Oct. 6 (Bloomberg) -- The death toll in Thailand’s worst floods in five decades rose to 244 and threatened to disrupt operations of automobile and electronics makers that use the Southeast Asian country as a production base.
Heavy rain since July 25 has caused flooding in 59 of the country’s 77 provinces, and 28 of them remain submerged, the Department of Disaster Prevention and Mitigation said on its website today. Industrial parks in Ayutthaya province home to factories from Honda Motor Co. and Sony Corp. are at risk after floods caused nearby plants to shut down.
“The situation in Ayutthaya is quite worrisome,” Prime Minister Yingluck Shinawatra, who surveyed the damage by helicopter today, told reporters after landing in Bangkok. “In some areas water has reached levels we have never seen before.”
The deluge has affected more than six million people in the region and claimed a further 224 lives in Cambodia, Vietnam and the Philippines, according to the United Nations. Thailand has seen the most fatalities as typhoons and above-average rainfall damage crops, destroy businesses and uproot families across Southeast Asia.
“The situation is getting worse and it may lead to big damages in the industrial sector,” Tanit Sorat, vice president of the Federation of Thai Industries, said by phone. “There are many big plants in Ayutthaya that produce raw materials for textiles and also produce auto parts. If they are flooded, the impact will be massive.”
Pressure on Rates
The waters have caused 25 billion baht ($805 million) of damage in factories based in Ayutthaya, Industry Minister Wannarat Charnnukul told reporters today. Nationwide losses from the disaster may reach 50 billion baht ($1.6 billion), the University of the Thai Chamber of Commerce estimates, complicating government efforts to boost the minimum wage.
Deputy Prime Minister Kittiratt Na-Ranong called on the Bank of Thailand to lower interest rates to help businesses cope with impact from the flooding after meeting with industry leaders, who requested loans with low interest rates to cope with the disaster.
“The first thing we should do is the central bank should cut interest rates,” Kittiratt said. “This is the message I want to convey to them.”
More than a hundred factories producing auto parts, food and electronics have temporarily closed because of floodwaters, according to the Federation of Thai Industries. Plants operated by Danish shoemaker ECCO Sko A/S and Japanese food and beverage producer Ajinomoto Co. are among 40 factories in Ayutthaya that have shut down, according to Narapote Thewtanom, deputy governor of the Industrial Estate Authority Thailand.
Canon Closes Factory
Canon Inc. halted operations at its inkjet printer plant in Ayutthaya because of flooding and will keep the factory closed tomorrow as a precautionary measure, Hirotomo Fujimori, a Tokyo-based spokesman for the company, said by phone today. Indorama Ventures Pcl, which says it’s the world’s largest producer of polyester, shut factories in Lopburi province that make wool yarns and polymers, the company said on Sept. 27.
Sony Corp.’s factory in Ayutthaya, which produces digital cameras and lenses, hasn’t suffered major damage from flooding and is operating as normal, Yasuhiro Okada, a Tokyo-based spokesman for the electronics maker, said by phone today.
Honda, Japan’s third-largest automaker, faces a “worrisome” situation at a plant in Ayutthaya, Pitak Pruittisarikorn, executive vice president of its Thai unit, said by phone. The company yesterday halted production at the plant, which can produce 240,000 vehicles a year, on supply shortages, he said.
Honda’s plant is located in Rojana Industrial Park, which is mostly a base for companies making automotive and electronics parts. Nikon Corp., Hitachi Metals Ltd. and Siam Cement Pcl are among companies with operations in the estate, according to Rojana’s website.
The deluge has displaced 2.6 million people in Thailand since late July and damaged almost 10 percent of rice farms in the biggest exporter of the grain, data from the Department of Disaster Prevention and Mitigation and the Ministry of Agriculture and Cooperatives show.
Economic losses from the floods and weakening overseas demand for Thailand’s electronics, textiles and agricultural goods may complicate Yingluck’s efforts to meet a pledge to raise the minimum wage. Her two-month-old government has deployed about 10,000 soldiers to aid flood victims and extended rice-price guarantees to shield incomes.
Yingluck “has to be seen as taking charge,” said Thitinan Pongsudhirak, director of Chulalongkorn University’s Institute for Strategic and International Studies in Bangkok. “So far that’s not the case. It’s more like routine work. There has to be more thrust behind her leadership.”
The University of the Thai Chamber of Commerce, a private institution founded by the chamber, said the impact of flooding, including an earlier deluge, may total as much as 130 billion baht and reduce economic growth by as much as 1.3 percentage points, it said today.
The government estimates the most recent floods may cause as much as 30 billion baht of damage, Kittiratt said yesterday. Costs so far amount to about 20 billion baht, central bank Governor Prasarn Trairatvorakul said.
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