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Economists, Business Leaders Warn Political Tension Could Harm Thai Tourism Industry


Plans for a massive anti-government demonstration later this week have business leaders worried about potential economic damage. Tourism is particularly vulnerable.

Tens of thousands of protesters supporting former Prime Minister Thaksin Shinawatra plan to rally in Bangkok starting Friday in a bid to force the current government to call new elections. The protests are expected to go for several days, and the government has warned of possible violence.

About 30 countries have issued travel advisories warning their citizens visiting or living in Thailand to avoid large gatherings and possible clashes.

Sompob Manarangsan, an economist at Bangkok's Chulalongkorn University, says the travel and banking industries are likely to be the first to suffer if violence breaks out. "The first one is tourism. Both domestic tourism and also the tourism from outside the country is going to be highly affected by this kind of situation and then also the financial sector," said Sompob.

In 2009 Thailand received around 14 million tourists contributing about six percent of the economy. Arrivals fell by three percent because of the global economic downturn and Thailand's political conflicts.

Anti-government protests last April turned violent, scaring off some potential visitors, and in 2008, another group of protesters overran the main international airport and shut down flights for a week. Hundreds of thousands of foreign visitors were stuck in the country and many more could not make planned trips.

John Koldowski, a spokesman for the Pacific Asia Travel Association, says travelers are already nervous about the political tension. "It is going to be tense and unfortunately one of the things that's happened now is that all it takes is to leak the word that something is going to happen and we get this sort of reaction straight up … the shear thought that it might is enough to get people scrambling," he said.

The travel industry had been expected to recover this year, but the new protests could change that. "No question of that. It's actually been through the ringer several times over the last 12 to 18 months and everyone's hoping that this is not yet another turn of the screw so to speak, [Hotel] rates are down, participation levels are down." said Koldowski.

Thailand's political scene has been troubled for five years. In 2006, the military ousted Prime Minister Thaksin, who fled the country in 2008 after being convicted of corruption. Before the coup, anti-Thaksin forces, primarily the urban middle- and upper-classes held massive protests. When a pro-Thaksin government was elected in 2007, those forces paralyzed the government for months.

His supporters, mostly rural residents and the urban poor, have protested sporadically over the past year and are demanding elections.

Recently, the World Bank said Thailand's uncertain political climate is an economic risk and could do long-lasting damage to investment.

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