July 02, 1999
| | |
| ||
| July 02, 1999 | atimes.com | |
| ||
| Southeast Asia Two years after crisis started, Thailand's policies remain unchanged By Boonthan Sakanond BANGKOK - Two years after Thailand floated its currency, the baht, and triggered an economic crisisthroughout Asia, there are few signs that the country's policy-makers have learned any long-term lessons from the experience. Even in the short run, despite some superficial signs of macroeconomic recovery, analysts say that there are still vast problems plaguing key sectors of the economy for which no simplesolutions are in sight. There are indications that Thailand seems to be taking the Asianeconomic crisis as just another blip - albeit a major one - inits grand vision of becoming a tiger economy, they add. For one, despite the unprecedented nature of the crisis, seniorgovernment and private sector officials responsible throughnegligence and even fraud for causing the problems remain unpunished. There has been no fundamental rethinking of the direction ofnational economic policies. And despite some minor measures, thecountry still remains vulnerable to the speculative flows ofglobal capital that brought it down two years ago. It was on July 2, 1997, that the Bank of Thailand decided to floatthe baht, after nearly a year of battling currency speculators whohad targeted the currency for being overvalued. The move caused the value of the baht to plunge by more than 100 percentagainst the U.S. dollar and set off a round of devaluationsthroughout the region and beyond, leading to severe recessionaryconditions all over. One of the best examples of how those responsible for thecollapse of the Thai economy are still walking free is the case ofRakesh Saxena, an Indian-born banker and former adviser to theBangkok Bank of Commerce (BBC). The BBC was one of the first Thai banks to collapse, in mid-1996,due to what investigators later said was fraud and embezzlement offunds by top executives of the bank along with Saxena, who isalleged to have been the brains behind those operations. More than two years after Saxena mysteriously escaped theclutches of the Thai police and fled to Canada, the Thaiauthorities are still unsuccessful in their attempts to extraditehim to face justice in Thailand. Several senior BBC executives, who come from politicallyinfluential Thai families, have been charged with economic crimesand let out on bail. But, mysteriously again, no criminal chargesare being pressed against them. The Thai government so far has spent over $4.0 billion on keeping BBC afloat, making it one of the world's costliest bailouts involving an individual bank. Over 56 financecompanies and four banks have been ordered shut down or mergedwith other more viable banks since the crisis began but none oftheir executives has been punished so far. ''There is very little likelihood of finance company and bankexecutives facing jail sentences, due to numerous loopholes inThailand's legal system,'' says Borwornsak Uwanno, a lecturerat the Faculty of Law in Bangkok's Chulalongkorn University. He says the fraudulent cases that brought down the variousfinancial institutions rarely provided the investigators with hardevidence and in almost all cases could only lead to circumstantialevidence, which might not be sufficient under the existing legalprocess to bring the alleged suspects to justice. An even more fundamental reason why no punishments arelikely, Borwornsak says, is because most of the culprits belongto well-entrenched ''old boy networks'' that dominate politics,bureaucracy and business in the country. He cites a 1984 case in which charges against several financecompany executives were framed; the charges were quietly dropped when theeconomy picked up steam in the late eighties. At the macroeconomic level too, the Asian economic crisis doesnot seem to have made a difference to the basic conceptsunderlying national policy making: making the economy asattractive as possible to foreign capital and promoting export-oriented industries based on cheap labor. Social action groups and economists have blamed Thailand'seconomic collapse on its over dependence on foreign capital,neglect of the domestic market and lack of adequate investment inhuman resources. Under the guidance of the International Monetary Fund the ChuanLeekpai government has in fact opened up the economy further toforeign investors even in sectors previously protected fordomestic investors, and has offered incentives to boost exports. The Thai government has claimed that due to such measures theThai baht has strengthened steadily during the past year and theThai stock market has risen by more than 40 percent from the depths itplunged to in 1998. International credit rating agencies Moody's Investment Servicesand Standard and Poor's have upgraded the outlook for Thaisovereign ratings and for the country's four big banks. But despitethis improvement in selected indicators, many analysts warn thatkey areas of the Thai economy, like its financialsystem, remain crisis ridden. ''The prolonged sickness of the Thai economy is due toa breakdown in the credit system,'' said Olarn Chaipravat,former president of the Siam Commercial Bank, in one of thetoughest assessments of the Thai banking sector so far. He said the economic crisis, which led to a spiralling number ofdefaults on loans by businessmen, has made it impossible forbankers to find anybody ''credit-worthy'' enough to lend to. Sowhile banks cannot make any money through lending operations,existing businesses too are struggling to find cheap credit toexpand operations or even survive. ''The IMF and the authorities have focused too much onthe pressing issues of the day rather than the heart of theproblem,'' said a recent editorial in the Bangkok based Englishlanguage daily The Nation. It said that without restoring trust between banks and businesses and getting the economy moving again at the micro level, there is no hope for long-term recovery. (Inter Press Service) | |||||||||
 |
|
Front | China | Southeast Asia | Japan | Koreas | India/Pakistan | Central Asia/Russia | Oceania Business Briefs | Global Economy | Asian Crisis | Media/IT | Editorials | Letters | Search/Archive |
back to the top ©1999 Asia Times Online Co., Ltd. |
