Bangkok: The Thai Chamber of Commerce has voiced concerns regarding the escalating tensions in the Middle East, fearing significant repercussions on energy and logistics sectors. The Chamber is set to attend a meeting with the Prime Minister to evaluate the overall impact, emphasizing potential risks such as rising oil prices and increased shipping rates, which may result in higher war risk premiums for exporters. Furthermore, the Chamber has urged the government to expedite support measures for SMEs.
According to Thai News Agency, Dr. Poj Aramwattananon, Chairman of the Thai Chamber of Commerce and the Federation of Thai Chambers of Commerce, disclosed before a meeting with the Prime Minister and security and economic agencies that the private sector has been invited to assess the impact of the direct confrontation involving the United States, Israel, and Iran. This situation has notably affected global energy markets and maritime transport. The meeting's objective is to devise comprehensive measures to alleviate the impact on Thai citizens and businesses.
Dr. Poj highlighted the strategic importance of the Strait of Hormuz, a crucial energy route that facilitates the transport of approximately 14-20 million barrels of crude oil daily, accounting for about 20% of the global maritime oil trade. It is also a key route for liquefied natural gas to Asian markets. Any disruptions in shipping through this area could lead to an immediate tightening of energy supply and upward pressure on global oil prices.
As a net energy importer, Thailand is vulnerable to fluctuations in oil and natural gas prices, which will affect production costs, electricity costs, transportation expenses, and ultimately, the cost of living. Simultaneously, the export sector could face increased logistics costs.
The business sector has identified four principal impacts:
- Rising oil prices are driving up transportation costs across sea, air, and land transport systems.
- The introduction of a War Risk Premium on Persian Gulf routes is increasing war risk insurance costs, with some routes experiencing initial hikes of around 50%.
- Exporters are at risk of delays in container bookings to high-risk areas, affecting cash flow and inventory management.
- Export costs to Europe are on the rise, with many routes already circumventing the Cape of Good Hope. Further increases in oil prices could intensify pressure and prolong round-trip shipping times by at least a month.
Dr. Poj remarked that simultaneous increases in energy prices and shipping rates would exert double pressure on the global trading system, impacting the competitiveness of Thai exporters.
Additionally, international airlines have modified flight routes to avoid high-risk airspace, leading to longer travel times and increased costs, potentially affecting both business and leisure travel.
Regarding governmental strategies, the private sector plans to propose accelerating the implementation of existing measures, such as enhancing liquidity for SMEs, stabilizing energy prices, coordinating economic policies among relevant agencies, and employing economic diplomacy to maintain confidence and mitigate systemic impacts.
Dr. Poj advised businesses to urgently review transportation contracts, insurance terms, and develop contingency plans to ensure short-term business continuity amidst high levels of uncertainty.
The Thai Chamber of Commerce is prepared to collaborate closely with the government to assess the detailed impact on each industry sector and propose strategies to assist entrepreneurs, particularly SMEs, in navigating the volatility of the global economy.