Display mode (Doesn't show in master page preview)

29 Jun 2021

Thai Economy

Net loss to Construction and Restaurant Businesses Set to Reach at least THB40 Billion within One Month of Partial Lockdown in Six Dark Red Zone Provinces (Current Issue No.3234)


The government has announced partial lockdown measures, including the prohibition of construction work, primarily at large construction projects for at least 30 days in the maximum and strict controlled zones (dark red) of six provinces, namely Bangkok, Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan and Samut Sakhon, plus sales of F&B at restaurants, with the exception of takeaways, effective June 28, 2021. Moreover, it has introduced relief measures that are preliminarily worth THB7.5 billion for both employers and employees in and outside of the social security system. Such attempts reflect the government's intent to contain the COVID-19 pandemic and compensate related losses as much as possible.     

KResearch, however, is of the view that assistance mechanisms for employers and employees in and outside the social security system are primarily intended for only the workforce and businesses in the downstream construction and restaurant businesses. Obviously, they are the first group to be affected by lockdown measures, but other groups in the related businesses or supply chains will be hurt too as they may not be able to sell or supply products to those that will suspend their activity for at least one month.​ For the construction business, related operators may face legal issues related to the delay in handing over construction projects, which could potentially incur higher costs than having to suspend their work for one month during the partial lockdown.     

Additionally, KResearch is of the view that the future will be full of uncertainties. If the COVID-19 situation subsides over the next one month, the impact might be only short term. But, if the situation is prolonged or the number of daily infections does not decline as fast as expected, the likelihood that businesses will incur additional losses and more people will be affected will be high.  

Preliminarily, KResearch assesses that the net loss to the construction and restaurant businesses in the six dark red zone provinces (Bangkok and five surrounding provinces) within one month of the partial lockdown may amount to roughly THB40 billion, or equivalent to 0.25 percent of GDP. It is believed that the authorities will continue to monitor and assess the situation in order to consider issuing additional measures if it deems this necessary. One of the relief measures will likely include liquidity enhancement for affected businesses in their entire supply chains.

Thai Economy