SEMINAR: THE EFFECT OF COVID-19 ON THE ECONOMY, BORDER TRADE, AND TOURISM IN THE SOUTHERN BORDER PROVINCES
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September 2020 – UNDP in collaboration with the Standing Committee on Finance, Monetary, Financial Institution and Capital Market, Southern Border Provinces Administrative Centre (SBPAC), and Tambon Samnak Kam Municipality organized a seminar on “The effect of COVID-19 to the Economy, Border Trade, and Tourism in the Southern Border Provinces” in Sadao district of Songkhla province where two sessions were held and more than 500 participants from Songkhla, Yala, Pattani, Narathiwat, and Satul have attended. The goal was for the standing committee to have dialogues with local stakeholders about the underlying issues, impacts, and possible solutions which are in line with the needs and capacity of businesses, communities, and people in the region. All discussion sessions are centered around challenges and opportunities for the sustainable and inclusive recovery in the context of COVID-19 crisis.
An assessment of current and anticipated economic impacts for southern border provinces
By Dr. Pishit Leeartham, Vice Chairperson of the standing committee & Dr. Piroj Chaijirathikool, Vice Chairperson of Songkhla Chamber of Commerce
Southern border provinces are among the ones with the highest confirmed coronavirus cases per million residents (besides Bangkok and municipal areas and high-income provinces such as Chonburi, Songkhla, and Phuket). During the peak of the outbreak, the Songkhla, Yala, Pattani, and Narathiwat decided to declare an enforced provincial lockdown between April and May 2020. Moreover, people movement and non-essential transactions between Thailand and Malaysia borders have been stalled since the end of March 2020. In this regard, local economic transactions were disrupted all over the country, but the impacts are especially severe in border regions like southern border provinces. The report on economic impacts of Songkhla and southern border provinces revealed that most economic sectors are facing contraction such as tourism, exports, trading, etc. Although there is a slight recovery after the virus containment has proved effective during mid-2020, the investment is not growing at all in the region. In this regard, it was proposed that the recovery process should involve:
- Redesign Integrated Data Futures Platform at provincial and local level for a better planning process.
- Require adaptive strategies to boost investment and improve productivity, diversify economic activities, and localize planning and resources.
- Resort to government spending to absorb the impacts for most affected sectors.
- Refocus measures in the stimulus package to response well with needs, focusing on leaving no one behind.
Challenges on Local Crisis Response and Opportunity for an Economic Recovery that Leave No One Behind
By Mr. Pongsak Yingchonchareon, Mayor of Yala Municipality[1] & Plenary discussion
Challenges:
- The change of legislation regarding tax collection in 2020 have had a negative impact on revenue generation for several local governments. In specific, three sources of revenue for local governments include centrally allocated revenue, provincial VAT revenue, and supplementary budget. The target of 35 percent national budget allocated to local administration have not been met (currently around 20%). Due to economic decline and reducing consumption during COVID-19 situation, provincial VAT collection is subsequently reduced by 70%. Lastly, spending the allocated supplementary budget is largely determined by the central administration. This left local governments with insufficient resources to initiate new developments and improve public service provision according to local needs and capacities.
- During the first wave of pandemic, some local governments had to use their planned budget and savings for emergency response and partial lockdown, especially extreme for border towns. In some cities, local governments had to spend millions of Baht to take care of foreigners and outsiders for quarantine facility. Moreover, the sense of urgency prompted most local governments to act beyond their designated authorities which have put some officials and leaders into facing legal challenges with national regulatory agencies.
Solutions: Local governments addressing digital divide and inequality
- New behaviors – Acceleration of digital transaction where people use digital technologies to access the good and services, as well as for providers to access new market segments and business opportunities.
- New business models – Local administration cannot work on the same-old bureaucratic model but should innovate and create public services that are suitable to users’ behavioral insights, adaptive to volatile situation, and responsive to those who have been left behind.
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- Yala Municipality adopted a new business model to expand value chain (long and wide) of food products, direct fast injection of fund, enhance disposable income, and generate new fresh money. It installed more than 80 wifi spots in the city to ensure free and accessible internet for its dwellers, preparing to launch Yala E-market to matching up good/service providers with local consumers. It aids those vendors who lacked access/ownership of smartphones by setting up offline back office for such e-market facilitating orders and payments while gradually building capacities and knowledge for them. The e-market aimed to recruit people from neighboring municipalities and cities to join in order to increase the size of market, explore partnership with local banks to exempt transactional fees, etc. Unemployed persons can register with its Line official account and be able to match up with clients in Yala for specific services. The Municipality planned to allocate more than 100 rai of land for urban farming, focusing on those who are left behind to be part of the program.
- This type of pilot program if working well should be scaled up through the learning platform such as National Municipal League of Thailand.
Impacts on the poor and vulnerable groups
By Ms. Lamai Manakarn, Secretariat of Pattani Basin Foundation[2]
Challenges:
The impacts of COVID-19 outbreak had doubled burden for vulnerable groups who are affected by violent situation, environmental degradation, and lack of social safety net in the southern border provinces. According to rapid survey, it is found that from just 8 local quarantine facilities in 2 districts there are 4,626 returned workers during two months of lockdown. Most of them returned from Malaysia and other provinces of Thailand and had to look for new livelihood opportunities. Some tried to adapt by opening small food stalls, going fishing, and household farming. In areas of abundant natural resources and land availability, they can rely on subsistent agriculture and fishing for household food consumption. For some other areas, households have come together to establish community system to help the most vulnerable populations in their own communities. However, the food accessibility and affordability among poor households are of concerns for many areas.
Opportunities:
- Recognize capacity of vulnerable groups.
- Focus on small-scale interventions that empower vulnerable groups to lead and take actions.
- Ensure data and insights of real time impacts among these groups.
Challenges and Opportunities for SMEs and Community Enterprises
by Mr. Tirmizi Yama, Ottoman Enterprise[3] & Plenary discussion
Common challenges among SMEs:
- Financial accessibility – SMEs by number is accounted for more than 95 % of economic actors, but government policies towards SMEs are not established with a sense of urgency and empathy. So far, the stimulus package cannot really reach SMEs because of the lack of trust between SMEs and financial institutions. Commercial banks are more likely to avoid risk by not giving loans for SMEs and community enterprises but offering them to those who are financially secured. During crisis, SMEs need remedial support from the government to continue their operation and maintain employment, such as moratorium, tax break, or other fiscal measures. Supposed COVID is going to stay with us longer than a year, SMEs survival and resilience are highly subjected to cash flow management and emergency financial accessibility. This should be done via localized institutions which can assess the feasibility of actual business operations at local level.
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- Fair business environment – Even though large chain corporations have comparatively high liquidation; they usually apply a long credit term before paying suppliers which had to struggle in the cash flow management. It is not fair for small entrepreneurs. The small suppliers/ producers should be in reciprocal relationships with large distribution companies rather than competitive ones. Some measures should be introduced to create a fair business environment.
- With entrepreneurial spirit of SMEs, we are resilient and endured. Our aspiration is that we want the consumers to access good quality products within the country. We are the engine of growth because SMEs are most likely to keep employment even during the toughest time. Therefore, it is a matter of prioritizing decisions toward the most affected sectors/ groups that the Thai government must make.
Opportunities:
- Looking for partnership and collaborative actions among peers, to drive the business ecosystem by considering equity financing, debt financing, and non-financial solutions through alternative partnerships.
- Crises open for opportunities to discuss some structural/legislative bottlenecks in reducing inequality in the economic system. The Thai government has put in place a set of crisis response measures which is followed by a recovery package that aims at income generation and debt reduction to mitigate impacts on businesses and households. Some legislation and remedial measures will have to be adjusted to ease restriction and open for innovation and creative ideas from private sector.
- Share resources between private-private and public-private sector such as crowdfunding and venture capital.
Challenges for Young and Newly Graduated Workforce and Employment Opportunity
by Mr. Abdulfatah Doloh, student of Prince of Songkhla University, Pattani campus[4]
Challenges:
- The struggle in online learning, the additional expense for internet access, and lack of suitable space for study at home.
- The household has more unemployed members, therefore, increased burdens and decreased income.
- Newly graduated workforces must compete in the labor market, and some might have to migrate for job opportunities outside the region.
- Social problems, the violent conflict and impacts on family burdens.
Opportunities:
- Several youth groups have taken the lead in citizen-owned innovation to crisis response and recovery.
- With appropriate support measures, young people can be reskilled and provided with entrepreneurial opportunities within the region.
In sum, the sustainability cannot be progressively attained unless all stakeholders take parts in the development process. In taking parts, it should mean a collaboration which resources and expertise from public, private, and civil sectors and international community are dedicated to the process. Not only the central government but also local administration should play a role in crisis response and recovery. Not only the adults, but also the active young generation should be able to design their common futures. The global economic decline and the most recent pandemic conveyed the vital message to us all that economy, society, and environment are interdependent to each other. Therefore, prospective ways towards SDGs should inevitably involve connecting the dots and transform the silo perspectives into a more systemic one.
[1] Mr. Pongsak was elected to be Mayor of Yala Municipality since 2003 (3 consecutive electoral terms until present). The city has a vision of “Yala as Multicultural city, creative innovation, and towards quality of life”. The Municipality won the first prize of the sustainable and livable city in Thailand in 2020. Mr. Pongsak’s vision is to restructure the economy by adding values to products and services available in the region and improve public services and participation through the use of technology. He is also a member of Thailand decentralization board and the Municipal League of Thailand.
[2] Ms. Lamai is the Secretariat of Pattani Basin Foundation which was founded in 2013 through a collaboration of community-based organizations in the Pattani Basin. The foundation aims to enhance capacities of community-based organizations for sustainable environmental management in three southern border provinces. Ms. Lamai herself is a development practitioner who has been working towards environmental sustainability and better local livelihoods in the region since 1992. She also is an advocate for women rights and public participation.
[3] Mr. Tirmizi is the owner of a meat-producing business; the Ottoman Enterprise which specializes in the production of burger patties. Burger Putra, Baema, and Lemburgh are current products available on market. When COVID-19 hit the region, just like many other business-owners, his business suffered. His sales dropped, forcing him to cut his own salary for months. However, the lockdown measure in response to COVID-19 offers him a new window to compete with products from outside Thailand. Mr. Tirmizi has started his business career since he was a student. He has been through several failures and successes over the past years, but with his endurance and determination to do business in the southern region, he strives through various challenges. See more of his story here.
[4] Mr. Abdulfatah is the fourth-year student of Political Science in Prince of Songkhla University. His family lives in Yala province, but he is currently in Pattani. His education is supported by a Lukrieng scholarship, but he still has to work part-time in order to support himself and his family. The COVID-19 crisis and subsequent economic declines affected his opportunities to earn additional income and create uncertainty of being employed after he graduated.
