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Tue Jun 26 12:13:23 MDT 2001
NY Times, June 26, 2001
Their Financial Crisis Past, Thais Remain Disillusioned
By MARK LANDLER
BANGKOK - Nearly four years after it devalued its currency, unleashing an
economic typhoon across Asia, Thailand is still reeling. And while the
storm has passed, its aftereffects have proved stubbornly hard to shake,
leaving this country in chronic distress.
Thailand's banks are hobbled by bad debt; many of its biggest companies are
bankrupt; and its fragile recovery is sputtering, hurt by the economic
slump in the United States, Europe and Japan.
For many Thais, the latest setback confirms what they had suspected since
the crisis of 1997- 98 - that their country can no longer depend on the
global economy. Once the darling of the International Monetary Fund and
foreign investors, Thailand is turning inward under the weight of its
With many neighbors in similar or worse straits, some analysts say that
Thailand's nativism could take root elsewhere in Asia. From Malaysia to
Taiwan, people are struggling to live without the export-led growth that
lifted them out of poverty in the last 20 years. Bewildered and bitter,
they are starting to question the economic policies that have been a model
for the region.
"People on the streets believe that the I.M.F.'s way of solving problems is
wrong," said Tongchat Hongladaromp, newly appointed chief executive of the
Thai Petrochemical Industry Company, the nation's largest corporate
bankruptcy. "We've got to find a solution that works for Thailand."
In its hunger for change, Thailand ousted its pro-Western prime minister in
January, replacing him with a populist billionaire, Thaksin Shinawatra. Mr.
Thaksin has charted a sharply different course, emphasizing growth at home
over exports, funneling billions of dollars to banks and farmers and
dismissing those, like the governor of the Thai central bank, with whom he
This go-it-alone strategy is fraught with risks, not the least of which is
a threat to the prime minister's hold on office because of a corruption
Along with the abandonment of I.M.F.-style prescriptions has come a surge
in economic nationalism. Thailand is drafting policies to help local
products compete with imports. It has raised the fees for foreigners' work
permits. And state agencies have been prohibited from hiring non-Thais as
This tendency toward isolationism stops short of policies in Malaysia,
where the leader, Mahathir Mohamad, inveighs against neocolonial
financiers. Thailand has not imposed controls on its capital markets, as
Malaysia did in 1998. And it remains a popular destination for foreign
direct investment and tourism, though new investment has fluctuated in
recent months because of confusion over Thai policies.
While Mr. Thaksin is unnerving some foreign investors, he has won broad
domestic support and respectful notices from a few analysts, who are
cheered that Thailand is trying something different.
"He's right to say that Thailand shouldn't rely on foreigners," said
Christopher Wood, a regional strategist at ABN Amro in Hong Kong. "It's
just plain common sense that Asia shouldn't put its bets on exports."
The I.M.F. itself has taken more of a hands-off role in the last year,
since its loan program to Thailand ended. While the lending agency is
drafting a report on Mr. Thaksin's policies, its officials are not eager to
revive the debate over how best to repair the economy.
"There isn't a particular prescription the fund has, which would or
wouldn't work," said Reza Moghadam, the I.M.F. mission chief for Thailand.
"The question is, what are the policies which will deliver sustainable
In many ways, Thailand's next move depends on what happens to its leader.
The National Countercorruption Commission ruled in December that Mr.
Thaksin, who amassed a fortune from his telecommunications conglomerate,
concealed some of his assets when he was deputy prime minister in 1997.
A constitutional court is considering whether to uphold the ruling. If it
does, Mr. Thaksin could be banned from politics for as long as five years.
While his coalition would retain a majority in Parliament and he could
eventually return, it is doubtful a caretaker prime minister could carry
out his policies as effectively.
Even if Mr. Thaksin stays in power, he will have to deliver on a campaign
that promised something to almost everyone. The government pledged $23,000
to each of Thailand's 70,000 villages for small-scale loans.
It is also setting up a national asset management company, which will take
over many of the bad loans from banks in an overdue effort to clean up the
financial system. Previous attempts to do this failed because toothless
bankruptcy laws emboldened debtors to be recalcitrant.
Analysts worry that unless these programs are run with discipline, they
could easily devolve into corrupt bailouts. "I don't see Thaksin cracking
the heads of his friends and supporters to do what is right instead of what
is popular," said Jeff Earhart, research manager at DBS Thai Danu
Some analysts also worry that if the verbiage of economic nationalism is
pushed too far, it could mutate into xenophobia. Thailand has tended to be
less suspicious of foreigners than other Asian countries because - as any
schoolchild here will tell you - it was never colonized.
But many people here, from tuk- tuk drivers to tycoons, think that
Westerners took advantage of Thailand's desperation after the financial and
economic crisis to scoop up assets on the cheap. In the election campaign
several months ago, this suspicion was used to great effect by Mr.
Thaksin's party, known as Thai Rak Thai, or Thais Love Thais.
"Fear is a great motivator," said Amaret Sila-On, the chairman of the Stock
Exchange of Thailand. "There have been genuine attempts by politicians to
use nationalism as a tool to get what they want."
The financier George Soros canceled a speech in Bangkok in February when
protesters, including some respected local businesspeople, threatened to
pelt him with rotten eggs and fruit. They blame Mr. Soros for the collapse
of the Thai baht in July 1997 because he speculated in the currency.
"As a Thai, it is my duty to protect the prestige of my country," said
Amarin Khoman, a shipping executive who organized the campaign. "I could
not let him come and spit in our faces again."
Fear of foreigners has been a recurring theme in Thailand's efforts to
overhaul its debt-ridden banks and companies.
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