VZCZCXRO7748
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #0014 0031002
ZNR UUUUU ZZH
P 031002Z JAN 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 3723
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 3425
RUEHBY/AMEMBASSY CANBERRA PRIORITY 6489
RUEHKO/AMEMBASSY TOKYO PRIORITY 8678
RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 2889
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

UNCLAS BANGKOK 000014 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EB 
COMMERCE FOR EAP/MAC/OKSA 
TREASURY FOR OASIA 
STATE PASS TO USTR FOR WEISEL 
STATE PASS TO FEDERAL RESERVE SAN FRANCISCO FOR DAN FINEMAN 
STATE PASS FEDERAL RESERVE NEW YORK FOR MATT HILDEBRANDT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN TH
SUBJECT: BANGKOK BOMBS AND THE THAI ECONOMY 
 
 
¶1. (SBU) The series of bomb explosions in Bangkok on New 
Year's Eve occurred at the height of Thailand's tourism 
season. Tourism is an important component of the Thai 
economy, contributing more than 6 percent to GDP.  Since 
2001, Thailand's tourism industry has faced the effects of 
9/11, SARS, avian influenza, terrorism in the south and 
especially the tsunami and has bounced back strongly each 
time. Major travel agencies here tell us that cancellations 
have increased to about 10 percent of bookings from a normal 
rate of 2 percent with most of the cancellations coming from 
the US and Europe. This includes visitors who were not 
scheduled to stay in Bangkok. Some bookings have been 
adjusted to cancel stays in Bangkok while maintaining the 
remainder of a Thai trip. US and other foreign air carriers 
report no increase in cancelled bookings at this point 
although they (like the Thai Tourism Association) expect 
typically skittish Japanese tourism to fall off quickly. They 
have also seen some increase in travelers already in Thailand 
moving up their departure dates. Almost every observer with 
whom we spoke indicated that with the holiday season just 
ending, the next few days will be their real indication of 
global traveler reaction. 
 
¶2. (SBU) Some analysts are concerned that by attacking 
crowded areas, including a shopping mall, the bombs could 
further reduce domestic consumption and consumer confidence 
in general.  With most private investment over the past year 
focused on new retail buildings and tourism infrastructure, 
there could also be a further slowing of private investment. 
The Stock Exchange of Thailand index declined 3.3 percent on 
January 3, its first day of trading since the explosions. The 
baht, on the other hand, was slightly stronger against the 
US$ than before the bombing, going from about 35.85/$ on 
December 29 to 35.8/$ on January 3. This was on very light 
volume and with exporter dollar selling the primary activity. 
Most believe that the baht will weaken again as foreign 
portfolio investors begin to repatriate the proceeds from 
equity sales made in the wake of the December 19 capital 
control regulations. 
 
¶3. (SBU) RSO and ACS Chief held a briefing for American 
Chamber of Commerce members. Despite the meeting not be 
announced until mid-morning, the 3:00 meeting was 
exceptionally well-attended. The mood was one of 
disappointment more than concern with one executive saying 
privately that it is getting ever more difficult to explain 
to his head office why any additional investment should be 
directed towards Thailand. 
 
¶4. (SBU) Comment: Since 1997, the Thai economy has weathered 
previous disasters without much distress. The difference this 
time is that with the recent capital control regulations and 
expected changes to laws regulating foreign investment, 
international investors may be more reluctant to devote 
capital to Thailand than at any time since the crisis. While 
we expect tourism to quickly recover from any short-term 
decline from the bombings, this sector too would be in 
jeopardy if additional attacks occur over the next few 
months. 
BOYCE