Cablegate: Turmoil at Thailand's Airport Impacts Cambodian

VZCZCXRO7226
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0957 3381035
ZNR UUUUU ZZH
P 031035Z DEC 08
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 0163
INFO RUCNASE/ASEAN MEMBER COLLECTIVE

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

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