Economic Calendar

Monday, November 7, 2011

Thailand Floodwaters Threaten Second Honda Factory, Inner-Bangkok Industry

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By Daniel Ten Kate and Suttinee Yuvejwattana - Nov 7, 2011 1:40 PM GMT+0700

Thai officials moved to defend two Bangkok industrial parks near the main international airport from a deluge that has swamped hundreds of factories over the past month and is now coursing through the capital.

More than 100 pumps are pushing out water leaking into Bang Chan industrial zone in eastern Bangkok, according to Vice Industry Minister Suparp Kleekhajai. Nearby Lad Krabang industrial estate includes a factory operated by Honda Motor Co., which abandoned its full-year profit forecast last week after another plant was flooded.

“The situation in Bang Chan industrial estate is still manageable,” Suparp said in an interview with the TNN television network. “We can still pump out the leaked water so far.”

The renewed threat to factories may worsen the impact of floods that have prompted the central bank to slash its 2011 economic growth forecast and disrupted global supply chains. Floodwaters edged closer to Bangkok’s central business district over the weekend, reaching the northernmost station on the city’s elevated rail system.

“The overall flooding situation remains very bad,” Bangkok Governor Sukhumbhand Paribatra told reporters today. “As long as more water is flowing into Bangkok, the situation won’t be resolved.”

Estates Inundated

Floodwaters have inundated seven industrial estates with 891 factories that employed about 460,000 people, according to the Thai Industrial Estate and Strategic Partners Association. Sukhumbhand today ordered residents around Bang Chan to evacuate.

Bang Chan, 15 kilometers (9.3 miles) north of Suvarnabhumi Airport, contains 91 factories, including an ice-cream plant operated by Nestle SA. Unilever, Isuzu Motors Ltd. and Cadbury Plc are among those running 231 factories employing 48,000 workers at Lad Krabang, located 10 kilometers from the airport.

“The enormous amount of water that you see still on the satellite maps north of Bangkok has to flow in one way or the other around the city,” said Adri Verwey, a specialist with Deltares, a Netherlands-based research institute, who is advising the government. “It will move on to a considerable depth around these estates. They are very much at risk.”

Suvarnabhumi and public transport links are still operating normally. The airport’s perimeter is protected by a 3.5-meter- high dike, Airports of Thailand Pcl said last week.

Compensation for Residents

Waters more than a meter deep have moved south through Bangkok, forcing Prime Minister Yingluck Shinawatra to evacuate her flood operations command last week at Don Mueang airport, which sits on the city’s northern edge and mostly handles domestic flights. The government has ordered evacuations in more than a third of the capital’s 50 districts, mostly northern, eastern and western areas.

The Energy Ministry, where Yingluck relocated the command on Oct. 29, is now surrounded by floodwaters. PTT Pcl, Thailand’s biggest energy company with offices in the same complex, relocated its operations on Nov. 4.

Residents in flooded areas of Bangkok’s outskirts have sabotaged dikes protecting the inner city in the past few weeks to try to drain their neighborhoods of water, undermining government efforts to stem the water flow into the capital.

Victim Payments

Yingluck today promised flood victims payments of between 5,000 baht ($163) and 30,000 baht for any house that has been inundated for more than seven days. She also proposed waiving all tolls on Bangkok highways and bringing in more garbage trucks to pick up trash.

“We won’t ignore people,” she said while visiting flood victims in a northern Bangkok district. “We will try to rehabilitate and bring the situation back to normal as fast as possible.”

City officials are aiming to halt the water’s advance at the Sam Sen canal, which runs just above Victory Monument, a major traffic intersection northeast of the city center and a stop on Bangkok’s Skytrain elevated railway network, according to Jate Sopitpongstorn, a spokesman for the Bangkok Metropolitan Administration. The central business areas of Silom and lower Sukhumvit are protected by two canals where water can drain out through the Chao Phraya river, he said.

“We still have hope that the inner city central business district will not be affected at the moment,” Jate said by phone yesterday.

Forecast Slashed

The Bank of Thailand, which slashed its 2011 economic growth forecast to 2.6 percent from 4.1 percent last month, expects expansion to slow as the global economy weakens and the impact of the nation’s flood crisis increases, according to the minutes of its Oct. 19 meeting.

Rehabilitation efforts have begun in parts of Nakhon Sawan province and will start soon in Ayutthaya as flood waters recede, Yingluck said Nov. 5. The government has an initial budget of more than 100 billion baht to help rebuild damaged areas, she said, adding that Cabinet will discuss new measures to help the economy recover on Nov. 8.

The disaster worsened last month, when rainfall about 40 percent more than the annual average filled dams north of Bangkok to capacity, prompting authorities to release more than 9 billion cubic meters of water down a river basin the size of Florida. Bangkok sits at its southern tip.

Flooding this year has affected 64 of Thailand’s 77 provinces, damaging World Heritage-listed temples in Ayutthaya province, destroying 15 percent of the nation’s rice crop and flooding the homes of almost 15 percent of the country’s 67 million people, according to government data.

To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editor responsible for this story: John Brinsley at jbrinsley@bloomberg.net




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