Dr. Saul: Ratchada’s GNP Factor

It is our privilege to introduce columns by Dr. Saul Kruggerand, the renowned Ph.D. economist and native of South Africa, who will regularly share with us his wide research and hands-on experiences on Thai economic affairs.

In his introductory column “Dr. Saul,” as he is affectionately called by his students, will analyze Bangkok’s Ratchada district and the role its many large-scale “entertainment complexes” play in the overall Thai economy: “Ratchada’s Entertainment Complexes & Their Contribution to Thailand’s GNP.”

Dr. Saul is himself a Yesbel Laureate with his Ph.D. from the prestigious London School of Economics LSE. Dr. Saul has worked with or along with the World Bank, IMF, Goldman Sachs, AIG Hedge Fund Division and George Soros. And now, without further introduction, here is Dr. Saul:

By Dr. Saul Kruggerand, Ph.D. Economist

Much has been spoken and written in regard to Bangkok’s Ratchada district and the role of its many large-scale entertainment complexes in the overall Thailand developing economy.

First, let us examine the mechanical steps that comprise a typical entertainment complex processing experience and the often heard complaints about the negative environmental impact generated by these large industrial-scale sites and their massive scale of processing.

Many of the entertainment complexes in the Ratchada district often have upwards of 700 to 1,000 rooms, each with their very own very large jacuzzi tub. After each client is “processed” by one of the entertainment complex’s 400 to 500 “service workers,” each jacuzzi tub is of course drained and because there are 700 to 1,000 of these tubs in just one entertainment complex, in order to operate in an environmentally responsible manner, the water is recycled through a sterilization and recycling system and, once the recycling is complete, the recycled water is then efficiently pumped back up to the rooms for the next client’s use in filling up the jacuzzi tub once again.

Now over the course of some months as all this water is repeatedly sterilized and recycled (approximately 10 times a day for each of the 700 to 1,000 rooms, that is, 70 times per week or 3,500 times per year), you can imagine, if you wish to set your mind to it, where this water has been, what fluids might have been repeatedly blended into it, what an array of microbes might have been introduced and what other extraneous matter it may have come to have contact with and what impact of all this might have on the environment.

But in this area, we can be assured and can set our minds at rest as there are many filters in the sterilization and recycling system and these filters are scrupulously maintained and inspected by a most diligent and highly trained Thai staff.

In the case of Ratchada’s largest such entertainment Complex, we can be further assured that a high-ranking member of the present Thai government, was, prior to joining the government, the Entertainment Complex’s executive manager, and the entertainment complex was conceived, brought to fruition, and is still owned by her family which maintains a very high standard of management oversight and control.

So you can be completely relaxed as to the level of management expertise and quality control that is applied in the environmental impact and recycling area. In fact, this particular entertainment complex recently completed an arduous ISO 9000 quality control certification process and has been awarded an ISO 9000 quality assurance certificate.

Whereas in normal quality control inspections, each aspect of the various processes are thoroughly tested for one complete cycle, in the case of this particular entertainment complex, each inspector insisted on laboriously testing every aspect of every single process a minimum of ten times, just to be absolutely certain that all the systems were functioning one hundred and ten percent as they should, with not even one square inch left uninspected.

Now, having dealt with the environmental impact and recycling areas, let us turn our attention to the economic impact of this particular entertainment complex.

The 50 story high, 5 star facility presently operates 24 hours per day 7 days per week, processing approximately 10,000 package tourists from mainland China per day … that’s 70,000 per week or 3.6 million package tourists from mainland China per year … which means that over the next ten years, about 36 million mainland Chinese tourists will be processed, unless they build a second tower of course which has been proposed under the present government’s economic stimulation package, with the Funds to be borrowed from mainland China at a favorable interest rate of five percent.

Calculate that the approximately 3.6 million clients per year will spend between gourmet dining, the excellent snooker room, the singer lounge/bar, the karaoke room, along with all of their whiskey and beer, and on average about 150 USD per “service worker” per client (on a range of 50 USD to 300 USD depending on the exact “classification” of the “service worker”) or to be cautious about 200 USD gross per client per visit multiplied by 3.6 million visits per year. This gives us a yearly “gross” (in the financial sense) of approximately 720 million USD per year for this one “Entertainment Complex” alone.

Now please do not let such large figures set your mind into sleep mode as there are more to come.

Let us further calculate that, in the Ratchada district alone (which is only one of many “entertainment” districts in Bangkok and Thailand as a whole), there are approximately 20 plus such large-scale entertainment complexes (along with the myriad thousands of smaller scale “entertainment venues”), then multiply our earlier “gross” by 20 and we arrive at a “total gross” for this one segment of the overall entertainment complex business of approximately 14.4 billion USD.

Now, mind you, we are speaking of the “gross” not the “net” as there are many expenses and costs, from the staff to the towels to the cleaning of each room after each “client” has departed to the orderly disposal of noxious fluids, to the various levels of high-ranking officials who have their own costs and expenses which must be met as set by custom, tradition and need.

Now this entire 14.40 billion USD is categorized in the economic sense as what is referred to as “net export of services income” (NESI) which represents a “pure” net gain to Thailand as the money is brought into Thailand from mainland China by mainland Chinese Tourists and nothing of actual value is being exported from Thailand, meaning that the entire benefit remains inside Thailand’s economy.

We can now move on to the “residual economic benefits” (REB) formula which is calculated by multiplying each U.S. dollar of NESI by 20 USD of other related economic activity (such as rent from the “service workers” for their rooms and apartments, food, clothing, beauty salons, the supply of tissue papers and protective latex devices from Thailand’s Muslim south, etc.) and we thus arrive at an “overall net benefit” (ONB) to Thailand’s GNP from this one entertainment district alone of about 290 Billion USD.

Now, some might argue that in addition to the potential environmental impact and financial impact, there are other negative consequences from having such an extreme concentration of so many large-scale entertainment complex processing centers in such a densely populated urban area in which there are also many schools, major medical centers, Buddhist temples as well as very large hotels and heavily populated apartment buildings.

But fortunately, Thailand is one of the world’s most “Buddhist” societies and its population is protected, reassured, relieved and relaxed by being taught and sincerely believing that “Desire is only an Illusion” and that, in fact, the entire array of entertainment complexes and their 24/7 processing activity is not actually “real.”

Thus, in conclusion, we can safely say that despite all of the risks and dangers involved, this economic pillar of society indeed provides a very “happy ending.”

(Disclaimer: The opinions expressed here represent the author’s and are entirely from his own experience. Furthermore, they do not necessarily reflect the views of the the people who live in the author’s hemisphere and the individual letters, words and punctuation marks involved had no option but to be placed into the story, and should not be held accountable for the author’s statement. Any spelling or grammatical errors are not the responsibility of the schools the author attended, the teachers the author was taught by, the regional governments who did or did not fund the author’s educational system, or anyone else involved in the author’s life.)




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March 30, 2009 | Filed Under Business & Economics, Dr. Saul, Nightlife & Entertainment, Seriously, Not ..., Travel & Tourism 

Comments

9 Responses to “Dr. Saul: Ratchada’s GNP Factor”

  1. ThaiCrisis on March 31st, 2009 1.16 am

    Nice … You’re too early for April Fools’ Day! ;-)

    Note: To introduce “Doctor Saul” as an economist who worked … for AIG … that was enough to blow up the cover from the very first line. ;-)

  2. Jaded on March 31st, 2009 1.46 am

    Your guest writer’s article must have been composed before the commerce minister’s recently announced tour of the neighboring countries who provide many of this sector’s service workers. Surely this tour must be seen as part of a government policy of maintaining the free market in this kind of labour. For this business to continue to serve its clients at low rates it is vital to the national interest that the pipelines funneling workers into these complexes in Bangkok are kept open. Unlike some of the multinational companies who are also enjoying the low wage regime there is no need to worry about repatriated profits in this case. In the U.S. for example, such guest workers might actually remit a considerable part of their earnings to their home countries but, under the particular working conditions of the large scale enterprises here, there is remarkably little leakage of revenue into the workers’ pockets. Just like diamond miners in his own South Africa, a strict search and seizure policy ensures that little cash goes unaccounted for.

    Frankly it makes me want to puke.

    The desperately sad thing about this is that most Democrat Party supporting middle class Thais that I know simply don’t see anything wrong, or every disturbing about having a commerce minister with a background in an industry that exists as an unnatural breeding ground for sex slavery, human trafficing or whatever else you like to call it. But it’s not just the poverty stricken, trafficked prostitutes that don’t merit any mercy or consideration. It’s anyone outside of that golden circle of privilege centered in Bangkok. The Poseidon minister is a perfectly logical reflection of the disgusting attitudes that prevail amongst large numbers of the middle class who support this government. The prime minister is a perfect medium through which to channel this indifference. Witness his performance on CNN when presented with evidence of the mass murder of Burmese refugees by the Thai military. He’s part of a generation of Thai politicians who have learned to be plausibly pleasant in difficult situations while remaining indifferent to any kind of moral and ethical standard. As you pointed out, the Buddhist rationalizations that accompany this rhetoric suggest that this will not change any time soon …

  3. BangkokDan on March 31st, 2009 9.22 am

    TC we don’t do an April Fools’ Day piece this year, but there is still last year’s – keep us posted if you see one!

    Cannot but agree with you Jaded. But then again, what’s more or less played out in the open along Ratchada and such is not inexistent in other cities around the world. On the contrary, I doubt there is less more or less open human slavery in major Western cities.

    Thailand at least manages to humanize (read: trivialize) the whole misery, as fatalistic this may sound.

    BangkokDan

  4. Jaded on March 31st, 2009 11.17 am

    I am not well informed on the comparative statistical evidence concerning other countries commercial sex sectors. On the other hand I have travelled a bit and lived in several countries with risque reputations and outside of Asia I have never seen anything that comes close to the scale of this business in Thailand. Its possible to make the argument that “entertainment” zones are enormous in Japan, “policed” by organized crime with the tacit agreement of the real police and the government. The ruling party maintains links with organized crime and on a local level there is a policy of tacit cooperation between the criminal gangs who control entertainment districts and the police. All that said I think the idea of appointing a minister whose business is prostitution might be quite controversial in Japan.

    I’ve never heard of industrial scale sex slavery receiving police and government approval in a Western country. Large brothels in places like Germany, Holland or Spain are common enough and are the destination of trafficking gangs from further east. But there are at least some protections in place for sex workers and public policies of observation and intervention. I’m sure that the toleration of these dirty businesses is something necessary and inevitable but I am equally sure that the appointment of a public figure like the minister of commerce with a background in such an activity would be impossible. I feel reasonably certain that kind of appointment would result in an immediate outcry in any of these countries that have policies of toleration. That’s where Thailand is so different. I can’t think of anywhere that has a lower standard of ethical behavior in public office than this country. It’s not a trivial issue to condone, support and encourage human trafficking by appointing an officially sanctioned public figure who is involved in this business.

    Politicians in many countries have frighteningly low standards. If there is a democratic process then these degenerates know that there are limits to what they can or cannot do in office. When they go beyond a certain point there is a public outcry. I don’t blame the politicians. Their worst excesses can be limited though. What’s absolutely disgraceful here is the degenerate attitudes and indifference of the people who support the political party that feels free to do this. If, as seems to be the case, the supporters of the Democrat party and its PAD allies are the the people with the privileges and education and resources to know better then I have no hope at all for Thailand. Beyond the protection of their own privileges these people don’t seem to care. No wonder a deeply flawed figure like the deposed prime minister can continue to enjoy widespread support. With the government openly involved in dirty businesses, and the Isoc’s power to behave brutally newly enhanced by their enthusiastic Democrat allies, Thaksin and the red shirts must seem like the only hope of political recognition decent people really have. I feel the bile rising in my throat again …

  5. Chris on March 31st, 2009 12.40 pm

    Re: Jaded’s comments:

    I would say that by far the largest commercial sex industry in the world in sheer volume and numbers is in India where it exists mainly to serve the indiginous population plus Muslim visitors from the various Islamic Arab states and Iran. The second largest by sheer volume and numbers is probably China. The third largest is probably Brazil.

    In terms of actual percentages of the population involved, I would guess there are many African countries with much higher percentages than Thailand, and a much more brutalized treatment of the commercial sex workers themselves.

    In terms of Southeast Asia, all the SE countries have a large commercial sex sector, even Burma and Vietnam, even squeaky clean Singapore and Muslim Malaysia and Indonesia.

    In terms of the most callous and brutal area of this business, it is undoubtedly at the bottom and the most desperate levels that the rawest trafficking and worst mistreatment is most prevalent, the little sex villages full of trafficked minors in Cambodia being probably the most horrendous example.

    In the overall world situation, the Ratchada district in Bangkok and especially, the hi-end entertainment complexes, (where there is probably very little if any direct trafficking involved, and there is considerable personal freedom in terms of choice of establishment and the option to choose another means to earn money), is no where near being the worst of the worst and is, in fact, not totally dissimilar from the U.S. gigantic entertainment district called Las Vegas.

    That having been said, yes, I agree that it is very curious and hard to comprehend how a person whose family is one of the major players in Ratchada and who personally managed one of the largest Ratchada establishments, could be so publicly appointed to a high position in a national government and be put forward by a relatively large country economically to represent it in its commercial dealings with other countries.

    But then on the other hand, an even larger player in the Ratchada district recently received quite a few votes in his run for the governorship of Bangkok and is presently a Member of the Thai parliament in good standing.

  6. Jaded on March 31st, 2009 3.16 pm

    All fair comments Chris. I was focusing my remarks on the developed world in response to Bangkok Dan’s comment about more or less open sex slavery in Western cities. I don’t think you can compare Rachada to Las Vegas but who knows what opportunities may arise in the next decade to faciliate that sort of transition. It’s definitely “the” medium term property play in BKK for insiders … You know who got caught out for precisely this reason. And your point about other prominent public figures who are involved in the sex industry is completely reasonable. I can’t even claim any moral high ground myself here as I have stayed more than once in the Davis hotel and even indirectly benefited from the owner’s generosity to his employees in one instance. Clearly the money generated by the sex industry is so enormous that it would be impossible to live a normal existence here and claim any kind of moral high ground. The captain of industry in question has a popular mandate based not just on his wealth but also on his history exposing Police corruption and speaking plainly on other issues. I wouldn’t vote for him but obvious quite a lot of people did and that makes his presence in parliament entirely reasonable. (It gives him immunity from prosecution too but if it’s good enough for Berlusconi …)

  7. Students to Analyze Ratchada's Entertainment Complexes & Their Contribution to Thailand's GNP - TeakDoor.com - The Thailand Forum on March 31st, 2009 7.56 pm

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  8. DungaDung on March 31st, 2009 9.32 pm

    Did he get his Ph.D. in Khao San? He claims that 3.6 million Chinese are processed through a 50 story whorehouse in Ratchada, when there are not even anywhere near 3.6 million Chinese entering Thailand per year. Bit over 1 million, almost half of whom are female.

  9. Chris on March 31st, 2009 11.59 pm

    DungaDung:

    Please show a little respect. Are you saying that a Yesbel Laureate Ph.D. economist who graduated from LSE and is famous around the world for having had a hand in the design of the AIG Hedge Fund and Derivatives Strategy is mistaken in his analysis!?

    What are your so-called “qualifications” …

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