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Chiang Mai Citylife > Articles > The Tipping Point: Chiang Mai on life support

The Tipping Point: Chiang Mai on life support

A firm belief that Chiang Mai is the city that defeats the experts (muang prab sien), is a sentiment that’s been around for decades. It refers to the difficulty of any outsider’s attempt to start a business here that becomes successful. The saying is both humble and proud: on one hand it admits to the undoubted expertise of the outsider, on the other hand, it also claims that the outsider is doomed to failure because he is perceived to be unable to assimilate the culture or integrate into the community. Therefore, the saying goes, the outsider businessman will not thrive in Chiang Mai and his business will fail.

With its own culture, language and traditions, Chiang Mai has never been fully understood by Bangkok, and probably the reverse is true too. Yet, over the years, it is remarkable how so many new newcomer businesses have failed to make a mark. But will it always be this way? Is the Chiang Mai of today at a tipping point? Is it at risk of losing its culture, its community and its identity in the face of industrialisation and a continuously growing tourism industry?

People fall in love with Chiang Mai

“The geographic reason, the absolute reason Chiang Mai was never industrialised, is that Chiang Mai doesn’t have a port,” explains Khuned Sachdev, Chief Executive of iLab who has multiple business interests in both Bangkok, where he is from, and in Chiang Mai, where he now calls home. “Where there’s no port, no access to the sea, the chances of manufacturing are extremely low. With the industrial revolution leaving Chiang Mai untouched, the crucial social shift from agriculture to an urbanised, industrialised economy with people living in condos and apartments and working in factories never happened here as it did in the rest of Thailand.” So Chiang Mai remained apart from the hurly-burly of the fast transition from an agrarian to an industrial society and in the city-dwellers’ imagination has become the Promised Land of Thailand, flowing with milk and honey.

“Industrialisation has a huge social impact in the course of development,” says Khuned. “Chiang Mai is the only place where you haven’t had movement of people and societies from an agrarian lifestyle, and that’s why you have the beautiful hamlets as you drive outside the city. Fifty percent of people who come to Chiang Mai wanting to start a business, come here because they want to live here. People fall in love with Chiang Mai and their desire to succeed here is driven, more than in any other part of Thailand, by their emotions rather than by rational thinking. Chiang Mai is the only real place to live a quality life in Thailand.”

Thais and foreigners alike are charmed by the rustic, rural scenery and by the laid-back pace of life and sometimes feel they can set-up a business and kick back a bit, when in reality they cannot afford to do so. “If you look at how much effort you have to put in to earn a baht here, I think many of the people who come up [from Bangkok], if they knew that beforehand, they wouldn’t,” says Khuned. “Chiang Mai’s beauty has grown exponentially as a place with an agrarian lifestyle in a setting that is still not fully urbanised. Add in the facts that it was a very high culture, up in the hills, with high art, script and linguistics, local crafts and low-income levels, and you’ve got this thing which is a beautiful base for tourism.”

Tourism is Thailand’s oil curse
The oil curse is the effect that often happens when a country that is relatively under-developed strikes oil. Typically, such a country will then tend to experience lower economic growth, less democracy, and worse development outcomes than countries with fewer natural resources.

Tourism is having a similar effect on the Thai economy. And tourism is still growing. In 1997 tourism contributed 5 to 6% GDP and employed 12% of Thai people, directly or indirectly. Today, tourism is worth 20% of GDP and employs 25% of Thai people.

“The government now relies completely on tourism,” says Khuned, “it has kind of become the oil curse. It is embedded in our minds now that no matter what we do, no matter how many people we bring in, tourism will continue to grow. So we depend on it and now lethargy has set in. Go to Vietnam, go to anywhere. You’ll see the drive of wanting to be in a job. To excel, to learn, to stay. And that is non-relevant in Thailand, and you are now seeing a declining service level and a decline of care and love for the tourist. I don’t blame the tourists, I blame the policy. You can’t have 40 million people every year. And if you do discover a huge oil find, and when you have no other earnings mechanism, what do you do? You just pump more barrels per day. And in tourism terms that same reaction is really affecting Thailand, and in a sub-context of that, Chiang Mai. You have reached a point now where Chiang Mai is losing its charm, losing its product.”

Vice Chairman of the Chiang Mai Chamber of Commerce, Kobkit Issaracheyawat, believes tourism may not be the long-term answer, in part because of the lack of repeat business “The tourists, when they come to Chiang Mai, they come just once, or maybe a few times, so we have to puts lots of energy and resources into finding a new customer to make our business sustainable and ongoing,” he explained. “It is difficult to tailor a business for tourists as the customer is constantly changing and the peaks and troughs of the high and the low seasons have seen many a good business struggling. It is harder to maintain a relationship with tourists than it is with locals.”

“I find tourism is reaching a tipping point. It’s destroying Chiang Mai heavily,” states Khuned. “I think Chiang Mai should limit its tourism capacity and move into very high value agriculture. I think people will flock to it.”

What does Chiang Mai need for the future?

“A fourth Ring Road? That’s just a prime example of how infrastructure is being built contrary to the strength of Chiang Mai,” continued Khuned. “That’s a development plan made for Western America based on the automobile.”

It’s time to hit the alarms. “I would like the Chiang Mai community at least to have a say in the future development direction of the city itself. And skip the Bangkok advisory, and just go to a more global level. There are people who can assist in giving a better understanding of how this town is developing. Chiang Mai’s development is constrained by how much policies are centralised,” says Khuned.

Chiang Mai depends on Bangkok for funding, planning and more or less everything else. All provinces depend on Bangkok. Nothing can happen politically without Bangkok’s approval and funding. Therefore, it seems an unlikely prospect that Chiang Mai can change direction, even if it wants to. It would need strong local leadership to spearhead a planning initiative perhaps, or a locally grown Greta Thunberg to act as a catalyst for change.

“But if there is a want, or a demand, I think there is a possibility,” says Khuned, “especially in today’s era of social media and being able to get the word out and drive the momentum of public opinion. Shared word is powerful. Community is powerful. Unless that happens then the direction will go in not a nice way. If we are taking an industrial approach, where we want to develop the way Central Thailand has, then Chiang Mai will soon reach a state of over-dependency on Bangkok.”

The clock is ticking, the ring roads are sprouting, the hotels are rising, the condos are filling. Is Chiang Mai attempting to adopt Bangkok’s tactics: the property development, the unnecessary infrastructure, the suburbanisation, a cement and tourism economy?

“It’s not super-too-late,” says Khuned, “but if you drive all the way down to the new San Khampaeng road there are no rice fields anymore. It’s a diminishing value. Are we going to reach a point where the whole valley from the air is just going to be concrete? What’s really the value of Chiang Mai then?”

Various foreign experts believe tourism should be thought of as just one option in a complement of economic plans. It can be a way to strengthen local identity and to pay for the maintenance of a culture or a landscape but it should not be pursued on its own. As much as tourism might seem like a gateway to economic and social development, in too many ways it can quickly become a trap. A tourist trap.