People come to Phuket for water-related activities," says Bill O'Leary, manager of Aman Cruises and a leading figure in the local boating industry. "For one thing, the water around here is an anomaly — water clarity decreases just north of Langkawi, in Malaysia, and just south of Burma's Mergui Archipelago. Phuket lies in the middle of the cleanest stretch of water in the Andaman Sea." And that's only one of many advantages this area offers the boating enthusiast.

Phuket is the cruising centre of the Andaman Sea. Within a few years, Phuket and environs could emerge as the most important boating destination in Asia, boosting both the local economy and the island's international image. But outdated laws and regulations have so far impeded this enormous potential.

One especially important stumbling block has been the crippling taxes on imported recreational vessels. Until 1996, taxes on imported yachts totalled about 50 percent of the value of the vessel. Then the excise tax was raised. The common understanding, at first, was that the levy was to jump to 50 percent. But the "50" was not "50 percent" — it referred rather to an arcane means of calculating what was really a 111.111 percent tax. Boats were valued by the Customs Department and assessed a 30 percent import duty; a 111.111 percent excise tax on the boat's value plus the import duty; an Interior Ministry levy of 10 percent of the excise tax; and 7 percent VAT on top of the other three taxes. In total, then, the official tax on an imported yacht came to about 209 percent. The calculations became so complex even the concerned officials often had trouble working things out, and the levies were perhaps left too much to the interpretation of individual departmental officers.

Last year, the government, in a first sign of reform, reduced the total import duties to 47 percent. On 4 October 2003, the Bangkok Post reported that Prime Minister Thaksin Shinawatra has now approved cutting the 5% excise tax and 30% import duty to zero. Thailand's largely Phuket-based marine leisure industry has won an important battle in a campaign of nearly two decades duration. The Prime Minister said Phuket needed a facelift to compete with other tourism spots in the region.

People in the industry have been trying to have these onerous taxes repealed for 20 years. Why are we finally seeing some action?

The Marine Alliance of Thailand (MAT), established at the initiative of the Tourism and Sports Ministry and under the direction of Dr Sasithara Pichai-channarong, of the Ministry's Office of Tourism Development, has this past year sought the advice of people connected with the industry and held public hearings to determine new policy. Among other things, MAT has estimated that the marine leisure industry is now contributing 700 baht per year to Phuket and more than 1000 million baht to the country as a whole. A considerable sum, but one that falls far short of the billions of baht that could be generated for both the local and the national economies — MAT believes that within 10 years the marine leisure industry could be contributing as much as 11 billion annually.

In part, the current concern stems from the government's drive to reposition Thailand as an upmarket destination. Marine tourism, in this regard, is perceived as an showcase product. For one thing, as Gareth Twist, managing director of Phuket's Yacht Solutions, points out, in a time of SARS, war and bombings, together with the concomitant plunge in regional tourism generally — the marine tourism industry, if anything, grew stronger. This may have helped inspire the realization that this represents an especially resilient growth market, "one that at the same time employs a lot of locals and gives Thailand a very desirable image."

"The change in attitude has also come," suggests Vincent Tabuteau, managing director of the upmarket East West Siam travel company and a pioneer of Phuket-based yachting, "because Customs might have noticed that, under the existing situation, no new boats are being imported at all, so they lose nothing by dropping the duties. And it's because a lot of yachts that really belong on Phuket are now moored instead on Langkawi, and this situation may have somehow touched even the Prime Minister himself." As O'Leary puts it, key government officials are finally coming to see that this is more than simply "a hobby for a bunch of rich foreigners".

What promise does this one change in law hold for the Phuket-based marine leisure industry? O'Leary sums it up thusly: More money should flow into Thailand, together with more tourists, more jobs, more skilled crew members, and safer boating practices.

"I'm sure the effects will be immediate," says Tabuteau. "Already, I know that [Phuket-based] Sunsail and Thai Marine Leisure are alone ready to import 30 new boats. In addition, new companies will be created and capitalized to buy boats, while related operations from marinas to shipyards will benefit. Boats now moored on Langkawi, furthermore, will move to Thailand."

O'Leary believes there'll be an immediate increase in foreign yachts applying for a Thai flag. The advantage, from the owners' point of view, is they then avoid the regular visa runs to Langkawi. From the perspective of the Thai national welfare, meanwhile, this situation will produce more revenue in terms of marina fees, wages for Thai crew, local maintenance and repairs, and much more. Thai luxury boat owners will be able to "come clean", opting for Thai flagging rather than having to carry flags of convenience in their own country of origin because of exorbitant taxes, adding still more to revenues.

The area should also see a jump in numbers of visiting megayachts who get Thai flags. Many of the super-affluent set will decide to keep vessels here permanently for their own cruising in Asia needs, also making them available for their families, friends and clients. "Once Thai flagged," O'Leary adds, "they'll stay here forever, becoming proxy Thai property. Flagging means that they can be used in the merchant navy, for example, in the event of war or civil emergency, which is again of benefit to everyone in Thailand."

Other potential benefits include promotion for the Thai travel industry as a whole, as news and editorial are released in major yachting and boating publications around the world, also boosting bareboat yachting activity and foreign investment in boat charter, boat building and property development.

What longer-term effects can we expect? "Phuket has some of the best cruising grounds in the world," says Twist. "There's a great local attitude, with skilled and helpful people who can adapt and work well. The integration of locals and expat talents and resources represents a unique opportunity to make Phuket the best in Asia. Millions upon millions more baht are going to flood into the local economy — supporting lots more marinas, long-stay boats and charter companies, together with a fast-growing support industry. Phuket will become Asia's Riviera." Other people, looking at potential developments from the global perspective, would instead describe Phuket as a new and improved Caribbean.

Tabuteau also thinks that "the sky is the limit." But, he believes, the next hot topic will be how to control the growth and its effect on the environment. "One of the advantages of this part of the world," cautions Graham Frost, managing director of SEAL, which among other things manages visiting superyachts, "is that you can find nice quiet anchorages with beautiful beaches all to yourself. This is especially appealing for superyachts. In the Mediterranean, by comparison, you're queuing up."

If duties drop to zero and a massive number of boats flock to the area, new pressures could threaten everything from the health of coral reefs to the idyllic ambience that now characterizes so many of the islands and coves. "But," Tabuteau argues, "it's not inevitable that development ruins a place. Development should come with a development plan. Private development should be undertaken in conjunction with the public sector.

"And sometimes the notion seems to prevail that marinas have to have 500 berths or none. That isn't true. By multiplying the number of separate facilities, you can take the pressure off. In Turkey, for example, you have seven or eight marinas now, but you also have a very strong management law — rules regarding how many boats are permitted where and for how long. Six and seven marinas could be established in the Andaman Sea without ruining the environment." (Graham Frost suggests that a marina in Trang or Saturn, for example, could provide direct competition for Langkawi.)

Ultimately, according to people like O'Leary, the recreational boating boom could bring with it greater environmental controls, reducing pressure on coastal habitats from shrimp farms, for example, and reef destruction by bombing, long-lining and inshore trawling for the short term gain of a few.

Tourism is now Thailand's biggest industry, while Phuket is already one of the Kingdom's prime attractions. Currently, the national government is promoting a vision of Phuket as a regional hub for transport, spas and hospital services, information technology, duty-free shopping, and yachting. Many of the people attracted by boating overlap virtually all the other segments targeted by the Tourism Authority of Thailand (TAT), including takers for the much-touted "million-baht privilege card". Beyond that, yachting will attract long-stay visitors, boosting a thriving local property market that is seeing ever-increasing numbers of million-dollar-plus villas going to retirees, holiday homeowners, and international business people seeking a home and office in tropical Asia.

And these tax reforms will spur lesser marine leisure booms on Koh Samui and the Pattaya-Koh Chang coast. Indeed, the surge in jobs and revenues will spill over into the entire national economy.

Will more Thais themselves become commercially involved in recreational boating? "Yes," says Twist. "Certainly. It's becoming simpler and easier, and more people are becoming aware of the potential. And the more the economy grows, the more disposable income will be available for investment."

Whatever its causes, the new official attitude represents a sea change from a year ago, when Mr Radab Kanchanavant, Phuket King's Cup Regatta Organising Committee member and Co-Commodore of the Yacht Cruising Association of Thailand, could suggest this: "I don't think we have key people in the government who really understand recreational boating. They fail to see the big picture. They seem to assume that owning a boat is like owning a Ferrari, and simply want to tax boats as luxury items. They don't understand how recreational boating could contribute to tourism and the economy. Boating, properly encouraged, will generate more government revenues as well as more income, jobs and training for locals"