Bangkok stands to lose an estimated 30-40 billion baht in property damages after more than 30 buildings including CentralWorld and Big C in the Ratchadamri area were torched by anti-government protesters who were enraged after their leaders surrendered to police.
“Insurance losses are estimated at about 10 billion baht for Bangkok’s tragic night,” said Surachai Sirivallop, chief executive of Thai Reinsurance Plc, the country’s leading reinsurer.
“But we have to examine again whether the policies bought by those property owners cover riots, civil commotion and terrorism.” However, Mr Surachai said the losses exclude property damage caused by arson at state and private properties in the provinces which have spread nationwide since Wednesday.
Businesses without protection against those actions would have to absorb all the losses.
Central Department Store Co said earlier the company had bought coverage against terrorism for all Central Department Store branches since the 9/11 terrorist attacks in 2001.
According to a source in the insurance industry, CentralWorld had bought a terrorism policy that covers property damages for the amount of 3 billion baht. It also bought industrial all-risks protection and coverage for business interruption worth 20 billion baht.
Building damage toll up to B40bn
Foreign direct investment has decelerated markedly in Thailand, but inflows should continue in 2009 and 2010 due to the secular trend to move production away from advanced economies.
Key risks to the outlook are political uncertainty and the timing of the withdrawal of fiscal and monetary stimulus. Increased political tensions may have a long-lasting impact on investment, and withdrawal of stimulus (in Thailand and the advanced economies) must be precisely timed to avoid macroeconomic imbalances (including new asset bubbles) while also ensuring that the recovery is on a sufficiently solid footing.
Long-term growth will require improving productivity and greater focus on distributional issues. Imbalances present before the crisis remain, but the crisis has increased the urgency of reforms to improve productivity, enhance competitiveness, and promote more equitable growth. Openness to trade and investment have been – and will continue to be – essential to Thailand’s long-term growth. However, a return to high growth will require boosting domestic consumption and developing additional sources of external demand.
The export collapse in 2009 has been the most severe in Thailand’s recent history.
Despite the rebound, Thailand’s export recovery is still subject to several downside risks. A recent export pickup in East Asia benefits mainly from coordinated and massive policy responses in G-3 economies and China that have boosted their demand for imports, and inventory re-stocking worldwide that followed a swift and large de-stocking in early-2009 as orders fell less than production. These two factors are temporary, as governments have to unwind injections to maintain fiscal discipline and companies resume their normal stocking levels. In fact, data shows that US inventory-to-shipment ratios for computers, electronic products, and electronic appliances started to rise again in August and September, thus leading to weaker new orders. This likely adds pressure on Thailand’s electronic shipments to the US in the coming months.
About the author
The Office of the Board of Investment is a government agency under the Office of the Prime Minister. Its core roles and responsibilities are to promote valuable investment, both investment into Thailand and Thai overseas investment.