Crime and its Impact on the Tourism Sector
Crime in Thailand: It Starts at the Top
March 7, 2016
By: Jack Swadron, Analyst; and Mitchell Nagy, Co-Team Leader
Keywords: Thailand, tourism, crime, fraud, safety
There are two major categories of crime risk for those conducting tourism ventures in Thailand. First, there is crime on the company. This type of crime would be activities such as fraud or bribery that increase the costs for a company to operate and thus decrease profits. Second, there is crime against the tourist. This type of crime affects tourism companies by potentially reducing the number of tourists visiting Thailand.
Crime against Business
Economic crime in Thailand in general is at similar levels reported globally, with 47% of businesses polled either certain or unaware that their business experienced economic crime. However, Thailand experiences more high-loss crimes per capita, with a larger portion of crime being US$100 million greater than the global average. To combat this, global firms operating in Thailand should have expatriates or other trusted employees working in all levels of the company, but most certainly in the financial control area of the firm. Increased corporate governance and oversight is another method to decrease the likelihood of internal fraud. This could come in the form of a veteran management team teaching the Thailand management team; however, a more cost effective and overall effective option may be to install a permanent experienced manager to maintain constant oversight.
A major potential for crime exists in the process of procurement of business. This usually appears during the request for proposal and the quotation stage of the procurement. What often happens is that shell companies, set up by both company insiders and outsiders, make several fake bids in an effort to drive the successful bid price to artificially high levels. Crime levels in this category are significantly greater than the global average, at 67% compared to 45% of businesses reporting crime during the procurement process. A safeguard against this would be difficult to ensure, but would require the company to have solid and transparent frameworks in place for when it issued such requests. Such a framework must be transferrable, with a focal point on conducting significant due diligence. Tourism companies that contract out their various tasks would face great difficulty in this regard, as most contractors likely do not have a great deal of easily accessible information. Therefore, the reputation and experience of the contractor would be key information.
As seen from previous statistics, economic crime in Thailand has not differed greatly from crime that would be experienced elsewhere. However, what makes business difficult in Thailand is its extremely high level of corruption. This is seen in the amount of bribery that occurs: 28% of Thai businesses reported to have been asked to pay a bribe versus 18% globally. Companies believe that the risk factor in this is the payment of bribes, rather than the risk of prosecution. This indicates that firms do not believe the government can help in lowering bribery rates, which infers that the only way to protect against this particular economic crime would be through internal means. Again, this suggests that the management team should be trustworthy and transparent. Additionally, employees near the bottom of the hierarchy, such as those with the most consumer face-time should be investigated to confirm their reliability. The domestic hiring process in Thailand is vital in ensuring that no untrustworthy employee is hired. A good testing metric would be the use of ‘secret shoppers’, individuals employed by the firm to try soliciting bribes from employees, to judge overall system susceptibility.
Crime against Tourists
In general, violent crimes against tourists are not prevalent in Thailand. Burglary, rape and kidnapping rates are all lower than in the United States. While petty theft like pickpocketing and taxi rate overcharging is prominent, this is likely not significant in dissuading tourism.
There is, however, a history of terrorist-related attacks in Thailand. For the last 100 years, there have been separatist movements within the southernmost provinces of Thailand. This movement has periodically used terrorism as a means to advance its cause. In 2006, bombings by a separatist group led to the death of an American national. The British government has instituted a travel advisory to limit travel to the southern states of Pattani, Yala, Narathiwat and Songkhla only to essential travel. These attacks have sometimes been aimed at tourist locations, with the intention of injuring Western citizens. The terrorist attacks produce substantial fear mongering, because of their inherent arbitrariness. If a significant terrorist attack were to happen (especially one involving many Westerners) or if terrorism became a more persistent issue, there could be grave consequences to the Thai tourist industry.
While the perception of safety in Thailand in general is not something that a particular tourist company can change, it can increase safety procedures in its own operations. Large scale tourism operations, like international or all-inclusive hotels, should invest heavily in security personnel and equipment. Not only would this increase actual safety for tourists, but tourists may feel safer and recommend the tourism establishment to others. Further, prior to making an investment, the location of the potential tourist establishment should be carefully considered.
