Thai Premier Calls for Unity as Flood Threatens Bangkok

OCTOBER 19, 2011
By JAMES HOOKWAY
The Wall Street Journal

BANGKOK—Thailand's Prime Minister Yingluck Shinawatra pleaded Wednesday for the country's warring political factions to unite to combat a worsening flood crisis that now threatens to engulf parts of the capital.

Fighting back tears at an emotional news conference, Ms. Yingluck acknowledged the crisis was overwhelming her two-month-old administration and pleaded for help.

"We've been doing everything we can, but this is a big national crisis. On our own, we can't get it done," Ms. Yingluck said. "We need unity from every side and we must set politics aside."

The devastating floods already have claimed at least 315 lives in Thailand and decimated major industrial suburbs north of Bangkok, knocking out supply chains for critical export-oriented business, such as electronics and automobiles. Many businesses and resident have blamed a lack of coordination between Ms. Yingluck's national government and a Bangkok city administration led by her Democrat Party rivals for contributing to the crisis. An opinion poll released Tuesday found that 87% of people surveyed distrusted information released by the government's flood war room based at Bangkok's old international airport.

Bangkok Gov. Sukhumbhand Paribatra is releasing his own crisis updates as soldiers and volunteers race to shore up protective embankments and dig canals to prevent the flood waters from inundating areas around the city, which represents more than 40% of Thailand's economic output.

Mr. Sukhumbhand couldn't immediately be reached for comment. An aide said he was cooperating with the national government on finding ways to help Bangkok.

Across the region, the United Nations said at least 745 people have been killed and about 8 million others affected by extensive flooding in Thailand, Cambodia, the Philippines, Vietnam and Laos since late July. After Thailand, the greatest loss of life so far has been in Cambodia, where floods have killed at least 247 people.

In Thailand, local authorities Wednesday issued evacuation orders around the northern outskirts of the city. One of the country's largest shopping centers, Future Park Rangsit, closed its doors in what might turn out to be a portent of problems to come.

Thailand's central bank has warned that as much as 1.7 percentage points might be lopped off the country's economic growth rate because of the floods. The National Economic and Social Development Board had predicted the Thai economy to expand by about 3.5% to 4% before the flood crisis struck. The Bank of Thailand's monetary policy committee Wednesday voted to keep its main policy rate at 3.5%, pausing a year-long series of increases in order to assess the economic impact of the floods, and the potential for a slowdown in the global economy.

The Bank of Thailand, one of Asia's most hawkish central banks, indicated it could resume increasing interest rates if heavy government spending to rebuild areas damaged by the floods triggers inflationary pressure. The government has estimated the economic cost of the disaster could surpass 100 billion baht, or more than $3 billion, assuming the floods don't swamp Bangkok, the country's economic heart.

Citigroup economist Jun Trinidad wrote in a research note that Thailand could face a "substantial loss in output" because of the flooding. That, coupled with lingering concerns about the strength of the economic recovery in Europe and the U.S., prompted Citigroup to forecast the key rate would remain at 3.5% for the rest of the year.