Economic cost of flooding in the Mekong region

Flood in Cambodia's Siem Reap province.

ABC Radio Australia

Updated October 14, 2011

Floods in South east Asia have killed at least 500 people in Thailand, Cambodia and Vietnam ... and displaced thousands of others, as whole villages are inundated.

Crops have been destroyed, factories suspended and Cambodia's popular water festival has also been cancelled.

We take a look at the economic impact of the floods.

Reporter: Sajithra Nithi
Speakers: Javed Hussain Mir, Asian Development Bank; Hun Sen, Cambodian Prime Minister

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NITHI: The floods are Thailand's worst in 50 years and have dealt a heavy blow to the economy, as hundreds of factories are under water.

Japanese car makers including Toyota, Honda and Isuzu have been forced to suspend production in Thailand because of direct flood damage or disruptions to their parts suppliers.

And it's not just the motor industry that has been affected.

Damage to rice crops has already prompted the Thai government to downgrade its estimate of production, from 25 to 21 million tonnes.

It's a similar scenario in neighbouring Cambodia and even in Vietnam - the world's second largest rice exporter.

Javed Hussain Mir is a Director of Environment, Natural Resources and Agriculture Division at the Asian Development Bank.

He says damage to crops is a cause for concern in the long-term.

MIR: In the short term this may not cause a sudden spike because there are, in the international markets, sufficient supplies, but in the coming months and the next year, if the situation is of the extent that's been estimated right now, it could cause further problems in terms of food supply and food price rises, especially in staples like rice.

NITHI: There are concerns for the regional economy, though Mr Mir says it's too early to put an exact figure on how bad.

MIR: But with the estimates we're seeing, in terms of damage and cost of reconstruction, it could be anywhere from two to three billion in the region. It's too early to call that, but even estimates of a reduced GDP of by about one 1 per cent is being estimated.

NITHI: While the motor industry and agriculture have been hit, tourism is one sector he is not too worried about right now.

MIR: Currently we're not seeing major disruptions because Thailand and Cambodian tourism market is quite diverse, so the areas where tourists go, coastal areas, especially northeast and northern Thailand, it's still accessible.

NITHI: But in Cambodia, floods have forced the country's biggest festival to be cancelled.
The annual water festival usually attracts more than a million people to Phnom Penh, to watch traditional rowing races.
But Prime Minister Hun Sen says the water levels in rivers are dangerously high and that the money saved from the event would be used for flood relief instead.

HUN SEN (translation): The government is taking the necessary steps to cancel the annual water festival, which was due to take place on November 9 - 11 in Phnom Penh. I take this opportunity to apologise to the monks and the people for our necessary steps we are taking to save lives in the countryside, instead of entertaining the city.

NITHI: Javed Hussain Mir from the Asian Development Banks has a positive outlook on the ability of these countries to recover.

MIR: The governments are in a good position to respond and if effective measures on reconstruction and rehabilitation are put in place, there will be some economic impact, but the recovery could be effective and fast.

NITHI: While one part of Asia suffers, the loss of rice crops in Indochina could be blessing for countries like India, with its plentiful stocks, as buyers turn to alternative markets.