Thai prime minister Yingluck Shiniwatra will be faced with the double challenge of ensuring the safe cleanup and recovery after the worst flood in 50 years, and convincing foreign companies like Honda Motor Company and Canon, that it is still reliable and safe to do business on the country’s flood plain.
Hana chief executive Richard Han explained the importance of how Thailand manages its post flood reconstruction and recovery: “Thailand’s credibility is on the line here. A complete review of how to protect these industrial estates needs to be conducted and it needs government support.” Bangkok based Hana, which makes parts for mobile phones and digital music players, was one of thousands of companies in Thailand to be flooded this month, and like many of them, has asked the government to take steps to make sure that it can never happen again.
Thailand has transformed from an agricultural based economy to a manufacturing center since the first of the industrial estates was built 40 years ago. But seven of these industrial parks were inundate this month when dams filled to capacity in the north released 9 billion cubic meters of water, causing $4.6 billion (140 bn baht) in damages, according to government figures, forcing 10,000 factories to close, and putting 660,000 jobs at risk.
This year's flood crisis will erase up to 3 percentage points from the nation's gross domestic product (GDP), said Francis Cheung, a strategist with Credit Agricole CIB. Thailand may be compelled to reduce interest rates because of flood costs and stalled export growth.
Former finance minister Korn Chatikivani with the opposition Democratic party said if Thailand is to develop into a high income economy it will need to learn how to manage and lessen the impact of natural disasters which are likely to occur more often and with greater force over the next few years. "If we don't learn lessons and don't find ways to control the impact, we will remain a poor country."
The World Bank warned in a report last year that there is a four fold increase in the probablity that Bangkok will be flooded by 2050 because of rising temperatures and sea level. The Thai capital is located at the bottom of the Chao Phraya river basin which has an average elevation of just 6.6 feet above sea level.
