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Chinese currency devaluation could shake Phuket

Legacy Phuket Gazette

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Chinese currency devaluation could shake Phuket | The Thaiger

PHUKET: Leaders of Phuket’s tourism and property industries are uncertain what the impact of the yuan’s tumble this month will be, as tremors continue to be felt throughout the world.

A 138% surge in Chinese visitors during the first half of 2015 helped pave the way for the Thai tourism industry to bank more than 697 billion baht in total visitor expenditures, according to figures released by the Ministry of Tourism and Sports.

However, on August 11, the People’s Bank of China’s (PBOC’s) devaluation of the yuan caused the currency to fall to a four-year low, decreasing the spending power of its citizens abroad and raised fears of a global ‘currency war’.

The PBOC quickly moved to calm fears as stock markets around the world took a major hit.

“Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan,” the PBOC said.

Though the Chinese arrival and expenditure numbers look strong at the moment, officials are aware that the full impact of the Bangkok bombing and devaluation of the yuan may not be seen in the tourism and property markets for several months.

“I warn that China might launch another round of currency devaluation and that this sudden currency deprecation reflects a looming Chinese economic crisis that could be much larger than thought, and will have a greater effect on global economic balances,” Anusorn Tamajai, dean of economics at Rangsit University, told the Gazette.

“While China is struggling to maintain its economic expansion to prevent turmoil, the decision to use exchange rate policy by depreciating its currency is a means of exporting part of its internal problems to other countries for collective responsibility.”

Chinese visitors are the largest source of both tourists and expenditure for Thailand, including Phuket, totaling 4 million arrivals in the first six months of this year and representing an enormous number of room keys on the island.

Nonetheless, Bill Barnett, founder and managing director of C9 Hotelworks, explained that there will likely be little impact on hotel occupancy from the yuan’s fall.

“Thailand remains a short-haul destination for the Chinese market. We may see Chinese who once travelled long haul go to closer destinations such as Thailand. Location remains Phuket’s key advantage,” Mr Barnett said.

TheChinese market’s real impact in the last two years is driving room rates down with the pressure of mass market numbers.

“Room rates have been strongly impacted for the past 12-18 months by the Chinese movement, and we can expect this to continue. The key [for Phuket] is to find replacement markets, and despite growth in short-haul arrivals, and from some locations like Spain and South Africa, there is no major solution,” Mr Barnett said.

The Cabinet is already considering a bill to help combat cheap tour group packages, but this is not expected to negatively affect arrival numbers for Phuket, explained Santi Pawai, Director of the Phuket office of the Ministry of Tourism and Sport (MOTS).

“If Cabinet passes this into law, it will be a step forward for the tourism industry.”

Although the bill is designed to put an end to ‘zero baht tours’, which rely on mass tourism to be commercially viable, Mr Santi explained that it would not affect the number of Chinese budget tourists taking part in group tours in Phuket.

“Chinese companies are ready to pay a standard rate. However, Thai tour companies are constantly trying to undercut each other by providing cheaper and cheaper packages,” Mr Santi said.

“Smaller, less established companies will be the ones most affected by the bill.”

Kritchakorn Roongmong-kolnam, executive committee member of the Phuket Tourism Association, who oversees the Chinese market on the island, agreed that the bill would not have a negative impact on the tourism industry and that the devaluation was nothing to worry about.

“I do not think there will be any negative impacts on Phuket. This is a good situation for China to balance its currency, and it will be good for tourism,” Mr Kritchakorn said. “There was a previous devaluation of the baht, which caused the yuan to go up almost 20 per cent over the last two years. Now, the yuan has been decreased. It’s a good balance.”

Mr Kritchakorn said the devaluation was nothing compared to the drop in the Russian ruble, which saw an exodus of one of Phuket’s most important markets.

“We may see some changes in the long term, but at this point we just have to wait and see. It is too early to be concerned,” he said.

The local Tourism Authority of Thailand (TAT) director also said a ‘wait-and-see’ policy is best.

“At this point, the Chinese market has not changed here. There have been no cancellations or any other signs that should concern us,” said TAT-Phuket Director Anoma Wongyai. “It really is too soon to tell. It takes time for us to see the effects of something like this – for better or worse.”

A slump in the Chinese tourism market, which has yet to be seen, could be an indicator of changes to come in the property market, pointed out Mr Barnett.

“Summer months are the Chinese high season, followed by Chinese New Year, so the timing is disconnected,” Mr Barnett said. “It took six to eight months to realize the impact of the Russian debacle.”

Unlike Mr Kritchakorn, Mr Barnett said it was too early to tell whether or not the island will face something similar to what happened to the Russian market on the island.

“There is nothing comparable to China, so we are heading into unknown territory. While speculation is easy, it’s a wait and see situation,” said Mr Barnett.

The real worry is the domino effect the devaluation could have, pointed out Mr Barnett,

“You have to view the knock-on effect of the yuan issue on global currencies, as that’s the greater concern. Phuket’s Chinese property market is only a ripple in the stream, but if there is contagion to other markets, that’s a trigger,” said Mr Barnett.

“In the later part of the 2000s, the decline of the UK currency had a far stronger impact than the Global Financial Crisis, given the leveraging of that currency to a large catchment of property buyers.”

In fact, there are indications that devaluation might have a positive impact on the property market.

“There are signs that the move may spur other Asian countries to match this move. Given the impact on exports and those trying to match it, this could see the baht depreciate and create more value in the market for opportunistic buyers,” Mr Barnett said.

“However, in broad terms, events like this are generally not a good thing for investment sentiment in property,” he concluded.

— Chutharat Plerin

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Crime

Now you see him, now you don’t… Patong Police hunt foreigner over $30k theft

Greeley Pulitzer

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Now you see him, now you don’t… Patong Police hunt foreigner over $30k theft | The Thaiger

PHOTO: Patong Police

Patong Police have yet to develop any tangible leads tracking down a foreigner who made off with US$30,000 in cash from a currency exchange booth in Kalim, north of Patong in Phuket, last Tuesday.

The man is about 168 centimetres tall with grey hair and around 60 years old, Patong police told The Phuket News.

“We have no clue what nationality he is.”

He was last seen at the currency exchange booth wearing a purple polo shirt, blue jeans and black cap. Police have checked hotels in the area, police stations across the island and Phuket Immigration, but have yet to join the dots and come up with firm leads.

“Investigators have checked CCTV in the area and collected what evidence we have but we still do not know the man’s name or where he was staying.”

The man had visited the booth several times before Tuesday, when he disappeared with the $30,000 in US banknotes, according to police.

“It was always small amounts”, he added, noting that the amounts didn’t warrant staff at the exchange booth to check the man’s passport before making the exchange.

The man arrived at the booth again at about 1pm on Tuesday, saying that he had 900,000 baht cash to exchange.

SOURCE: The Phuket News

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Crime

Mystery surrounds security guard found dead in his Phuket room

The Thaiger

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Mystery surrounds security guard found dead in his Phuket room | The Thaiger

PHOTOS: Phuket Hot News

The security guard of a hotel in Nai Yang, northern Phuket, 52 year old Yingyot Butsabong, from Maha Sarakham province, was found dead yesterday (October 16) in his room. Police remain mystified how the man came to grief.

A woman named Supattra received a call from the hotel he worked at and was informed that he didn’t show up at work yesterday, so she went to his apartment to check on him.

She saw that his room was locked from the inside, so used the key she had in her possession to open the room and found Yingyot laying on the floor, face down. She thought he was just sleeping so she tried to wake him up but once she flipped him, she found that he already passed away.

She immediately called Saku police, and once on the scene, police found that there was some blood on the floor. The man had a 2 centimetre wound on his left eyebrow which was deep into his skull. There was also a wound on his chin about 1 centimetre long and about a centimetre deep. His left eye had a bruise which looked like he was attacked by a hard object.

Police report that he had been dead for around four hours in the room.

The room was not ransacked and there was no sign of fighting or theft. His body has been sent to Thalang Hospital for a detailed autopsy and to look into the cause of death.

SOURCE: Phuket Hot News

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People

‘Always Smile Journey’ raises fund to provide free English classes for underprivileged people

Nattha Thepbamrung

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‘Always Smile Journey’ raises fund to provide free English classes for underprivileged people | The Thaiger

On October 18, the ‘Always Smile Journey’ group and its partners will host an exhibition with plenty of fun activities at the Yak Yai Market, near Chalong Circle, in Phuket. This event was designed to raise funds to provide free English classes for underprivileged people on the island of Phuket on Saturdays and Sundays. The group does not accept donations but aims to raise money through the sales of the products available at the event.

‘Always Smile Journey’ raises fund to provide free English classes for underprivileged people | News by The Thaiger

From 2 pm to 8 pm, there will be a number of artists, musicians and performers who will keep the attendees entertained along the way. There will be a short film about His Majesty King Rama 9 as well as fun activities and games for kids and families, which are all free of charge.

The big bike crew is also a part of this event. They will ride a parade from Rawai Beach heading to the market and showcase their gorgeous two-wheel buddies.

One of the highlights of the Always Smile Journey exhibition is the ‘Happening’ artists group, who will draw and paint a picture of the His Majesty King Rama 9 under the name ‘Street Art King Bhumibol’ on a 4×10 meter sign live at the event so the guests will experience this large-scale art in action. The Happening will also offer portrait sketching for the participants.

‘Always Smile Journey’ raises fund to provide free English classes for underprivileged people | News by The Thaiger

One of the works created by the Happening team; a painting of HM the King Rama 9 on a huge wall (Photo credit: Chawat Chumpasan)

There will also be some western menus available at the event which will be donated to underprivileged children.

This free English class project has over seven years of experience through its cooperation working with individuals and other charity organizations. Throughout the years, the group visited several areas such as Ban Laem Hoy School, Ban Bopud School and Ban Angthong School in Samui, Surat Thani province, Ban Bueng Ao Oun School and Ban Kakoh Rayong, in Surin province, Jalae Village of Lahu (Muser) in Chiang Rai province, as well as community education centers in Siem Reap, Cambodia and in Luang Prabang, in Laos.

This event is a cooperation between several groups, including Happening, Yak Yai Market and Arrow Media, Tattoo artist group, Thonburi Art School Alumni, International School of Tourism, Suratthani Rajabhat University, big bike group from Phuket, artists/performers/musicians from many provinces as well as several businesses across Phuket.

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