PHUKET OPINION: Economics leads the challenge to Thai Tourism

PHUKET: A survey by a popular UK-based website recently ranked Bangkok as 31st among 32 major cities around the world in terms of cost of living. (See Phuket Gazette report here.)

The survey, and our report of it, set off a great deal of lively, if not always learned, debate among armchair economists in the Gazette readers’ forum.

A common complaint among expats on fixed incomes is that Phuket is becoming an increasingly expensive place to live. This is, of course, the result of the sustained rise in the value of the baht against most Western currencies.

Inflation also looks likely to continue as a threat, though it may not have been recognized as such in last week’s passage by Cabinet of a minimum-wage rise, from 204 baht to 221 baht per day, for workers in Phuket.

Although the most generous increase awarded to labor in any province in the Thailand, Phuket’s 8.3% will be seen by some as modest and insufficient for the island’s poorest workers. Indeed, many find it egregious in the context of the whopping 14.8% increase accorded the nation’s lawmakers – almost all of whom are multi-millionaires (in baht, at least).

Whatever the perception, pay rises on the scale we saw last week are inflationary, with most Phuket residents – Thais and foreigners alike – having little or no control over what will transpire from here.

Predictions that the rising baht would have a strong negative effect on tourism this high season may soon be well borne out, notwithstanding the ever-encouraging government proclamations with regard to rising tourist numbers.

Shop owners, restaurateurs and hoteliers are telling the Gazette that the collective ‘spend’ of Phuket’s tourists is palpably in decline.

The recurring observation is that the demographics of Thai tourism have changed in a bellwether way, with the baht-fearing Europeans staying home, their chairs and beds in Thailand now filled by a more frugal Asian counterpart.

Many in the industry worry that the rise of the baht is likely to be part of a long-term trend that will eventually see the Thai currency restored to its pre-1997 level of about 25 to US$1. If that were to happen, it could have an immensely adverse impact on tourism, they say.

But perhaps it is still too early to speak of catostrophe. The most important issue now is just how pricey Phuket really is when compared with rival destinations. Meanwhile, the island still represents good value for money for most visitors, and it is up to us to curb greed if we want to keep it that way.