Thailand said floods that have devastated much of the country’s south have “paralyzed” the flow of high tech components and car parts to neighboring Malaysia, potentially benefiting rival exporters in Indonesia and Vietnam.
In the hardest-hit area of Hat Yai in Songkhla province, a commercial hub and transport gateway, major roads have been cut off and rail services suspended.
“Hat Yai has become our bottleneck,” the Ministry of Commerce said Tuesday in a statement. “Even though border checkpoints remain open, the reality is that most routes leading to them are either underwater or impassable.”
The statement said the flow of goods had slowed to almost zero: “Exporters simply cannot move their shipments out.”
More than 180 people have been killed, and millions more affected. Around 800,000 households have suffered serious damage and more than 100,000 cars were lost in the disaster.
The floods are the worst on record for southern Thailand, with the government estimating the damage at around 500 billion baht ($15.6 billion).
“Repeated disruptions like this undermine confidence in Thailand’s reliability as a regional supply hub. If we can’t guarantee timely delivery, buyers will look elsewhere,” the commerce ministry said in the statement, prepared by its Trade Policy and Strategy Office. “Vietnam and Indonesia won’t wait for us to recover. If overseas buyers turn to alternative suppliers now, winning them back later will be extremely difficult.”
The country faces additional losses of up to $400 million a month if conditions persist, with electronic components and auto parts seeing both higher costs and delivery delays. There is the potential for direct losses on exports of perishable goods.
In some instances, flooding has halted the issuance of certificates of origin needed for export processing. And in any case, the bowl-shaped terrain of the Hat Yai area has virtually cut off exporters’ access to the Sadao and Padang Besar checkpoints, which handle 96% of bilateral border trade with Malaysia, the ministry said.
The week of Nov. 24-30 saw a 43% plunge in visitors from Malaysia compared with the previous week, according to Ministry of Tourism and Sports data.
That represents a blow to the country’s already sputtering hospitality industry, with Malaysians topping international visitors to Thailand in the first 11 months of the year.
“We don’t know how long will it take for tourist arrivals to return to normal,” said Thanavath Phonvichai, the president of the University of the Thai Chamber of Commerce, at a briefing in Bangkok. “The impact on tourism in the affected area may drag on to early next year.”
The flooding comes at the end of a challenging year for Thailand, which was rocked by an earthquake in March, saw border clashes with Cambodia in July and a subsequent political crisis that brought a new government to power.
The economy shrank 0.6% in the three months through September from the previous quarter.
Still, the overall economy should expand more than 0.6% in the current quarter from a year ago, Finance Minister Ekniti Nitithanprapas said in a briefing in Bangkok Tuesday. That forecast factors in the southern floods, which are expected to shave 0.1 percentage points from overall growth.
Photograph: People clean up damage in Hat Yai, Thailand, on Nov. 29, 2025; photo credit: Sirachai Arunrugstichai/Getty Images
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