Thai confidence at 10-year low; floods hit more firms

People use small boats to move in a flooded area in Bangkok's suburbs November 9, 2011. (Credit: Reuters/Damir Sagolj)

Thu Nov 10, 2011
By Alan Raybould and Kochakorn Boonlai

BANGKOK (Reuters) - Thai consumer confidence hit a 10-year low in October as flooding took 533 lives and shut thousands of factories, with another big industrial estate threatened on Thursday as the waters spread to the east of the capital, Bangkok.

The consumer confidence index from the University of the Thai Chamber of Commerce slumped to 62.8 in October from 72.2 in September - a level last reached in the aftermath of the September 2001 attacks on the United States.

"The flooding has dragged down consumer confidence and it will probably fall further if the economy is severely affected and the government can't speed up rebuilding within 3-6 months," said university economist Thanavath Phonvichaisaid.

The flooding began in the north and northeast of the country in late July, running down to rice areas and then overwhelming seven industrial estates north of Bangkok in October.

Now the capital itself is in danger. Residents in a third of its districts, mostly in the north of the densely populated city of 12 million people, have been advised to get out as floodwater strewn with trash moves slowly south.

Water has seeped into parts of the Bang Chan industrial estate in the eastern suburbs, home to 93 factories run by local and international companies including Nestle SA, instant noodle maker YumYum and President Bakery Pcl, which makes buns for McDonald's and Farmhouse bread.

Yongyuth Thongsuk, deputy permanent secretary of the Industry Ministry, said 16 companies had temporarily shut there.

"Most operators who have stopped are in the painting and industrial glue businesses," he said. "Major food producers like Nestle, Farmhouse and YumYum are still operating as normal.

Industry Minister Wannarat Channukul told Reuters that factories had been advised to raise machinery from floor level but the estate was only at flood alert level one, meaning firms could decide for themselves whether they should continue operations.

Wannarat said 10 more pumps would be brought in on Thursday to add to 44 pumps the estate already used to push water into a nearby canal. "If all goes as planned, we should still be able to defend this estate," the minister said.

Idthipol Patimavirujh, deputy managing director of Daily Foods Co Ltd, the third-biggest milk producer in Thailand, said its three plants at Bang Chan were still working.

"We can't stop producing. Bang Chan is now the only big kitchen left for Bangkok people," he said.

ECONOMIC TOLL

The central bank has slashed its economic growth forecast for this year to 2.6 percent from 4.1 percent and may have to cut it further if the flooding spreads right across Bangkok, which accounts for 41 percent of gross domestic product.

The floods could reduce tourist arrivals by up to 800,000, Deputy Governor Suchada Kirakul said on Thursday.

Workers are trying to hold the line at the city's Bang Sue canal running from east to west, pushing water into the Chao Phraya river and stopping it from overflowing to the south.

Reuters reporters in the area said workers had largely managed this so far, although businesses to the south in the Victory Monument area, a big starting point for buses to the rest of the city, had sandbagged up their premises as a precaution.

Highways leading to the north of the country are inundated and Rama II Road, the main route to the rubber-producing south, which has not been flooded, is also under threat.

Thursday sees the Loy Krathong festival, when Thais like to float offerings of food, flowers and candles on rivers and lakes, a symbolic pushing away of bad feelings and bad luck.

But Bangkok Governor Sukhumbhand Paribatra has canceled a big event on the fast-flowing river and urged people not to float their offerings in flooded areas. That would add to the tonnes of rubbish lying in sodden piles in the streets, he said, and the candles were a fire hazard.

Bangkok's main Suvarnabhumi airport in the east of the capital is functioning normally inside a reinforced dike at least 3 meters (10 ft) high but the old Don Muang airport in the north of the city, used mainly for internal flights, is closed.

The Chao Phraya river snaking through Bangkok has another phase of high tides from Thursday to Monday and riverside communities are braced for floods, especially on the relatively dry east bank, although a navy official said the river should not reach the record high levels seen at the end of October.

($1 = 30.70 baht)

(Additional reporting by Martin Petty, Boontiwa Wichakul, Panarat Thepgumpanat, Orathai Sriring and Ploy Ten Kate; Editing by Kavita Chandran)