Govt needs a credible flood prevention plan by next April

That sounds like a deadline for Prime Minister Yingluck Shinawatra, whose handling of the flood crisis over the past few months has often been criticised by the private sector.

So far, foreign investors, especially Japanese firms – which have suffered the most, with over 700 Japanese-owned factories damaged – have viewed the government’s industrial recovery programme as lacklustre.

First, the efforts to get all seven inundated industrial estates dry are moving forward too slowly, as some are still under water, preventing estate and factory operators from getting inside to clean up, repair machinery and resume production quickly.

The longer it takes to start the recovery process, the greater the losses in business opportunities as the global supply chain in the automotive, electronics and other industries has already been significantly affected by the Thai floods.

Beyond this, investors are paying close attention to the government’s medium- and long-term solutions. For the medium term, most industrial estate operators are planning to seek soft loans from the government to build permanent concrete floodwalls higher than the existing ones, which were breached by the floods.

For example, the Bangkadee Industrial Park in Pathum Thani province is planning to build an 8-kilometre permanent floodwall around its compound at a cost of Bt350 million. The new walls will be 4.5-5.5-metres high compared to the previous 3-metre high clay walls that were ruptured by the water.

Rojana, High Tech, Saha Rattana Nakorn and other industrial parks also plan to invest in the construction of permanent concrete walls higher than the existing ones.

Estate operators hope that this investment plan will help restore foreign and local investor confidence in their industrial parks, as this year’s massive floods have led to huge financial damage, with insurance claims estimated to top Bt200 billion.

Estate operators also need interim measures to manage the possibility of floods next year, as construction of most new flood barriers will not be completed by the next rainy season.

For the longer-term solution, the government needs to come up with a comprehensive relocation programme for factories that prefer to move to higher ground, such as in new locations on the eastern seaboard or in the northeastern region.

According to Jetro, most Japanese firms are in the process of weighing the pros and cons of renewing their investment in Thailand following the country’s worst floods in half a century.

Due to the severity of this year’s deluge, investors are now cautious and are closely following the updates on government plans for both short- and long-term measures to prevent a repeat of the disaster. In other words, they expect the Thai government to be clear on long-term anti-flood measures. If that is not the case, they may review their investment plans here or relocate to other countries.

At this stage, about 450 of the 700-plus Japanese-owned factories ravaged by the floods hope to resume production at around 70-80 per cent of previous capacity, while the rest have not made any decision pending further measures to be announced by the government.

As a result, the government will now have to race against time to come up with a credible and comprehensive programme on flood management.