TURMOIL AT THAILAND'S AIRPORT IMPACTS CAMBODIAN

UNCLAS PHNOM PENH 000957 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EFIN EINV ETRD CB SUBJECT: TURMOIL AT THAILAND'S AIRPORT IMPACTS CAMBODIAN ECONOMY REF: PHNOM PENH 934 SENSITIVE BUT UNCLASSIFIED ¶1. (SBU) Summary: The suspension of flights from Bangkok's Suvarnabhumi airport has had an immediate impact on Cambodia's vulnerable tourism industry and disrupted air cargo exports. Many here fear further fallout from Thailand's political woes, which could discourage many would be travelers from visiting both Thailand and Cambodia in the months to come and exacerbate the already weakening tourist industry. End Summary. Airport Closure a Headache for Tourism -------------- ¶2. (SBU) The closure of Thailand's main international airport has hurt an already slowing tourism industry, which due the impacts of the global economic crisis is expected to grow at 10 percent in 2008, down from the 20 percent growth enjoyed in recent years (reftel.) In 2007, 2,015,128 foreign tourists visited Cambodia, generating USD 1.4 billion in tourist receipts. Since the November 26 suspension of flights from Bangkok, tourist arrivals are down. According to Luu Meng, President of the Cambodia Hotel Association, approximately 1,320 tourists usually arrive daily from Bangkok, which is about thirty percent of total arrivals. In 2007, tourists on average spent USD 694 during their stay. The Minister of Tourism is quoted in the local press stating this year the average amount spent by tourists in Cambodia is expected to rise to USD 770. Based on this estimate, we calculate that as much as USD 1,016,400 could be lost for every day flights with Bangkok are suspended. ¶3. (SBU) Many of the domestic service travelers in Cambodia (mainly Siem Reap - Phnom Penh) arrive in Bangkok from Europe and then proceed to Cambodia. With the crucial Bangkok - Siem Reap and Bangkok - Phnom Penh routes suspended, there are fewer travelers in Cambodia's skies. However, some tourists are still finding their way into Cambodia. With flights suspended, some tourist have opted for overland routes. Cambodian immigration officials at two major Thai-Cambodia border crossings report that the number of foreign visitors arriving by land since the airport closure has increased by about 150 people at Koh Kong and as munch as 500 to 600 people at Poipet. ¶5. (U) While European tourists comprise a sizable amount of foreign visitors to Cambodia (France and the UK alone accounted for 8.64 percent in 2007),Asian tourists are by far the largest group. In the first eight months of the year, visitors from South Korea, Vietnam, Japan, and China accounted for approximately 38 percent of total foreign visitors. Their traditional routes for accessing Cambodia (from Korea or Vietnam) remain unaffected by the turmoil in Thailand. Thirty-four percent of all tourists arrive from Vietnam, according to Luu Meng. Exports Disrupted -------------- ¶6. (SBU) The airport closure has also affected the export of goods to Thailand. Twenty-five percent of total air cargo shipments are routed to or through Thailand. Eighty to eighty-five percent of these exports are garments. According to Sin Chanty, Secretary General of Cambodia's Freight Forwarder Association (CAMFA),an average 50 to 60 tons of goods are exported by air to Thailand each day, whereas 40 tons are imported from Thailand. Based on a calculation including costs, insurance, and freight, Sin Chanty estimates that USD 200,000 to 300,000 is lost each day due to the suspended flights. While air cargo transporting firms are exploring alternative routes for shipping more goods to their final destinations (such as through Malaysia, Hong Kong, Taiwan, and Singapore),Niwat Neonan confirmed that Bangkok Airways air cargo flights had nonetheless resumed between Phnom Penh and Bangkok December 3. He stated that Bangkok Airways passenger flights are expected to resume December 4 or 5. ¶7. (SBU) Comment: The full extent of the impact of the closure of Bangkok's main airport on Cambodia's economy is still difficult to quantify. The disruption in air services to Cambodia comes at an already precarious time for Cambodia's vital tourism industry. Only time will tell whether Thailand's continuing political instability and the anticipated reduction in tourists visiting Thailand will result in even fewer travelers to Cambodia from this key destination. RODLEY