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A diver in the cockpit of one of the sunken squadron that vanished

Phuket's Dive Industry in Economic Distress

Tuesday, December 15, 2009
This article has been reproduced in its entirety at cyber diver news network without approval or a fee. This is akin to stealing phuketwan's breathing equipment. We urge all readers to boycott the CDNN.

THE PHUKET DIVE industry is in distress, with high costs and competition forcing a crowded profession to reassess the future.

Diving's downturn has even been linked to the recent suicide by hanging on a boat of one business owner, a popular expat.

A spate of bitter email exchanges between some brands has also caused dismay. In some cases, but not all, the heat is being generated between expats and Thais in an industry where teamwork in the past has been essential and unquestioned.

Some dive companies retain a positive attitude and believe the situation will improve. Others acknowledge the need for a shakeout, with the strongest surviving.

The proliferation of small dive operations, cardboard companies with little cash, has intensified the current crisis, which shows no sign of abating.

As economic reality bites home in 2010, layoffs are expected at some of the Andaman region's resorts and spas, both large and small. More restaurants and associated tourism businesses are expected to suffer, too.

For the dive industry, the crunch is already here. Instead of bringing improved revenue, the 2009-2010 high season has become the sigh season.

Tourists are back in numbers, but they have less money to spend (sigh). Where once it was easy to get a slice of the action, the oversupply of dive agencies means less has to cover more (sigh).

Diving is more expensive on Phuket (sigh) and the political uncertainty in Thailand means people sometimes choose to dive in Indonesia or Malaysia (sigh).

Survival for some will not be easy. One company manager who has diversified into dive apparel told us she has heard often of tourists complaining about prices.

Live-aboards have grown in scale to accommodate larger numbers of people but now, filling them is no longer easy.

Here are a some anxious excerpts from emails that have been copied to Phuketwan:

DIVER in Distress One ''I've heard rumors about myself and the company for more than one year now and have not retaliated in any way . . . I am brave enough to tell you that my company has seen better days with many of these current factors affecting me every day as customers decrease, decreased income, increased expenses etc, and of course it's related to cash flow and finances, which many people are concerned about. I am confident to continue operating to make us get through this crisis.

''I know that I am not the only one as vicious rumors circulate about others, too. I think now is the time to help each other not stand all over each other.Concerning any overdue invoices, I am still continuing to make no profit every day and am also owed a lot of money by people who are in the same situation. Please kindly wait for a while and let me work smoothly, so I can pay you all.''

DIVER in Distress Two ''This email is in an effort to fix the relationship between me and you. I was hoping, in your reply, that we would be coming to a point to get our problems sorted. After all, I owe you approximately 20,000 baht from a debt which was left to me by my previous business partner.

''My interest to clear the debt is still foremost. But this year, it has been too difficult to clear. This year has seen many losses and I have been riding the big bad wave so that I can be able to get money back to you during this high season. I have tried all year to make it through to this time of the year to be in a position to make corrections, and closing the door on me now just doesn't make sense.''

DIVER in Distress Three ''We should have better cooperation between true Phuket Thai dive boat operators with regular meetings and clear strategies to deal with all foreigners setting up illegal dive companies (More than 500 registered with TAT Phuket) with proxy nominee shareholders, proxy nominee directors and proxy nominee Thai staffs to look like they are Thai-managed dive companies.

''In fact, they cheat us. I understand that Thais do not like to complain to Thai administrations but complaining about hardship we are encountering with unfair competition is not a sin.''

PROBLEMS within the industry in Phuket, Phang Nga and Krabi are exacerbated by the high cost of entry to the Similan and Surin National Parks, the Andaman's prime diving destinations, with an entry fee of 200 baht and 400 baht a day for diving.

The national parks are scheduled within two or three years to become a Unesco World Heritage site and may be required to limit the number of visitors and divers per year.

This would normally apply a brake to the unprecedented expansion within the diving industry, an expansion that has come without customers to justify it.

However, from 2010 businesses in Asean member countries will be able to hold 51 percent of Thai companies, increasing to 70 percent in 2015 and 100 percent in 2020.

Without regulation, this means certain continued turbulence.

This year the local diving industry has also recorded a live-aboard sinking in which seven people drowned. A police investigation provided a single-page report, with no expert review of the cause of the disaster or the lame, late rescue of 23 survivors.

To add insult to injury, an artificial reef of obsolete aircraft, sunk off Phuket with great expense and publicity, was destroyed by fishing trawler drags and strong tides that divers did not anticipate.

Any individual on Phuket who feels excessive emotional distress should call 1667 for help, 24 hours a day.
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Comments

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Too many dive centers, too many tuktuks, too many tour-counters, too many hotels, too many restaurants...and the list is endless.

When TAT Thailand will learn to control properly tourism related business expansion by issuing or not new business licenses in order that all those already in the same businesses make enough profit to have a decent life.

The too hard competition in tourism related businesses for few hypothetical customers bring up the system of bribes and large commissions to touts or middle-men and at the end it is the tourists who are paying the overprices for services; therefore TAT get the opposite of what they are looking for.

Posted by Whistle-Blower on December 15, 2009 19:15

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@whistle-blower: You really think TAT could "manage" a "right" amount of tourist related business, so everyone on the inside can have a decent life? What about the outsiders with good ideas? Even China does not do that anymore. A healthy economy is the survival of the fittest and the going down of the weak.

For the diving business, besides the safety regulations and the dive place regulations, I do not see any point in thinking how the TAT can be better at forecasting the diving business needs than any operator by itself. But what the TAT should do is help to improve transparency in the diving business - bring out the stats -, improve or at least maintain the diving places and promote them worldwide and help improve the overall business climate for the tourist industry in Phuket and nearby provinces by eliminating red tape, overpricing and cheating on tourists. Better knowledge, better decisions - better places + better image, more customers - more tourists, more divers.

And the operator should think about getting bigger, selling out or buying other, franchising, branding, market as the "Starbucks" of diving or the "Big C" of diving. And do that in cooperation with a lot of destinations.

The time for the two guy show, with the backpackers coming first to Krabi/Phuket with money left to spend on diving courses and then going on to Bali and Australia has changed. A lot do diving courses somewhere else. And of course, since the Thai can instruct diving also, the market inflated. But the competition is not only in Phuket, it is in Egypt, in Dom.Rep. etc.

Posted by Lena on December 16, 2009 16:43

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TAT Region 4 (Phuket-PhangNga-Krabi) Registration Office at Wirat Rongyok Road, Muang, Phuket is in charge to check if all dive operators have all official documents such as:
- SHAREHOLDERS: There are at least 51% of Thai shareholders in the companies and 70% of Thai shareholders in case dive companies own Thai dive boats which must be declared as transport boat with the harbour Department. Thai shareholders must be real investors and not Thai proxy nominees which is illegal in Thailand to do it.
SHAREHOLDER'S ASSETS: To get issued a work-permit by Labour Department, Thai companies must have at least 2 Million Baht per work-permit (1 Million Baht in case the foreigner is legally married with Thai spouses). Most of dive companies do not have the required 2 Million Baht but have 1 year to credit the Thai companies of that amount but none do it which is illegal in Thailand.

- DIRECTORS: Company Registration documents must stipulate that only Thai directors can sign for new or renew TAT licenses and it cannot be Thai proxy nominees which is illegal in Thailand to do it.

- THAI STAFFS: Dive companies must employ at least 4 Thai staffs for 1 foreigner and in no way Thai staffs should be Thai proxy nominees which is illegal in Thailand to do it.

At the moment, most of foreign Instructors with the help of rogue lawyers and accounting offices are setting dive companies with no money (2M Baht) with the help of Thai proxy nominee as Thai shareholders, Thai Directors and Thai staffs.

Also TAT Region 4 (Phuket-PhangNga-Krabi) may decide with the help of Governors and local authorities to stop to issue new TAT Licenses for diving businesses as they did already with Sea-Walking and Jet-Ski companies previously.
Those, Thais or foreigners alike, who are following the Thai regulations are the born losers at the moment and it should be corrected by the Thai Administrations the sooner, the better.

Posted by Whistle-Blower on December 16, 2009 18:47

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Thanks, now I understand your point.

"Those, Thais or foreigners alike, who are following the Thai regulations are the born losers at the moment and it should be corrected by the Thai Administrations the sooner, the better."

Posted by Lena on December 16, 2009 21:56

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If you are looking for distressed managers in the diving industry, you will find them.

Just walk into a dive center and ask if they have any problems. And of course, it is alwas the fault of somebody else: The TAT, the competition, the tourists, the weather - anything is good as an excuse.

Actually, there are worse countries than Thailand and much worse places than Phuket.

My honest opinion is, that there are always winners and losers in the market, but the latest trend seems to be a sad one: "Send out e-Mails to everybody and let them know how bad your business is at the moment and try to object every rumour they are telling about you".

This does not really help. In fact, it even spreads more rumours and pushes some companies into the spotlight they don`t want to be in.

Again: There are winners and losers, but it seems that the winners keep quiet and spend their time rather by improving their marketing strategies and increasing their margins instead of answering to every rumour about them.

Posted by Mig on December 18, 2009 10:10

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@ Mig; So if we understand your opinion, dive operators in Phuket should not complain about illegal and unfair competition from selfish dive operators, should not organize professional meetings with dive associations and local authorities to fix problems but instead should focus to help foreign Instructors to work with Tourist Visas, should help foreign investors through bribes to set up Thai companies with Thai proxy nominees as Thai shareholders, Thai Directors and Thai staffs.

Sorry for you, but in Thailand there are rules and laws as good or bad as in Europe or North-America.

What would happen in Europe or North-America if foreigners would be working without proper documents (Visa, work-permit and company registration)...they would land in jail, be prosecuted and deported manu military. That it.

Why not in Thailand?

Posted by Local dive operator on December 18, 2009 13:01

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@Local dive operator: No.

Posted by Mig on December 18, 2009 15:41

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@ Mig; what do you mean by No! No to what? Give us clear explanations of you want to say. Thanks.

Posted by Local dive operator on December 18, 2009 18:01

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World Wide Web is THE place for free information, perhaps Phuketwan should charge for access to its site if reproduction is not desirable - but then it would lose readers.

Editor: The article we worked to compile has simply been stolen in its entirety, cut and pasted onto another site so that others will benefit from our hard work. This is robbery. These thieves will continue to operate in this fashion.

It has nothing to do with 'free' information. It has a lot to do with plain and simple theft. These people deserve to be shunned.

Posted by MediaWatcher on December 19, 2009 09:47

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@Local dive operator:
By "No", I mean that this is not my opinion: "dive operators in Phuket should not complain about illegal and unfair competition from selfish dive operators, should not organize professional meetings with dive associations and local authorities to fix problems but instead should focus to help foreign Instructors to work with Tourist Visas, should help foreign investors through bribes to set up Thai companies with Thai proxy nominees as Thai shareholders, Thai Directors and Thai staffs."

Actually, I never wrote something about this, but more about some successful and busy operators and some who are not. (And I am not saying that all successful dive centers are running illegally!)

So, communication through a forum is not really helpful, there are too much misunderstandings.

Posted by Mig on December 21, 2009 11:38

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Forums are the best way to communicate to public at large and you too give us your personal opinion in Phuketwan forum.
The point where Thais and foreigners disagree the most is that many foreigners think that they are better and more professional that local Thai people and claim that they deserve to work legally or illegally because they speak the same language as the divers or because they bring into Thailand those divers.

Large successful foreign dive centers with foreign management and fully staffed by illegal working foreigners are the root of most of problems we encountered in Phuket only as other dive destinations in Thailand do not work the same way.

Dive centers in Koh Tao by example are fully owned by Thais and employ foreigners as dive Instructor and staff but are fully under the control of Thai people and those foreigners can not work as freelance dive Instructors for several dive centers or canvass in the street for commissions by booking dive tours with several dive centers but instead they must work for only one dive center with or without work-permit so the Thai dive centers do not have to pay up to 30% to the freelance Instructors in extra of the commission they pay them to teach dive courses.

The objective of the Thai administration since longtime through meetings and regulations is not to block foreigners to invest or work in Thailand but to control the development of the dive tourism industry.

Foreigners can invest 30% (Company owning dive boat) and 49% by being true foreign partners with true Thai partners as it happening in the hotel industry. Hilton, Sheraton, Le Meridien and so on are partners with Thai people which own fully or partially the properties according to Thai laws.

Many foreign investors and dive Instructors do not respect Thai regulation and laws and you get the mess that we have today in the dive industry in Phuket.

Posted by Local dive operator on December 21, 2009 14:10

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That CDNN site is a sham and well known in the dive industry - for more about it you can see http://www.divepoll.com/

Posted by Jamie on December 21, 2009 14:59

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@Local dive operator:
Allright, I understand your point. But also, there are some unsuccessful and unhappy dive centers on Koh Tao.

And to make it clear: A lot of foreign dive center managers are the ones who are distressed and complaining. I think we can agree on the fact, that there`s black sheep everywhere and not all are the same. And I also agree to your comment, that everyone should have the same rights and follow the laws (as long as they make sense).

Let`s see what the future brings and how the market changes.

Posted by Mig on December 22, 2009 14:46

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Since 15 years, the dive industry in Phuket had tried to auto-regulate the dive business in Phuket by setting up DOCT (Dive Operators Club Thailand) without success as greedy owners of large dive centers were fighting each other for protecting their businesses.

Then, since 2005, we saw the official dive association TDA Diving Association (Thailand) which is affiliated with CMAS Worldwide. Infighting for power, lack of ethic and few Thai people in the BoD who know the diving industry and the way diving is managed around the world has weaken that association for a while but sooner or later it may be the sole leading official dive association in Thailand.

Phuket Governor on October 2009 said he will set up a committee to control the too many illegal foreigners working in Phuket but up to day nothing has happen and all illegal foreign Instructors enjoy to work illegally in the dive industry in Phuket.

Merry Christmas.

Posted by Local dive operator on December 24, 2009 11:12

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Lena, you couldn't be more wrong. You say "A healthy economy is the survival of the fittest and the going down of the weak." You have a blind, unjustified faith in the worst sort of social darwinism, in which healthy businesses are eroded by competing with cheap unworthy competitors. By "unworthy competitors", I mean businesses with good services and a decent profit wither under competition with bad-services-but-more-profitable companies, fly-by-night competitors, and competitors that simply have the backing of richer investors so they can invoke a long price war.

You simply sound naive when you suggest that the TAT couldn't do better than an individual business, in deciding whether the marketplace can afford to have one more dive operator. The TAT has deeper pockets, more objectivity, and better access to economic histories and forecasts. A future dive operator in Phuket, whether Thai or foreigner, is not likely to have a well-researched business plan. The foreigner might be looking for a "fun" job for himself, to keep him in the land of cheap beer and wild Patong gals.

Look at the number of failed bars, restaurants, and dive businesses. Foreigners, I suspect, are well motivated to start these businesses for reasons that have nothing to do with a healthy economy.

Try to get past the propaganda about a free market economy. Managing teh number of competitors in these key industries is a GOOD idea.

Now let me backpedal a little: I don't think it's a good idea to force Thai dive instructors on the industry. In my opinion, it takes more than five years and possibly ten years of dedicated learning before one has enough English/Swedish/Russian/Japanese to do a competent job at teaching scuba certification courses. Let the Thais be managers, owners, divemasters, captains and boathands, but the law needs to be realistic about the communication skills needed to be an instructor.

As for the TDA: its farang leaders are self-involved, and should be removed immediately. They aren't in-country year-round; they placed the "coral reef squadron" in a bay that is only convenient to THEIR diveshop, and they're committed to trying to make their preferred dive certification group (CMAS, as opposed to PADI, NAUI, BSAC, etc.) the MANDATORY dive certification group in Thailand. They're selfish opportunists.

Posted by the blind leading the blind on December 26, 2009 07:30

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Burn baby burn especialy thailand divers.

Posted by jim on December 27, 2009 18:02

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Look at Singapore which is the most capitalist and free market country in Southeast Asia.
Singapore is controlling its tourism in a perfect balance between investors and what is really needed in hotel rooms same as do it Maldives.

Few years ago, Singapore dive centers was wild and uncontrolled as it is today in Thailand where dive centers are opening and closing at very fast space and are organizing and selling dive packages and liveaboards around the world through dive center web sites with payments in third country by PAL to avoid taxes in Thailand as well without proper tourism licences to do it.

Singapore decided to bring under control Singaporean dive centers and now those dive centers must have proper tourism licences with qualified staffs to send their customers abroad or book through legally registered travel agents their dive holidays abroad.

We just cross the fingers that TAT and Thai Administrations will act decisively the same way as in Singapore or Maldives to name just a few.

Posted by Whistle-Blower on December 28, 2009 10:15

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Today, Friday 15 January 2010, Chalong Pier got the visit of the Phuket Immigration to crack down illegal foreign Instructors working in Phuket without work-permit.

It was a fled the scene by most of those foreign Instructors, proving to all how many of them are working legally.

Posted by Local dive operator on January 15, 2010 18:33

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thats interesting they've only had two years to take pictures and so on of them and then they run away. that's cool great organisation. I pay my taxes and all that yet I'm not supported by Immigration as I srtuggle to make ends meet. Who really wants to do the job properly to take it in hand? No one, I think?.

Posted by OWSI on January 31, 2010 09:25


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