Thailand looks back at lessons from Asian financial crisis
By Channel NewsAsia's IndoChina Correspondent, Anasuya Sanyal | Posted: 02 July 2007 2004 hrs

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BANGKOK: Exports have been the driving force behind Thailand's steady recovery from the 1997 regional economic crash of epic proportions known as the Asian Financial Crisis, rising from 40 percent to the present 60 percent of the economy.

Today, Thailand has US$65 billion in foreign currency reserves, versus a total foreign debt of US$50 billion.

Since the crisis, the Thai government has changed a number of regulations, resulting in a more stable economic environment.

Growth is no longer as volatile. And in the last decade, GDP growth has been steady, in the region of 6 percent.

Adisak Kammool, Economics and Strategy Research Institute, KGI Securities, said: "After the crisis, business practices were changed, especially on the regulatory side. For instance, the financial sector, which used to have a limit of 25 percent foreign holding before the crisis, now allows foreigners to hold 100 percent stakes in any banks. It's freer than before and more liberalised."

Given the upcoming elections, economists do not anticipate any new policies from the interim government. Instead, they hope to look to the new government to guide Thailand's fiscal course.

But speculation on the baht – the trigger for the meltdown ten years ago – and the central bank's recent botched attempts to control it, are making some people worry that history may repeat itself.

Mr Kammool said: "We tried to stop speculation late last year, but we failed, so the authorities had to set the regulatory measures by imposing 30 percent provisioning rules against short-term funds moving into Thailand."

Many Thais see King Bhumibol Adulyadej's sufficiency economy theory as a plan for stable and measured growth.

Professor Titiporn Siriphant Puntasen, Faculty of Social Administration, Thammasat University, said: "I think in certain sectors like the agricultural base sector, whose livelihoods depend very much on the ecosystem and the natural environment, some of what they have practiced are in alignment with the King's saying."

One man who is applying this principle of prudent expansion is Sirivat Voravetvuthikun, popularly known as the "Sandwich Man".

This once-wealthy entrepreneur lost his fortune in 1997. To survive, he turned to selling sandwiches at busy Bangkok intersections.

He has since expanded his business to two small coffee shops, without borrowing money.

Having seen both good and bad times, he predicts tough times ahead from the increased regional competition.

Mr Voravetvuthikun said: "I think Thai people have not learned and they are not prepared this time. I think this economic bust will be bigger than the one in 1997. Ten years ago, Vietnam was nothing compared to Thailand. But today, everyone is talking about Vietnam, the next tiger, not Thailand."

But taking to heart the lessons he has learnt from the crisis, Sirivat is looking forward to listing his company on the stock exchange in two years.


- CNA/so