The Monetary Policy Committee yesterday chopped the policy rate by 1 percentage point, the largest-ever one-time cut in the Bank of Thailand's history, as the economy braces for the impact from the global slowdown and domestic political turbulence in the aftermath of the closure of Bangkok's airports.
At the same time, Thai Airways International's board yesterday resolved to sue the People's Alliance for Democracy for compensation for revenue losses of Bt20 billion during the closure, which forced THAI to cancel more than 1,000 scheduled flights.
Suvarnabhumi Airport partially reopened yesterday, slated for full opening tomorrow after the testing of all systems today according to Transport Minister Santi Prompat. Don Mueang Airport will be fully reopened today.
Many businesses have suffered from the eight-day closure and the impact is expected to linger into 2009.
Transport permanent secretary Surachai Thansitthipon, as chairman of the national airline, said THAI would ask for the government's assistance in borrowing Bt20 billion to boost its liquidity. Earlier, it planned to raise Bt30 billion to finance aircraft purchases. Totally, THAI will need the injection of Bt50 billion, the chairman said.
THAI expects its flights to run at half-capacity until mid-2009, with the load factor increasing to 75 per cent in the second half.
Bank of Thailand assistant governor Duangmanee Vongpradhip admitted that the domestic political impasse had had a serious impact on the economy, particularly on confidence and tourism.
Thanks to lower inflationary pressure, the interest rate can be cut sharply to boost the economy, which now is expected to grow only 3-3.4 per cent this year and 2.8-4 per cent next year. Earlier projections for the two years were 4.3-5 per cent and 3.8-5 per cent, respectively.
As tourist arrivals are expected to fall by half next year, some luxury hotels - at which the occupancy rate is below 50 per cent - have cut room rates by up to 80 per cent to draw Thai travellers. Following the airport closure, tourism business operators do not expect a massive return of foreign travellers next year, and this could affect the 3 million workforce in the sector.
Acting Deputy Prime Minister Olarn Chaipravat, appointed by the Cabinet yesterday to lead a committee to alleviate the impact from the closure of the two airports, said helping stranded tourists, amounting to over 100,000, and Thai tourists overseas was the priority. The Foreign Ministry estimates that about 1,000 Thais are stranded overseas.
The committee will look into the problems of tourists and other travellers as well as private business operators.
While saying that he is drafting economic plans for the new government, Olarn said he would not take a ministerial post in the new administration.
"The government needs to restore normal conditions as soon as possible," said acting Deputy Finance Minister Pradit Pataraprasit. "Right now, as an interim government, we don't have much power. This situation needs the new government. In the short term, what's important is to cure the tourism-related problems as well as restore confidence in tourism and the overall economy, and restore the national image."
He added that the panel would win some financial backing from the central government budget.
At the special meeting, the Cabinet maintained the 2009 spending plan.
Chaovarat Charnweerakul was appointed acting prime minister.
During an inspection of Suvarnabhumi yesterday, Airports of Thailand acting president Serirat Prasutanond said: "We have learnt the lesson. This affects the entire nation and all lose. If there is any more political conflict, please never again take Suvarnabhumi as a political tool."
Serirat insisted that on the day that protesters took control of the airport, AOT had done its best to protect the airport. All security officers and police officers did their best, under the guideline that there should be no clashes.