VZCZCXRO3720
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #0593 0680912
ZNR UUUUU ZZH
O 090912Z MAR 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6318
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 6832
RUEHBY/AMEMBASSY CANBERRA PRIORITY 9489
RUEHKO/AMEMBASSY TOKYO PRIORITY 1438
RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 6282
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

UNCLAS BANGKOK 000593 
 
SIPDIS 
 
STATE FOR EAP/MLS, EAP/RSP AND EEB 
STATE PASS TO USTR 
TREASURY FOR OASIA 
COMMERCE FOR EAP/MAC/OKSA 
SINGAPORE FOR FINATT BAKER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PREL ETRD TH
SUBJECT: THAI GOVERNMENT SAYS NO TO AUTO AND TOURISM 
BAILOUTS 
 
REF: A. BANGKOK 3490 (AUTO INDUSTRY IN THAILAND) 
     ¶B. BANGKOK 3519 (THAILAND: ECONOMY SUFFERS) 
     ¶C. BANGKOK 384 (ADDITIONAL THAI GOVERNMENT MEASURES) 
     ¶D. BANGKOK 175 (THAILAND'S ECONOMIC STIMULUS) 
 
¶1. (SBU)  Summary: The Cabinet recently rejected proposed 
"bailouts" of the auto and tourism industries, two of the 
most visible sectors hardest hit by the economic crisis. 
Both assistance proposals involved tax or excise cuts, along 
with other measures.  Royal Thai Government officials say 
that simply lowering taxes will not necessarily stimulate 
demand and that assisting automakers and tourism operators 
would invite criticism from other business sectors that the 
government is playing favorites.  Ministry of Finance 
officials state they are considering broader financial 
assistance packages that will assist all industries. 
 
¶2. (SBU) Comment: The auto package would have been very 
welcome to General Motors, whose operations here are 
struggling for working capital, as well as sales, as the 
bailout packages in the U.S. restrict Detroit's ability to 
move money to its overseas operations.  (A senior General 
Motors official told the Embassy that the company would 
continue to work with the RTG to seek loans from private or 
quasi-private banks.)  Japanese companies would have 
benefited as well from the auto package.  By nixing both 
packages, the RTG may also be seeking to insulate itself from 
charges of protectionism. 
 
¶3. (SBU) The Thai auto industry has been suffering since the 
last quarter of 2008 (see ref A).  Automakers and auto parts 
suppliers, including Japanese carmakers and General Motors, 
have been negotiating with the RTG over the last several 
weeks for a "bailout" primarily in the form of a 3 percent 
cut in excise taxes along with other incentives for 
consumers.  Eventually, the Ministry of Finance (MOF) 
rejected assistance on two grounds.  First, according to MOF 
officials, cutting the excise tax would not stimulate car 
buying because the underlying problem was consumers not 
having enough disposable income for major purchases.  Second, 
the RTG could not be seen to be favoring one industry over 
another. 
 
¶4. (SBU) Meanwhile, the tourism sector, saddled with both a 
faltering economy and a shutdown of the international airport 
by protesters in December, expects tourism to drop as much as 
fifteen percent this year (see ref B).  Media reports 
indicate that tourism operators proposed relief measures 
including reimbursement for expenses suffered as a result of 
the airport closures and corporate tax relief.  MOF officials 
told the Embassy this package was also rejected largely on 
the basis that it would not bring more tourists into Thailand 
and because the RTG could not assist one industry at the 
expense of another. 
 
¶5. (U) According to public statements and press reports, MOF 
officials claim that a variety of proposals will be 
considered that will aid all industries without singling out 
any specific sector.  These measures could include broad tax 
relief, loans, and other forms of assistance.  MOF could not 
give a specific timeframe for when these measures would be 
taken up.  MOF also stresses that financial stimulus packages 
have already been approved by the cabinet (see refs C and D). 
JOHN