Prolonged political unrest and the closure of Don Mueang and Suvarnabhumi airports for over a week has had a big impact on the IT and electronics industry here.
The Association of Thai Software Industry (ATSI) has revised its growth projections for the software industry down from 15 percent to 20 percent, to 12 percent, many conferences and important meetings have been canceled or postponed, while there are concerns as to how businesses will fare next year.
Some IT industry executives and officials expressed hope that the government could stimulate business in 2009 by promoting public projects involving IT, while Software Park director Suwipa Wanasathop sees an opportunity amid the crisis with the need to develop disaster recovery, business continuity management, communications and security systems.
Nectec Director Pansak Siriruchatapong said that industry groups had assessed the cost to the IT and electronics industry in general at one billion baht (US$28.2 million) a day. He said it was medium-sized operators that had felt the most pain as major multinationals such as Western Digital all had business contingency plans in place to get parts in and out of the country overland though Malaysia.
"I think the industry can make a full recovery from a one-week blockade, but I think terminal damage would happen if it were to happen again soon," he said.
On the academic side, many conferences have been canceled--not just in December, but right through to the end of January and the repercussions are expected to continue to echo for a while. This includes the cancellation of the Asian Forum for Information Technology (AFIT) by its Japanese organizers which had been scheduled for the middle of December. The event has been postponed to February next year.
One major international event that did proceed, the Fespa World Expo at Bitec exhibition centre which opened Nov. 28, three days after Suvarnabhumi Airport had closed, recorded a loss estimated at 40 million baht (US$1.13 million) after between 2,000 and 3,000 international visitors were unable to travel here.
Despite this, the exhibition and conference for screen printers registered 5,247 visitors from 35 countries, with event director Marcus Timson stating that "successfully running a show in these challenging conditions is a great achievement". The organizers are optimistic about organizing a follow-on event here in 2010.
Nectec director Pansak also said that the airport closures had also aborted a meeting about assistive technology and interoperability between government sector representatives and Microsoft's senior vice president for emerging markets Orlando Ayala, who could not travel to Thailand as scheduled.
He added that earlier some U.S. companies had made plans to move their manufacturing base to Thailand due to the global economic crisis when makers of components for hard disk drive manufacturers had talked to Nectec. He said Thailand now had to rebuild its readiness to invite foreign investors here.
Asked about his outlook for the future, Pansak said philosophically that there was no quick fix to the problems that Thailand was facing today and that the only way forward would be through a long-term process of better education.
ATSI President Somkiat Ungaree said the global financial crisis had not had much impact on the industry, but political protests lasting for two months and the airport closures had "absolutely affected" business here, causing up to 50 percent of buying to be delayed.
The impact of the crisis would be felt severely next year, he predicted, noting that the ATSI was now addressing strategic measures to cope with the situation by seeking a budget of 69 million baht (US$1.95 million) to be supported by Software Industry Promotion Agency (Sipa).
Those measures included offering software in bulk at cheaper prices with the support of the government sector. Target buyer groups would be government agencies such as tambon administrative organizations and provincial administrative organizations, he said.
Somkiat said the association was developing a database of IT professionals, while those made jobless due to the economic crisis should undergo skills retraining. He added that the ATSI would run a business-matching program for local software houses and businesses.
Software Park Thailand director Suwipa Wanasathop noted that the airport closures had been a significant lesson for Thailand but that, amid the crisis, there was also an opportunity for software developers.
"At least four applications relating to the incident are absolutely essential, even though no one had thought about it before. These are disaster recovery, business continuity management, communications and security systems," she said.
The airport closures had caused business supply chains to be broken and software developers should come up with solutions that would enable business to continue. This definitely required business continuity management (BCM), she noted.
There should be a way to re-route products by using other channels, she said, adding that a disaster recovery system that would allow the airport authorities to keep on working was also a must.
The Software Park director noted that communications in the form of a customer relationship management (CRM) system would help the Tourism Authority of Thailand and concerned agencies to communicate with customers and tourists and to build up their confidence.
The system would also serve executives with a databases of information so that they could have an efficient tool for decision-making.
Security was also one of the most important aspects and every airport should have a standard security system and a backup recovery system, Suwipa added.
IT City President Ekachai Sirijirapatana said sales revenues were still growing, but at a declining rate; business performance during the first half of this year had been good but it had started to have problems during the third quarter. The overall IT business had been impacted in the fourth quarter and he expected that this would continue into the first half of next year.
There was still a high uncertainty due to internal and external factors, he said. "No one could forecast the market during the past ten days," the president of the IT superstore chain said last week.
Ekachai said that IT City had to move forward carefully, and focus on efficiency and effectiveness, adding that the company would continue to expand its branches in the provinces, with five more locations planned for next year. "We now have IT City outlets in 12 provinces, thus there is still a large scope for expansion, he said.
Multinational companies, including HP, IBM and SAP, said they had been monitoring the situation but had not been affected much, partly thanks to product inventories, while SAP Thailand's managing director Patara Yongvanich, who also oversees the Philippines, noted that Thailand still had a strong industry "with a better opportunity than other countries in terms of the effect from global financial crisis".
IBM country general manager Thanwa Laohasiriwong said that the situation in Thailand was still very much "business as usual"--except for daily 6 a.m. meetings with senior executives to summarize the current events and, if necessary, instigate contingency plans to have employees work from home or to evacuate.
HP Thailand Personal Systems Group general manager Prasert Charoonpaisal said the airport seizures and unrest would have an impact on consumer confidence, which would lead to delay in the purchase of products, although it was too early to say how much the impact would be.
He suggested that the government could stimulate a business recovery, and that government projects could lead to more jobs. "The government sector can stimulate and help consumption to continue," he said.
One leading Bangkok IT human resources consultant, who asked not to be identified, said that he had seen some slowdown in recruitment requests, but this could be attributed to the global economic meltdown, although it had not been helped by the situation in Bangkok.
Today there is a surplus of talent in the IT job market, which is different to what the industry had been used to in recent years, he said, adding that there was still a high demand for developers with a background in banking as overseas banks were looking to outsource more of their work to reduce costs.
The head-hunter said that hiring for new project teams had gone down somewhat, but the demand for the maintenance of existing systems was still very high. Overall, the number of job positions was still firmly positive, which was not in line with the general economy.
"However what has upset me is this: Currently we are hiring many staff for our outsourcing team in Thailand. In the last three months we have added six developers, this month three new staff and I have a potential head count of 40 new employees for the early part of next year.
"However our overseas HQ has now informed me that they are concerned about moving mission-critical work here, stating, 'if they cannot secure an airport from being taken over, how can they guarantee the telecoms infrastructure won't be the targeted next time'. So now we have to cut back on our own expansion plans," he said.
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