Thursday, February 16, 2012

Research Paper on Thailand after Tsunami

Research Paper on Thailand after Tsunami 2004

Why were the consequences of the tsunami of 26 December 2004 so severe in Thailand, and how did it affect the tourist industry?
Thailand is one of the leading economies of the South-East Asia. However, the national economy suffered unparalleled problems in the mid-2000s when the natural disaster, tsunami, struck in 2004. In fact, it was a turning point in the recent economic history of Thailand since the national economy, which had been rapidly progressing until 2004, had slowed down its development consistently. In such a situation, it is obvious that the national economy needs considerable investments in its main industries, such as tourism to recover from the disastrous effects of the tsunami of 2004.

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On the other hand, it is extremely important to understand causes of such disastrous effects of the tsunami in Thailand because the country is susceptible to the negative impact of such natural disasters and the risk of new tsunamis is relatively high. At any rate, it is impossible to ignore a potential threat of a tsunami in Thailand which may occur unexpectedly. In such a context, the negative experience Thailand had after the tsunami of 2004 may be very helpful for understanding of effective ways of prevention of huge destructions and numerous casualties which could have been avoided if the country was prepared for the disaster. Hence, the analysis of causes and effects of the tsunami of 2004 in Thailand on the national economy, especially the local tourist industry, is essential because it can help minimize negative effects of similar disasters which can occur in Thailand.

The tsunami in Thailand and its consequences
In order to adequately assess the impact of the tsunami of 2004 on the national economy of Thailand, it is necessary to briefly dwell upon the economic development of the country prior to the disaster and focus on the most important industries, which constituted the foundation of the local economy. First of all, it is important to underline that Thailand was and still is one of the leading countries of South-East Asia. Its economic potential is considered to be very significant and specialists argue that Thailand could easily take the leading position in the region and stimulate the economic growth in South-East Asia at large. On the other hand, the national economy of Thailand is consistently influenced by the process of globalization and the situation on international markets can affect the economic development of the country substantially. Moreover, the main industry of Thailand, which comprises a considerable share of the local GDP, is tourism. Obviously, this industry is also oriented on international markets since foreign tourists constitute the overwhelming majority of tourists using services of local tourist agencies and companies involved in this business. In such a way, the national economy of Thailand heavily depends on the tourist flow and on the situation on international markets.

In this respect, it is worth mentioning the fact that by the early 2000s, the situation in the national economy was quite difficult because Thailand suffered a lot from a profound financial crisis of 1998, which slowed down the economic development of the country and led to considerable financial losses of local companies and stagnation of many industries. In such a situation, by the 2000s, tourism became the main industry which stimulated economic development of the country. To put it more precisely, the physical position of Thailand, local nature, climate and culture attract tourists from different parts of the world, especially from Europe and the USA.

At the same time, the integration of the national economy into the global economy in terms of the process of globalization stimulated the development of international cooperation of Thailand with other countries of the world. As a result, the openness of the national economy and the policy of the local government aiming at the attraction of direct foreign investments led to the growing interest of foreign companies to the local tourist industry. The foreign investments and active development of local tourist industry contributed to the fast development of tourism in Thailand.

In response to the development of the tourist industry, Thailand got considerable economic benefits since the unemployment rate started to decrease, while foreign investments increased as well as the standards of life in the country. However, the problem was that tourism was the mainstream industry for Thailand, which stimulated the development of other industries, which were related to tourism, such as food industry, transportation, etc., but all these industries could not compensate economic losses in case if the tourist industry was affected by a crisis.

This weakness of the national economy of Thailand became particularly obvious in 2004, when the huge tsunami had struck and led to a profound crisis in the tourist industry of Thailand. The tsunami proved to be extremely destructing and many buildings and facilities were ruined, while the number of people, who died in the result of the tsunami, constituted thousands of people, while over 50,000 people were affected by the tsunami. In this respect, it is possible to refer to tables 1 and 2:

The statistical data reveal the fact that the number of Thais and foreign tourists killed in the result of the tsunami is practically equal. This means that recreational areas, where the national tourist facilities are concentrated, were particularly affected by the tsunami. In order to better understand the causes of such disastrous consequences of the tsunami, it is necessary to underline that the tsunami occurred when people were practically unprepared for such a huge and destructing disaster.

In this respect, it is necessary to take into consideration several factors which contributed to numerous deaths and destructions of buildings and local infrastructure. First of all, the tsunami that struck in 2004 was extremely powerful. In actuality, even though Thailand is susceptible to such natural disasters as tsunami, such powerful and destructing tsunamis occur rarely in Thailand and South-East Asia. Therefore, the destructions and casualties provoked by the tsunami were unparalleled.

However, along with the natural factor, i.e. the huge destructing power of the tsunami in 2004, the unpreparedness of Thailand for the disaster played also a very significant role. In fact, the economic development of Thailand in the late 1990s - early 2000s was accompanied by the growth of the local infrastructure, construction of new facilities and buildings, but the local infrastructure and facilities did not meet the basic safety standards in regard to the threat of a powerful tsunami. In other words, in the process of construction of buildings and development of local infrastructure, safety norms were either ignored or not fully implemented. In practice, this means that buildings and infrastructure proved to be too fragile to protect people from the destructing effect of the tsunami in 2004 and, what is more they were absolutely unprepared for such natural disasters.

In this respect, it is worth mentioning the fact that some areas of Thailand were particularly susceptible to huge destructions compared to others. For instance, the table 2 and figure 1 shows that Phang Nga was the most affected by the tsunami in 2004 and the number of people killed and injured in the result of the disaster was the highest in this region compared to other parts of the country which were also exposed to the strike of the tsunami.

The reason for such unequal redistribution of the destructing power of the tsunami is the specifiicity of the physical position of different regions, local buildings, facilities and infrastructure. For instance, Phang Nga is mainly located in the flatland, while local hotel and leisure companies developed mainly small buildings, such as bungalos. Naturally, such small buildings located in the flatland could not afford the strike of the tsunami. Consequently, the destructions in this region were consistently higher compared to other regions of Thailand and the number of people killed in the result of the tsunami in 2004 exceeded 4,000 people (see Table 2).

Furthermore, in addition to huge destructions caused by the power of the tsunami and poor resistance of local buildings, facilities and infrastructure to the tsunami, Thailand proved to be unable to inform people, who were in the epicenter of the disaster, about the threat to their life and health which the tsunami could have. In this respect, it is important to underline that the local authorities could not adequately assess the real power of the tsunami which was about to occur in the region. Moreover, they were simply unaware of this threat, but even when they got the information about the upcoming tsunami, they failed to warn people about the threat. At any rate, the local authorities apparently failed to develop an effective communication system which could be used to convey the information concerning the threat of the natural disaster on the coastline of Thailand and throughout the country. As a result, communication gaps and poor communication system are main factors which led to numerous casualties.

Obviously, it was practically impossible to avoid the destruction of numerous buildings and infrastructure in the area of the disaster, but, potentially, it was possible to avoid numerous casualties and injuries. It proves beyond a doubt that if people were informed in time about the actual threat to their life and health they could have been evacuated from the regions which were under the direct impact of the tsunami. However, as the local authorities did not inform people they stayed in these regions until the disaster had come.

Moreover, the statistical data show that about a half of killed people were tourists, though the number of Thai people living or working in the regions affected by the disaster was consistently higher than the number of tourists. This is a very important fact because it reveals another cause of numerous deaths, especially among tourists. In fact, tourists were not only unaware of risks and threats they could be exposed to because of the tsunami, but they simply did not know what to do when the tsunami had started. In this respect, the local population was more prepared and, therefore, local people could save their life and act properly in order to avoid the impact of the disaster. Thais were aware of the destructing power of tsunamis and, what is more, they could have noticed the first signs which indicated to the upcoming tsunami, while tourists were absolutely unaware of this risk. For instance, when the water started to move back from the shore into the ocean many tourists remained on the shore, being unaware, that soon the water will return with the tsunami. As a result, many tourists died.

In such a context, the local authorities and tourist agencies proved to be unable to instruct foreign tourists about basic norms of behavior and possible risks they may face in Thailand. In fact, it was possible to instruct tourists in details about signs which indicate to the upcoming disaster and provide them with a simple action plan which they could use if the tsunami was about to occur. However, neither the local nor tourist agencies provided the basic information or action plans for tourists. As a result, the panic caused by the tsunami in Thailand increased the number of victims, especially among tourists, who did not what to do and what was actually going on.

However, numerous deaths and injuries constituted only a part of the losses Thailand suffered from in the result of the tsunami. The economic effect of the tsunami was extremely negative. As it has been already mentioned above, the national economy of Thailand had just started to recover after the financial crisis in 1998 and the economic growth in the early 2000s stimulated the growing interest of foreign investors to the country. In fact, the economic growth was fast until the disaster. In 2004, the economic growth of Thailand slowed down consistently and the country needed substantial funds to recover from the tsunami. In this respect, it is possible to refer to the table 1, which shows that almost 60,000 people were affected by the disaster and, therefore, needed material and financial help from the part of the state and other organizations. The estimated value of damages constituted 353,4 million USD, while the Thai government assistance and compensation exceeded 1 billion USD by September 2005. In such a context, even the UN’s aid, which exceeded 40 million USD, could not really improve the economic situation in Thailand consistently. The huge destructions caused by the tsunami practically paralyzed the national economy. What was even more important, the tourist industry was the most affected by the tsunami. At this point, it is necessary to remind that the tourism industry constituted the backbone of the national economy and the crisis in this industry naturally produced a negative impact on other industries of Thai economy.

In addition to considerable financial and economic losses, Thailand suffered from substantial environmental losses and destructions. In fact, the tsunami changed the natural environment in the regions affected since many species and plants, including sea plants, were either extinct or could not grow and develop normally after the disaster. This effect was particularly important for Thailand because its unique nature was one of the main attractions for foreign tourists.  Consequently, changes in the environment could potentially affect the tourist industry.

In such a way, the tsunami of 2004 in Thailand produced a disastrous impact on the national economy and led to the humanitarian catastrophe in the country since many people were dead or injured. At the same time, it is important to underline that the disaster had a long-term, negative impact on the development of Thailand because the country did not only need to recover after the tsunami, but it also needed to restore its economy.

The effects of the tsunami on the tourist industry
The negative economic impact of the tsunami of 2004 in Thailand was particularly obvious in the tourist industry. In fact, tourism constitutes 12,2% of GDP of Thailand and, in this regard, Thai tourist industry is one of the leading in the South-East Asian region (see Table 3).

On the other hand, it is necessary to underline that the data concerning the huge material losses, related to the destroyed buildings, facilities and infrastructure, reveal only a part of the problem. In this respect, the public image of Thailand, its reliability as a tourist region was and still is even more important than material destructions. What is meant here is the fact that shortly after the disaster, the amount of foreign tourists in Thailand decreased substantially. For instance, specialists (Plunkett, 2006) argue that shortly after the tsunami about 1.2 million foreigners were likely to cancel their trips to Thailand, costing the industry some $750 million, according to the Association of Thai Travel Agents. Others predict arrivals will fall by as much as 2 million in coming months (Plunkett, 2006). In such a way, after the disaster, Thailand to restore its economy and tourist industry, but conditions for the recovery were extremely unfavorable because of a considerable reduction of the number of tourists visiting the country, deteriorated quality of services, because of the lack of facilities, and, therefore, decreasing revenues from tourism.

Furthermore, tourism and Sports Minister Sonthaya Khunpluen estimated that some 200,000 employees in the tourism sector, the country’s no. 1 foreign exchange earner, were expected to lose their jobs due to the disaster (Plunkett, 2006). In actuality, this means that the tourist industry which employed practically a tenth of the population of Thailand had to cut jobs substantially. Naturally, job cuts in the tourist industry increased the unemployment rate nationwide, especially in regions where tourism was well-developed and the majority of population was employed in the tourist industry.

In this respect, it is worth mentioning the fact that there were two major factors that provoked job cuts. On the one hand, the decreasing number of tourists decreased profits of companies operating in the tourist industry. Therefore, they needed to save costs and job cuts turned to be the effective way to save costs. On the other hand, the destruction of tourist facilities left the local population no place to work at. For instance, the tourism minister said that only about 40 of the more than 200 hotels on Phuket Island were damaged (Plunkett, 2006). The same trend could be traced in other major tourist regions of the country (see table 4). In addition, many people living in Thailand were unwilling to return to areas affected by the disaster because of the fear that the next tsunami can take their lives. At the same time, the local population did not have a large choice and often they had to neglect such a risk and return to the areas exposed to potential strike of tsunamis.

In stark contrast, foreign tourists had a consistently larger choice of desirable destinations. In fact, the decreasing number of tourists visiting Thailand did not mean that tourists stop travelling and visiting different countries of the world. Instead, they changed their destination. Hence, they preferred to visit safer countries, which were less exposed to natural disasters than Thailand. In addition, tourists started to pay more attention to the problem of safety and the development of the local infrastructure and facilities. After the tsunami of 2004, tourists wanted to feel safe as they visited new, unknown countries and, naturally, they preferred countries with a well-developed infrastructure, effective communication systems which allowed them to be informed about an upcoming disaster and be evacuated in possibly shorter period of time and with a minimal risk to their life and health. In such a way, Thailand became not only an exotic place but also a dangerous place, at least, in the conscious of foreign tourists.

In such a context, it is possible to speak about the formation of a negative image of Thailand as a tourist destination. The latter is extremely important in the contemporary world because the process of globalization contributes to the growing competition between countries and various industries. In this regard, the tourist industry in Thailand is not an exception. After the tsunami of 2004, the national tourist industry had started to lose its competitive position on the international tourist market. Instead, Thai competitors had started to improve their competitive position, especially countries of Latin America, partially, African countries and more traditional destinations, such as European countries, where people were safe and did not fear of any natural disaster.

Such negative effects of the tsunami of 2004 were particularly dramatic in the context of unparalleled progress of Thai tourist industry prior to the tsunami strike. To put it more precisely, the tsunami rolled in just days after the Thai government trumpeted tourism’s success in 2004, citing an increase of 20% in arrivals over the previous year and $9.8 billion in income despite the outbreak of bird flu and Muslim terrorism in southern Thailand (Plunkett, 2006). In such a way, the negative impact of natural exceeded all the other potential threats, including terrorism, leading to the decline and profound crisis in the tourist industry of Thailand.

As a result, it was not only the tourist industry but also the national economy of Thailand that was affected by the tsunami. (see Figure 2.11).

By 2005, the economic growth practically stopped, though the early 2000s were characterized by the annual GDP growth exceeding 5%. Moreover, along with a considerable slowdown of the GDP growth, Thailand suffered from the growing inflation which had been the highest in 2004 since the financial crisis of 1998. In addition, it is worth mentioning the growing unemployment rate.

Nevertheless, the tourist industry of Thailand steadily recovers after the disaster of 2004 and gradually  Thailand returns its leading positions as one of the main destinations in the South-East Asian region. This means that the country still has good prospects for the further development of the tourist industry, which, in its turn, can accelerate the development of the national economy.

Thus, taking into consideration all above mentioned, it is possible to conclude that the tsunami of 2004 produced an extremely negative impact on Thai economy and tourist industry. In fact, the country proved to be unprepared for the disaster. The poor development of local facilities and infrastructure, which could not affort the tsunami’s strike, ineffective communication system, lack of information led to numerous deaths and injuries among the local population and foreign tourists. As a result, Thailand needed considerable investments for the recovery and reconstruction of its tourist industry. However, above all, the national tourist industry needed to regain the confidence of foreign tourists in the safety and reliability of local tourist facilities. In fact, the country failed to avoid a crisis in the tourist industry and national economy after the disaster, but, today, Thailand is steadily recovering and it is likely to regain its competitive position in the international tourist industry.
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