Representing the Best Real Estate in Phuket

THAI ECONOMY IS SHOWING SIGNS OF RECOVERY

The Thai economy began to show signs of recovery in the second quarter of this year, with the production sector shrinking at a slower pace and increasing overseas purchase order, according to the Fiscal Policy Office (FPO).

FPO-Director-General Somchai Sajjapong said that private consumption and exports showed signs of improvement from earlier contraction, but private investment continued shrinking.

The economy had stabilised with the unemployment rate declining and employment in the production sector picking up. In line with that, the country’s international reserves remain at a healthy level.

Given these positive factors, the FPO believes that the Thai economy had already hit rock bottom in the first quarter of this year and contracted more slowly in the second.

The economy is expected to further recover in the third quarter and resume positive growth in the fourth.

FPO will revise the country’s gross domestic product (GDP) for 2009 in the next two months. It had earlier forecast GDP would contract with 3% this year.

Now, while various economic figures do stay volatile, there are positive aspects to the economic growth. As the economy now signal recovery, the FPO sees a need for private companies to prepare for investment expansion. FPO says they should not wait until the economy fully recovers because that might be too late.

The FPO advised the government to accelerate spending to ensure it meets its target, and forge ahead with implementing Thailand’s investment projects under the Thai Khem Kaeng (Stronger Thai) slogan to lead the way for private companies to decide to increase investment because the investment in the second quarter remained worrying.

AIMING FOR THE RICH

In the eyes of many Phuket does not need more tourists, but needs richer tourists instead. In fact they say it needs the ultra-rich. One of the reasons for this argument is that one really high-end visitor spends as much as 50 package tourists but puts only 1/50 of the strain on the infrastructure. And that high-end tourist’s money is spent in Phuket, not at a travel agency abroad.

In the past, the Tourism Authority of Thailand (TAT) has in the past said it is willing to attract ‘high end’ tourists. But in recent years Phuket has been hit by so many global events that had an negative influence on tourism that simply filling up all the hotel rooms has been  the main target of TAT. It started in 2001 with 9/11 and the subsequent wars in Iraq and Afghanistan. Then there was SARS, bird flu, the Tsunami, the military coup in 2006. More recently we have the Mexican (swine) flu and the political turmoil in Bangkok which put people off visiting Thailand. The global economic crisis has made quiet a few well off people being less well off, and some rich people wanting to spend less money.

So it has been up to the private sector to try to provide the pleasures and facilities the super rich expect to get when going on holiday. This has been done with varying levels of success. The very high end property market has been surprisingly resilient, taking in consideration that some properties have price tags of USD 6M and more. This has also increased the market for luxury properties for holiday rentals which is something Phuket did not have about five years ago.

Luxury items like good wine or Cuban cigars are now readily available with some companies even delivering these goodies at your door at any time of the day and night. Recently a second marina for super yachts has opened in Ao Po and is rapidly filling up. The management of Phuket International Airport has plans to build a terminal for private jets (see: http://www.phuket-tropical-realestate.com/blog/?p=75); five years ago the arrivals of private jets in Phuket could be counted on the fingers of one hand. Now there are private jets arriving daily.

Luxury restaurants serving all types of international food are easy to find. European-style nightlife venues are now also all over the island. The only downturn to this is that the opening hours are still restricted. Many of these clubs are forced to close their doors at a time many Europeans actually just start to party.

There is still a lack of luxury cars for rent on the island and there is only one car dealer that sells high-end imported cars. The Ferrari dealer in Bangkok considered opening a branch in Phuket has put these plans on hold for the time being. Also for buying a Rolls Royce, Lamborghini or Porsche you still need to pay a visit to the City of Angels.

A few years ago the Thai government decided to drop as good as all the taxes on imported boats. This resulted in an instant boom in the Phuket marine tourism industry. It is now very easy to rent a luxury yacht with crew, including bar staff and gourmet food from one of the many companies offering luxury yacht cruises in Phuket.

For those who prefer the airspace instead of the water, there are now two companies offering chopper charter flights and Phuket Bangkok Hospital’s emergency helicopter is also available for joyrides when it is not being used for transporting the sick.

For those with their own light aircraft there is now a strip near the island’s east coast. There are land plots for sale for those who want to build their home with hangars next to the strip.

Overall the private sector has achieved a great deal at the luxury end of Phuket’s tourism market, which has in the process helped to fuel an increasingly high end property market.

THAI COMPETITIVENESS CONTINUES TO RISE

Despite the political turmoil, Thailand continues to have one of Southeast Asia’s most competitive economies. Thailand rose one place to 26^th in the latest IMD World Competitiveness Yearbook (WCY), a ranking of the world’s 57 most competitive economies.

Thailand’s improved ranking in the WCY comes on the heels of the ‘2009 World Bank Ease of Doing Business Report’, in which Thailand moved up two spots from 15^th to 13^th. This is consistent with the IMD ranking, for ease of doing business is a key factor in a country’s competitiveness.

The WCY, compiled by the Switzerland-based Institute for Management Development (IMD), is considered the benchmark in ranking the global competitiveness of nations. The annual rankings are based on 329 criteria, two-thirds of which are based on statistical indicators and one-third executive opinion survey.

IMD’s definition of competitiveness is not limited to economic performance; it also includes ‘soft factors’, such as a country’s environment, quality of life, technology, knowledge.

Thailand outperformed most of its regional neighbours in the annual competitiveness rankings, coming in third in the region. Singapore dropped one spot to 3^rd while Malaysia rose one spot to 18^th. Indonesia (42^nd) and the Philippines (43^rd) were the only other Southeast Asian nations to rank among the world’s 57 most competitive economies. Among the major economies that Thailand was deemed more competitive than were Korea (27^th), France (28^th) and India (30^th).

This year, the IMD also administered the ‘Stress Test’, which analyzes which countries are better equipped to make it through the crisis and improve their competitiveness in the near future. In other words, the test is future orientated – it focuses on exposure, readiness, and resilience in a period of world recession.

Thailand fared very well in the ‘Stress Test’, coming in 19^th. In the Test’s four key categories, Thailand ranked 11^th in Economy Forecast/Perspectives, 19^th in Government, 17^th in Business, and 30^th in Society.

With regards to other ASEAN countries, Singapore scored extremely well, coming in 2^nd overall, while Malaysia was ranked 10^th. The only other ASEAN countries to rank among the top 57 were the Philippines (32^nd) and Indonesia (33^rd). china was ranked directly ahead of Thailand at 18^th and Japan was ranked 26^th. Denmark was the top performer on the Stress Test, while the USA came in only 28^th.

The Thailand Management Association, which provided commentary for the local survey, said the areas that Thailand needs to work on are further addressing the challenges of globalization and moving towards a ‘creative knowledge economy’.

Source: www.boi.go.th

AOT APPROVES 5,79 BILLION BAHT FOR PHUKET AIRPORT EXPANSION

The board of AoT (Airports of Thailand Plc.) approved a 7,79 billion Baht plan for the expansion of Phuket International Airport.After the expansion Phuket airport’s handling capacity will double to 12,5 million passengers per year by 2013.The expansion will address crowding at Thailand’s second busiest airport and meet the expected rise in air traffic demand over the next 10 years.Last year, almost six million visitors passed through Phuket International Airport.Arrivals in the first four months of this year (2009) was slowed by the global economic crisis and the political turmoil, contracting 13,8% to a bit more than two million arrivals with flights shrinking 17,1% year-on-year to 12,939.The expansion, which includes the construction of anew terminal for international passengers, improving the existing terminal, upgrading the jet fuelling system and building new taxiways, is scheduled to commence by the end of next year.AoT has also started with a study on building a terminal dedicated to private jets at the airport. This is part of the plan to further improve the island’s growing reputation as a destination for the international stars, the rich and famous and jet-setting business people.This first of its kind terminal in Thailand would be built separately from the expanding main terminal under a ‘build-transfer-operate’ contract. This means that AoT would own the facility but private companies would invest in and run it.