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16 Aug 2010


Tourism Liberalization: Opportunities & Challenges for Thai Tourism (Business Brief No.2907)

Liberalization of tourism via various agreements either under bilateral or multilateral framework offers an opportunity for Thai tourism business to access larger markets within ASEAN and those sharing common borders with ASEAN countries. The tourism privileges will facilitate Thai tourism operators to have greater presence in other countries while taking advantage of their vast experience in tourism. Our strength lies in internationally-accepted services – especially by large tourism operators –bolstered by our service-minded workers.
Even though greater investment in the tourism sector abroad will help bring in more foreign currency income to Thailand, it also requires huge outlays, especially for investments in hotels in some countries that have especially costly land prices in central business districts (CBD) and at tourism venues. Still, there is still room for Thai business network expansion, particularly in hotel management. However,Thai SMEs have insufficient management experience on an international scale and little interest in business expansion abroad.
In the domestic tourism market, liberalization will help boost income for related businesses, e.g., restaurants and food shops, souvenir shops, entertainment and recreational venues – including golf facilities and spas – thanks to expected increases in tourist arrivals. Among the main beneficiaries will be international-chain hotels. However, it is likely that a more open market will also mean stiffer competition from existing rivals and newcomers. Small operators, in particular, those with less resilience to change, are thus expected to be marginalized.

Under these circumstances, the government should expedite devising a contingency plan to assist businesses affected by trade commitments that have come into effect. This is particularly true because of the Thai economic recovery that is yet to gain a firm footing, plus a domestic political situation that remains rather volatile. Most investors are therefore likely to adopt a cautious attitude. With existing legislations on investment and employment in the Thai tourism industry, the government still has some leeway to implement policies that could alleviate adverse impacts on affected businesses.