After months of hardship caused by the COVID-19 spike in Thailand, a glimmer of light can finally be seen at the end of the tunnel. With a record one million inoculations in a single day and, as reported in the Bangkok Post, a planned border reopening date for international tourists by early November, businesses are hoping for a much-deserved period of economic growth and prosperity.
However, getting the economy back on track will not be smooth sailing, nor will it happen overnight. As the pandemic has caused deep setbacks for multiple key sectors in Thailand, particularly tourism and aviation, it could take months, if not years, for these businesses to enjoy anything resembling the glory days of the pre-COVID era.
Still, it would be a grave mistake for business leaders to regard the pandemic as merely a period of lost time and missed opportunities. Every new situation brings lessons to be learned, provided we have the will and insight to learn them.
The past year and a half have seen a remarkable display of resilience and agility across economic sectors, where businesses found new ways of generating alternative revenue to stay afloat, and in some cases even maintain their momentum. “To withstand, overcome, adapt, and seize opportunities – that’s what business resilience and agility are all about,” said Ian Pascoe, CEO and Managing Director of Grant Thornton in Thailand.
It is therefore worth examining the challenges faced, and countermeasures adopted, by the major sectors since the pandemic began, as this period of disruption has a lot to teach about effective adaptation. “By learning the right lessons and implementing them energetically, businesses can not only weather this pandemic, but can also be far better equipped for future disruptions,” said Chris Cracknell, Chairman of Grant Thornton in Thailand.
How major business sectors are finding the path forward
Global travel restrictions during the pandemic have caused the tourism sector in Thailand to take the hardest blow. Normally accounting for a reported 11-12% of Thailand’s total GDP, with millions of inbound tourists per annum, the industry saw international visitor numbers plummet to just 40,500 in the first half of 2021.
To weather this disruption, many hotels and travel agencies have diversified their services, shifting online to host virtual tourist visits, promoting local tours to attract domestic customers, and selling branded spa products to help grounded travellers recreate the holiday experience at home. While these initiatives have helped keep many businesses afloat, more can be done to help the tourism sector handle future disruption.
Opportunities include, but are not limited to, good cash management and more flexible employment arrangements to soften the blow of a sector-wide slowdown. As pointed out by Tanva Mahitivanichcha, Partner in the Tax and Legal Department at Grant Thornton in Thailand, “the government also has an important role to play here, by amending outdated laws, regulations and procedures on licenses and permits related to tourism, so as to remove unnecessary delays and costs borne by investors and service providers.”
Alongside tourism, the aviation sector is buckling under the weight of similar pressures. According to the International Air Transport Association, the current reduction in air travel is likely to continue until 2022, with a complete recovery by 2023. However, this might be overly optimistic.
The good news is that domestic flights continue to operate in Thailand, with eased COVID-19 restrictions expected in the coming weeks for international visitors.
Airlines and other players in the sector should understand their customers, and how they are likely to respond to reduced travel restrictions. Which demographics will be the first to bounce back? Depending on the airlines and the routes, business travellers may be the most important customer group to target – or young tourists, or retirees, or wealthier holiday-goers.
An awareness of brand perception, combined with clear insights into competitor activity and under-served markets, could enable a much faster recovery once the country opens up in earnest. Updating digital platforms can also increase sales, and go a long way toward improving the overall customer experience.
Adulpol Charukesnunt, Associate Director of the Financial Advisory Services at Grant Thornton in Thailand also advised businesses to apply for government relief whenever possible, while also performing continuous financial modelling to increase operational efficiency and maximise the effectiveness of every resource. “Oftentimes, financial modelling in particular can shed light on new financial opportunities for companies to take advantage of,” he said.
While lockdown measures have forced thousands of retail stores to shut their doors, many have been quick to use e-commerce as an alternative source of income.
Indeed, this shift to the online space comes alongside sweeping changes in customer behaviour and preference. Since the pandemic began, the number of Thai households shopping online has increased by 58%, with 43 million online shoppers expected in Thailand by 2025.
Thus, despite the re-opening of malls, stores and restaurants, many retailers still regard upgrading their online presence as the better investment. “From small-sized businesses to multinational corporations, retail has shifted almost entirely online,” said Luxsamee Deetrakulwattanapol, Partner in Audit Services at Grant Thornton in Thailand.
When implemented skilfully, e-commerce solutions can help retailers stay connected with their customers even during periods of disruption. This strategy is helping retail companies thrive, and should be continued even in the post-COVID era – both as a standard business model, and to protect against potential disruptions in the future.
As businesses worldwide look to diversify through a China Plus One production and supply chain strategy, manufacturers in Thailand are in an excellent position to capitalise.
In some respects, Thailand has already shown itself to be an attractive destination. Manufacturing has been one of the country’s few economic bright spots over the past year and a half, partly as a result of regulators issuing pandemic-related operational protocols that protect factory workers and help attract foreign investment at the same time.
Still, bringing in foreign investors requires more than just the ability to keep factory workers safe. International businesses increasingly expect an upskilled workforce whose output is maximised by automation.
“Skilled labour availability is perhaps one of the most important aspects that foreign businesses inspect before investing in a country,” said Ratna Wright, Partner in Business Consulting Services at Grant Thornton in Thailand. Vietnam currently out-competes Thailand in both the price and availability of labour. To remain competitive, Thailand must invest in upskilling more workers, especially in this age of factory digitisation and automation.
In addition to skilled labour, foreign investors expect today’s manufacturers to incorporate modern production methods. As noted by Kesanee Srathongphool, Director of Audit Services at Grant Thornton in Thailand, “factories that embrace automation and digitisation have an enormous advantage over those that do things manually.”
Smart investment in robotics and related technologies, paired with forward-looking training and education policies, can bring about swift growth in the years ahead.
Though the pandemic has severely disrupted Thailand’s economy, proactive businesses have developed their own countermeasures. Successful efforts should be emulated by businesses throughout the country as quickly as possible, so they can operate more efficiently while staying better prepared for future disruptions.
Still, though a general understanding can illuminate the path forward, much work remains. Lessons must be carefully adapted to specific situations, and then implemented with precision. Our team can help your business move forward while avoiding common missteps, and helping you stay prepared for whatever challenges are ahead.
In addition to sector-specific solutions, strategies such as outsourcing can help all organisations make the most of the resources available. “In these trying times, companies need to focus on their core business, and outsourcing rule-based work is an excellent way to keep costs down and flexible against revenues,” said Jean-Paul Binot, Director of Business Process Outsourcing Services at Grant Thornton in Thailand.
As a leading professional services provider, Grant Thornton consistently shows clients how to manage their resources well and stay ahead of the curve. By helping our clients apply the right lessons throughout the pandemic, we put them in position to thrive sustainably in the years to come.
To learn more about how we can put your organisation on the path to success, contact us today.