In recent days, the National Economic and Social Development Council (NESDC) has revised its projection for foreign tourists this year from 5 million to 5.5 million visitors and suggests that the country can use the renewed impetus from the sector to drive GDP growth for 2022 of up to 5%.
The Thai government is planning to scrap all entry restrictions on foreign travellers sometime this year when it declares the virus as an endemic disease according to the Ministry of Tourism and Sports Phiphat Ratchakitprakarn. On Wednesday, the kingdom did away with the requirement for a second test on arrival on the 5th day for incoming tourists following calls by business leaders to allow the industry to revert to normal. This is happening at the same time as economic data suggests strongly that foreign tourism income has a far higher impact on the country’s economy than originally thought due to its impact on confidence and the level of indirect economic activity generated.
Thailand, on Wednesday, gave the green light to the suspension of the mandatory 2nd COVID-19 test for visitors from March 1st next. The move will see the scrapping of any need for a hotel reservation on the 5th day after arrival. For now, the requirement will be for a self-test to be undertaken by the visitor using an antigen test kit.
The announcement comes amid a surge in Omicron virus infections across the kingdom with 23,557 cases confirmed on Thursday. At the same time, there is growing confidence within the government and the Ministry of Public Health that this pandemic crisis is winding down.
Growing calls from the tourism sector for all controls to be lifted and a return to normalcy that existed up to April 2020 being heard with election looming
Indeed, there are growing calls from the travel and foreign tourism industry in the kingdom to scrap all requirements on entry including the need to undergo any subsequent COVID-19 test and a streamlining of the process to allow the country to begin recovering its foreign tourism market which has been dormant since 2020.
There are already signs that the reopening of the kingdom to foreign tourism late last year has brought with it the sort of economic momentum that the government, with the looming and growing possibility of an election on the horizon, is determined to foster.
Uptick in economic data from 2021 attributed to the Test and Go entry regime launched in November 2021
In recent weeks, the confirmed growth rate for the Thai economy in 2021 has been upgraded to 1.6% following a disastrous 6.1% contraction in 2020. It is one of the slowest in Southeast Asia. At the same time, for the region’s second-largest economy, the updated figure is far ahead of expectations with all indicators towards the end of 2021 showing Thailand in very real danger of experiencing a second year of contraction or at best, negligible growth.
Shaky economic recovery as planners target only a 1% gain in 2021 with rising headwinds in Quarter 4
Thailand pushes ahead with foreign tourism drive, may defer switch to antigen testing over Omicron
The situation appears to have been turned around with a 21.3% rise in exports in the last quarter of 2021 and the arrival of approximately 340,000 foreign tourists in the same period, driven by the ‘Test and Go’ entry regime which offered far less restricted access to the kingdom from November 1st 2021.
Tourism provinces at the heart of the Thai economy and GDP rebound, accounting for 70% of annual GDP
The improvement in the economic performance may be linked to a trend seen in economic data recorded in May last year which showed that 15 key provinces across the country accounted for 70% of its GDP including many of the main foreign tourism centres.
These are Bangkok and its five hinterland provinces which are Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan and Samut Sakhon. In addition to these come Chachoengsao, Chiang Mai, Chonburi (including Pattaya), Khon Kaen, Nakhon Ratchasima, Phuket, Rayong, Songkhla and Surat Thani (Ko Samui).
Figures from Phuket Sandbox show a high level of indirect economic activity which suggests that foreign tourism drives up to 26% of the kingdom’s GDP
On Wednesday, figures released concerning the Phuket Sandbox scheme which embattled Prime Minister Prayut Chan ocha claims as a signal victory for his government and a turning point in the country’s economic fortunes last year showed that 333,784 foreign tourists had generated direct revenue of ฿18 billion or ฿59,927 per head.
However, the government, this week, claimed a further ฿25 billion had been generated in the knock-on activity from the reopening or the equivalent of ฿74,898 per incoming tourist.
In 2019, Thailand’s GDP was $544.3 billion of which $62.29 billion was direct expenditure by 39.8 million foreign tourists that equated to ฿1.93 trillion. This represented 11.45% of the country’s GDP.
Based on the figures for Phuket however, since July 1st, it could well suggest that the foreign tourism industry in Thailand drives up to 26% of the country’s overall economy including indirect activity.
Explains the long term economic damage inflicted on the country’s GDP caused by its closure to foreign tourism in April 2020 and continued restrictions
This would help to explain the dramatic and apparently, long term damage to the kingdom’s economy since 2020 as the country has yet to experience the sort of economic rebound we have seen in western economies.
It would certainly explain the government’s determination now to bring foreign tourism back to life even amid the Omicron virus storm which appears to be resulting in lower hospitalisation rates with less severe illness and deaths running at 0.2%.
The kingdom is currently experiencing deaths in the order of 30 per day compared to 300 last year at the height of the pandemic driven by the Delta variant.
CCSA eased restrictions including a lowering of the insurance requirement as Minister explains that incoming travellers are less likely to be infected
This scenario was emphasised ahead of this Wednesday’s meeting of the Centre for Covid-19 Situation Administration (CCSA) where the decision was made to ease the burden on incoming travellers. This was supported by the Minister of Public Health Anutin Charnvirakul and the powerful Department of Disease Control within his ministry.
The easing of entry conditions announced by the CCSA, chaired by Prime Minister Prayut Chan ocha, came after public health officials endorsed the move which also included a reduction in the insurance cover required for inbound travellers from $50,000 to $20,000. Last year, at the outset of the Phuket Sandbox reopening, in July, the requirement stood at $100,000.
Speaking before the meeting, Minister Anutin highlighted the low level of infections being detected among incoming travellers to Thailand which, he said, was running at less than one in one thousand and confirmed that the current surge in the kingdom is being driven by local sources and clusters.
Minister confident the current virus surge will ease as ‘Test and Go’ entry scheme continues its success
He was confident, however, that this surge would plateau and begin to decline in due course which would be a critical moment in the country’s fight against the disease.
The Test and Go entry regime for foreign tourists appears to have continued its success since it was restarted on February 1st after a pause from late December last year due to fears of the arrival of the Omicron virus strain in Thailand.
On Wednesday, Dr Taweesilp Visanuyothin, the spokesman for the Centre for Covid-19 Situation Administration (CCSA), confirmed that since the start of the month, 302,000 visitors had been approved under the scheme which is currently being driven by western tourism into Thailand.
The top destinations are Bangkok and Chonburi which is home to Pattaya, the tourist resort which just six months ago was reduced to a ghost town.
Wednesday’s move also comes in the face of recent calls from the Pheu Thai Party to strengthen the Covid 19 testing regime in the face of rising levels of infection.
Business leaders urge the government to seize this moment to drive foreign tourism momentum and boost it for the rest of the year by opening up further
Nevertheless, the foreign tourism industry leadership in Thailand and wider business lobbies have begun urging the government to do more to bolster the sector’s prospects, particularly after April when foreign tourism normally has its off-season until October.
Mr Sanan Angubolkul, the Chairman of the Thai Chamber of Commerce and Board of Trade has emphasised that the revival of the industry was necessary to also boost domestic tourism and overall commercial confidence in the kingdom.
Before Wednesday’s news from the government, he made the point that travellers are also tested before embarkation for Thailand and have to be fully vaccinated before they are allowed to travel here.
‘Many countries focus only on full-dose vaccination and RT-PCR test results 72 hours before entering the country, such as Greece, UAE, France, Germany, Austria or even the United States. The Thai Chamber of Commerce, therefore, considers that if the RT-PCR examination can be cancelled on the 5th day, it will encourage more international travel. Although the current epidemic of omicron in the country is likely to increase.’
Minister of Tourism and Sports Mr Phiphat says that all restrictions will go once the virus is declared an endemic disease, likely to happen this year
It also appears that business leaders may be pushing an open door as recently, Minister of Tourism and Sports, Phiphat Ratchakitprakarn has indicated that all testing for the virus and other restrictions may be scrapped at the point where the virus is declared an endemic disease in the country.
This is likely to happen this year, according to officials at the Department of Disease Control at the Ministry of Public Health and would come as a timely boost for this year’s High Season which begins again on October 1st next.
Thai economic forecasters are already increasing projected figures for foreign tourists in 2022.
Top economic body forecasts strong GDP growth on more foreign tourist arrivals as it raises projections
In recent days, the top official at the National Economic and Social Development Council (NESDC), the government’s top economic body, Danucha Pichayanan, has raised that body’s estimates for foreign tourists this year from 5 million to 5.5 million.
The NESDC is also projecting a higher GDP growth rate in Thailand for 2022 of up to 5% which is ahead of recent projections.
This outlook makes it easier to understand why the government is determined to prime the foreign tourism economic engine to take the economy forward this year.
This approach was summed up by Mr Supant Mongkolsuthree the Chairman of the Federation of Thai Industries (FTI) this week when he called on the government to cancel all COVID-19 restrictions in the kingdom to allow the private sector to get fully back to work.
He also called for the complete abolition of all entry restrictions for foreign tourists including the Test and Go entry regime and the Thailand Pass system. He wanted to see the situation revert to the status quo that existed before April 2020.
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