Economic waters rise: Thai business sector flooded with challenges

The business sector is facing a stormy crisis this monsoon season as severe flooding batters key economic regions across Thailand. Provinces like Chiang Mai and Chiang Rai have been hit hard, with water levels reaching devastating heights—marking the first time in decades that such catastrophic flooding has occurred.

Officials are closely monitoring the Chao Phraya River, issuing early warnings in areas like Nonthaburi as concerns grow over potential overflow. With climate change predicted to bring even more rainfall to Thailand and Southeast Asia, business leaders are calling on the government to devise better long-term strategies to tackle the risks posed by natural disasters.

Pornchai Thiraveja, Director-General of the Fiscal Policy Office (FPO), stressed the urgent need for concrete action against the impacts of climate change. He cautioned that failure to act could lead to dire consequences, citing a World Bank report that suggests Thailand’s economy could take a hit of up to 10% of GDP during major floods.

From mid-August to early October, floods have affected 45 provinces and displaced 250,000 households, with the economic fallout still being assessed. Pornchai underscored the necessity for hefty investment in water management, revealing that the government has earmarked a staggering 111 billion baht for 3,367 water management infrastructure projects in the 2025 fiscal year.

A whopping 73.1% of this budget is allocated for water supply and drainage systems, with smaller amounts designated for embankment protection and water quality management, said Pornchai.

“Thailand must adapt its water management and climate change strategies to avert severe economic damage,” Pornchai asserted. He highlighted a medium-term fiscal plan set for the next four years, aimed at ensuring adequate resources for handling natural disasters.

Water management

The Federation of Thai Industries (FTI) echoed these concerns, emphasising the importance of proactive disaster management. With increased rainfall and runoff from the north expected this month, swift preventive measures are crucial. Vice-chairman Isares Rattanadilok Na Phuket urged the government to enhance water management and disaster warning systems.

“We need a disaster warning system that’s easily accessible to everyone.”

Isares proposed implementing a real-time alert system via mobile phones and improving risk assessments for the more intense storms anticipated in the region.

Idthipol Patimavirujh, Managing Director of Phat Food Intelligence Co Ltd, reassured that his factory in Saraburi remains safe from flooding due to its elevated location. However, he highlighted the critical need for sustainable water management in the agricultural sector.

“The government should create a master plan for sustainable water resource management to address both immediate and long-term needs.”

Idthipol noted that while water management was a national priority during the devastating floods of 2011, its importance appears to have dwindled since.

Economic damage

Sanan Angubolkul, chairman of the Thai Chamber of Commerce, pointed out the extensive economic damage caused by recurrent droughts and floods. He called for a comprehensive water management strategy to mitigate flood impacts and combat illegal encroachment that harms watershed areas.

The chamber, alongside the University of the Thai Chamber of Commerce (UTCC), estimates that flood damages in 2024 could cost a staggering 40 billion baht, significantly affecting agriculture, services, and industry. Sanan stressed the necessity for a business continuity management plan to ensure that vital functions can quickly resume after disasters.

Despite the widespread flooding, insurers are not overly concerned this year, according to Apisit Anantanatarat, CEO of Bangkok Insurance (BKI). Initial assessments indicate property damage of around 290 million baht and vehicle damage of 50 million baht, with much of the cost passed on to reinsurers, said Apsit.

“Natural disasters have affected insurance profits this year, but overall damage is still within expected limits.”

Apisit added flood prevention measures in industrial estates have significantly reduced potential losses.

The Industrial Estate Authority of Thailand (IEAT) bolstered flood prevention measures in its complexes, particularly in Ayutthaya, following the catastrophic floods of 2011. Acting governor Sumet Thangprasert reassured that these estates are well-protected this year thanks to the implemented measures.

Flood damage

However, Isares expressed concern for light industries, such as farm produce and food processing, which often operate outside industrial estates and have already been impacted by floods and mudslides.

Insurance companies are now required to cover flood damage to vehicles at various levels, starting from 8,000 baht, as per new criteria from the Office of the Insurance Commission (OIC). The OIC is working with the Thai General Insurance Association to compile a comprehensive list of flood damage for inspection, Bangkok Post reported.

Children can be seen playing in flooded neighbourhoods, while sandbags line the roads in areas like Samut Prakan—highlighting the urgent need for effective flood management and disaster preparedness across the nation.