Thailand’s USD13 billion plan could woo 65 million tourists yearly

Thailand is already struggling to cope with the environmental impact of a tourism boom that’s expected to lure 40 million visitors this year. The influx is on course to hit 65 million a decade from now, signaling an even bigger challenge ahead.

Southeast Asia’s second-largest economy plans to pour about USD13 billion into expanding airport capacity and connecting major terminals with high-speed railways. As a result, foreign tourist numbers could jump more than 60% by 2029 to about the size of the U.K. population, projections from The World Travel & Tourism Council show.

Tourism is an economic lifeblood for Thailand, and the sheer number of visitors is one of the reasons the nation has Asia’s strongest currency this year. Yet the environmental challenge of coping with the deluge is multiplying, exemplified by the indefinite closing of the iconic Maya Bay – made famous by the Leonardo DiCaprio movie “The Beach” – to allow its ecosystem to recover.

“The number of tourists is growing too fast for what the country can handle,” said Somprawin Manprasert, chief economist at Bank of Ayudhya Pcl, a Thai unit of Mitsubishi UFJ Financial Group. “We have to implement a better system to manage the tourists and destinations, which could help with the congestion and environmental problems. We don’t see enough of this being done yet.”

Thailand isn’t alone in facing the fallout of mass tourism, ranging from coral damage to plastic, garbage and sewage pollution in the sea. Neighbors including the Philippines and Indonesia face similar challenges.

The difference for Thailand is that tourism on some measures accounts for a fifth of the economy, making management of the sector a crucial issue for the nation’s outlook. Arrivals have moderated in recent months, a blip officials view as temporary amid a cooling global economy.

Officials have tried for years to entice travelers to less visited parts of the country, to ease pressure on traditional hot-spots such as the capital Bangkok and beach resorts like Phuket. Those initiatives were only partially successful.

Thailand’s planned infrastructure upgrades include adding new terminals at the two international airports in Bangkok, as well as expanding another close to the beach resort of Pattaya.

That would take capacity at all three facilities to roughly 190 million passengers per year by 2025, from about 78 million presently. The nation’s airports are handling many more passengers than they are designed for.

Transport improvements alone aren’t enough to ensure tourism is sustainable, said Weerasak Kowsurat, who was Thailand’s tourism minister before being appointed to the Senate.

“We need to promote more energy and water efficiency, reduce the use of plastics and recycle more,” he said. Natnicha Chuwiruch, Bloomberg

Foreign investment booms as trade war escalates

Foreign investment into Thailand surged in the first quarter, further evidence that Southeast Asian nations are benefiting as businesses seek new locations in the region to avoid an escalating U.S.-China trade war.

Applications for foreign direct investment climbed to 84.1 billion baht (USD2.7 billion) in the first quarter, up 253% from the same period last year, according to Pisit Puapan, executive director of the Ministry of Finance’s Macroeconomic Policy Bureau, citing official data from the nation’s Board of Investment.

Thailand joins countries like Malaysia and Vietnam that are reporting soaring investment as global supply chains shift. Approved FDI into Malaysia’s manufacturing rose 127% in the first quarter from a year ago, and the central bank governor recently said the positive spinoff from the trade war could add 10 basis points to economic growth.

The jump in FDI in Thailand comes at a time of weakening export demand, which is weighing on the economy. The Finance Ministry in April downgraded its growth outlook for this year to 3.8%, based on a 3.4% export rise. Prime Minister Prayuth Chan-Ocha also said at a Bloomberg summit on Friday that the U.S.- China trade war creates more uncertainty for global businesses and is a concern to Thailand. MDT/Bloomberg