics Hub. This project will be submitted to the Strategic Committee for Reconstruction and Future Development (SCRF) and the Cabinet for approval.