Dealing with the deluge

The monsoon season this year has created tremendous concern in the business sector as many key economic areas are impacted by severe flooding.
Many provinces, notably Chiang Mai and Chiang Rai, had high water levels ravage their economies for the first time in decades.
Following the flow of water along the Chao Phraya River down south, the level at dams has been monitored, prompting some areas to issue early warnings to residents to prepare for possible overflow, such as Nonthaburi.
As Thailand and other Southeast Asian countries are predicted to face higher levels of rainfall because of climate change, business operators are urging the government to prepare, devising better long-term plans to avoid risks from natural disasters.
Pornchai Thiraveja, director-general of the Fiscal Policy Office (FPO), said it is time for Thailand to take action, not just talk, to lessen the impact from climate change.
If Thailand does nothing, the future impact could be too severe to handle, he warned, noting the World Bank recently indicated that if Thailand does not adapt its water management and climate change response, it could harm the economy, especially in the event of severe disasters such as major floods.
The impact could be as much as 10% of GDP, particularly if natural disasters such as floods spread to key economic areas, especially industrial zones and tourist destinations, said Mr Pornchai.
For the floods that occurred between Aug 16 and Oct 11 this year, 45 provinces and 250,000 households were affected. The economic impact is still being assessed, he said.
In terms of future investment to address these issues, Mr Pornchai said in fiscal 2025, there are 3,367 water management infrastructure projects with a total budget of 111 billion baht.
The majority of the budget, 73.1%, is for projects related to water supply and drainage infrastructure, such as sluice gates, weirs and irrigation canals.
Another 19.3% is allocated for embankment protection, 7.2% for water storage and new water sources, and 0.3% for water quality management.
However, in terms of specific flood management projects, the budget is only 6.07 billion baht or 5.5% of the total water management budget.
The province receiving the most flood prevention funds is Ubon Ratchathani, with 3.42 billion baht, followed by Kanchanaburi with 2.37 billion and Bangkok 2.33 billion.
He said between 2015 and 2024, excluding the pandemic years of 2020-21, the government’s emergency disaster relief budget averaged 5.5 billion baht per year, which is 0.18% of the average annual government expenditure. This does not include other funds allocated by the government for disaster relief efforts.
As the FPO oversees fiscal policies, Mr Pornchai emphasised that maintaining fiscal stability is crucial for ensuring there are sufficient funds to respond to future natural disasters.
A medium-term fiscal plan was developed for the next four years to ensure Thailand has enough fiscal space to implement policies that address potential natural disasters.
The nation experienced a major flood in 2011, when a massive volume of water from the North flowed into the central region and parts of Bangkok.
The National Economic and Social Development Council reported the 2011 floods caused GDP growth in the fourth quarter of that year to contract by 9.0%, resulting in GDP expansion for the year of 0.1%.
The University of the Thai Chamber of Commerce (UTCC) estimated the damage from that flood at 156 billion baht, with most of the damage coming from the impact on manufacturing.
A total of 930 factories in 28 provinces were affected, including several industrial estates in Ayutthaya and Pathum Thani provinces.
While ongoing efforts to rehabilitate businesses and households affected by severe floods in the North are urgent and crucial, authorities must start thinking of better methods to deal with disasters, which are likely to become more destructive in the future, said the Federation of Thai Industries (FTI).
The call comes as officials are bracing for higher rainfall, runoff from the North and high tides, which threaten to inundate portions of the central region this month.
Preventive measures are needed, as the government cannot be complacent to avoid further damage.
Officials should devise long-term plans to protect people against floods, said Isares Rattanadilok Na Phuket, vice-chairman of the FTI.
“We need better water management and a disaster warning system easily accessible by people,” he said.
Mr Isares suggested the government develop a warning system that can provide accurate, real-time alerts via mobile phones.
Better risk assessment is needed for Thailand and other tropical countries as more powerful storms are expected to increase in the region, he said.
Rising temperatures in the Pacific Ocean are a key factor leading to more frequent and intense storms, according to scientists.
The government needs to take more serious action to cope with floods and other damage triggered by these storms, according to the FTI.
Idthipol Patimavirujh, managing director of Phat Food Intelligence Co Ltd, the manufacturer of Goodwill dairy products, said the company’s factory is located in Saraburi province, downstream from Pa Sak Jolasid Dam, which reduces runoff and the likelihood of flooding in the lower reaches of the Pa Sak River.
He said he’s not worried because the plant is located on high ground with low risk of flooding.
“The company assessed that its supply chain is still safe from the flood,” said Mr Idthipol.
However, Phat Food is monitoring the level of the river and implementing mitigation measures by setting up sandbags around the factory in case of future flooding, he said.
“Water resources are vital for the agricultural sector. Thailand faces two types of water problems, alternating between floods and drought, which affect the majority of the population,” said Mr Idthipol.
He said the central government should order water boards and local authorities to be responsible for the management of floods within their own territory.
During the severe floods in 2011, when 65 of 76 provinces were declared flood disaster zones, water management issues were set as a national agenda item, said Mr Idthipol.
As time passed, he said it seems the issue has gradually diminished in importance. Flooding this year again thrust water management in the spotlight, said Mr Idthipol.
“The same old questions remain: how can we truly solve water management and how can we store water during the rainy season to be used in the dry season?” he said.
“The government should formulate a master plan on sustainable water resource management for both urgent and long-term needs, ensuring the continuity of the country’s development even with future droughts and floods.”
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said in recent years Thailand has experienced frequent and severe droughts and floods, which have seemed to intensify.
These extreme events have caused damages to the economy, affecting agriculture, industry and community areas.
He said the government needs to develop a comprehensive water management plan to mitigate the impact of floods, including measures against illegal encroachment to prevent the degradation of watershed areas.
The chamber and the UTCC estimate the cost of flood damage in 2024 will reach 40 billion baht, said Mr Sanan.
As of Oct 15, the assessment found the agricultural sector has been severely affected, with damage estimated at 27.4 billion baht, followed by the service sector (9.2 billion baht) and industrial sector (287 million baht).
As Thailand is entering the high season for tourism, the ongoing flooding poses a significant threat to visitor revenue, he said.
Mr Sanan said the private sector needs a business continuity management plan, setting out operational policies, standards and procedures for emergencies to allow critical business functions to continue or resume within an appropriate time frame.
La-iad Bungsrithong, board advisor for the Thai Hotels Association, said although the authorities warned people in Chiang Mai in advance of the floods hitting the outskirts and city centre, its rapid flow was unexpected, causing households and businesses to be unprepared.
She said tourism operators want the government to prepare more systematic relief measures, helping people fix damage caused by the floods to restart operations in time for the high season.
Thaneth Tantipiriyakij, president of the Phuket Tourist Association, said the key obstacle in dealing with flooding is the lack of efficient water management and the imbalance between the tiny budget allotted to infrastructure development and lucrative tourism income of around 500 billion baht, which the province projects for this year.
Apisit Anantanatarat, chief executive of Bangkok Insurance (BKI), said flood damage this year is not a big concern for insurers because the flooding is happening in limited areas, with most of the damage to cars.
BKI’s initial assessment found property damage is roughly 290 million baht, with damage to cars at 50 million baht, with some of the damage being passed on to reinsurers.
The company estimates the floods this year are not as severe as those in 2011.
In addition, industrial estates have applied preventive measures such as flood walls, which have reduced the damage considerably, he said.
While the floods this year are widespread in the North, Northeast and South, they did not occur at the same time.
In Chiang Mai, damage caused to the city centre was minimal, said Mr Apisit.
Floods in southern areas such as Phuket, Krabi and Koh Samui have not caused much damage to houses, he said.
“The frequency of natural disasters has increased, so insurance companies have to be more careful in assessing the situation, and have good risk management tools to cope with them,” said Mr Apisit.
For areas with frequent flooding, the liability insurance firms shoulder is limited to only 10% of the sum incurred, with the rest shared with reinsurers.
In low-risk areas, insurers pay up to 50% of the incurred sum.
BKI has a team of engineers that inspect customers’ properties, such as rice mills and factories.
The engineers inspect the strength of factory structures to assess risk and offer knowledge to factory owners, including assessing the height of the factory site to determine risk from rising water levels, he said.
“Natural disasters have affected the profits of insurance companies this year, but the damage is still within the expected range and insurers have profits from investments to compensate,” said Mr Apisit.
In the industrial sector, the Industrial Estate Authority of Thailand (IEAT) has reinforced the lessons of flood prevention for its industrial complexes in the central region following the massive flooding in 2011.
The huge volume of water ravaged factories, including those in industrial estates. Seven industrial estates in the central region suffered severe flooding that year, according to the FTI.
After the 2011 disaster, the IEAT built flood walls 7-8 metres high to protect industrial estates, especially those in Ayutthaya, where Hi-Tech Industrial Estate, Bang Pa-In Industrial Estate and Nakhon Luang Industrial Estate are located.
These estates should not face severe flooding caused by runoff this year, said Sumet Thangprasert, acting governor of the IEAT.
“We also dredged canals near the industrial estates, prepared pumps and discussed plans to protect communities located nearby,” he said.
Mr Isares of the FTI expressed concern over light industries, including farm produce and food processing, as they are usually not in industrial estates.
Many factories in these groups were already affected by floods and mudslides, he said, damaging their machinery and electrical systems.
According to new criteria from the Office of the Insurance Commission (OIC), insurance companies are required to pay for flood damage caused to cars at five different levels, starting from 8,000 baht.
If the repair costs exceed 70% of the current car price, insurers must pay the full amount as specified in the policy.
Most first-class insurance coverage is calculated based on the current car price, while second- and third-class coverage is fixed and can be selected before a policy is purchased, such as 100,000 baht or 200,000 baht.
Kananusorn Theingthrakool, senior director of the Benefit Protection Department at the OIC, said paying damages for cars impaired by flooding is not required by law, but the regulator did request cooperation from insurers on speedily addressing claims.
The OIC coordinated with the Thai General Insurance Association, asking it to compile a list of flood damage from all insurance companies for the regulator to inspect, he said.