(Dec 2): Thailand said the floods that have devastated much of the country’s south, claiming at least 181 lives, have “paralysed” the flow of high tech components and car parts from Hat Yai, potentially benefitting rival exporters in Indonesia and Vietnam.
“Hat Yai has become our bottleneck,” the Ministry of Commerce said in a statement on the disaster on Tuesday. “Even though border checkpoints remain open, the reality is that most routes leading to them are either underwater or impassable.”
With major roads cut off and rail services suspended, the flow of goods to Malaysia has slowed to almost zero, the ministry added. “Exporters simply cannot move their shipments out.”
Millions of Thais have been affected by the flooding, with 800,000 households suffering serious damage and more than 100,000 cars lost in the disaster. The government has estimated the damage at around 500 billion baht and the floods are the worst on record for southern Thailand, the University of the Thai Chamber of Commerce said in a statement.
“Repeated disruptions like this undermine confidence in Thailand’s reliability as a regional supply hub. If we can’t guarantee timely delivery, buyers will look elsewhere,” the ministry said in the statement, prepared by its Trade Policy and Strategy Office. “Vietnam and Indonesia won’t wait for us to recover. If overseas buyers turn to alternative suppliers now, winning them back later will be extremely difficult.”
The country faces additional losses of up to US$400 million a month if conditions persist, with electronic components, auto parts, and concentrated latex among exports impacted.
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In some instances, flooding has halted the issuance of certificates of origin needed for export processing. And in any case, the bowl-shaped terrain of the Hat Yai area, in the worst-affected Songkhla province, has virtually cut off exporters’ access to the Sadao and Padang Besar checkpoints, which handle 96% of bilateral border trade with Malaysia, the ministry said.
The flooding comes at the end of a challenging year for Thailand, which in March was rocked by an earthquake in neighbouring Myanmar, and in July saw border clashes with Cambodia that killed dozens. The economy shrank 0.6% in the three months through September from the previous quarter and the floods are set to hit a tourism industry that has already been sputtering.
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