Have Thai businessmen and politicians learned their lesson from the 1997 economic crash? Raise that question today and you get a rousing chorus of 'yes' and a bevy of bad luck stories. One voice from the trenches is that of Bangkok Bank executive vice-chairman Piti Sithi-Amnuai, who fobs off the critics who say Thailand has learned little, and that a new economic bubble is in the works. 'We in the banking industry disagree, for we have been badly burned,' he says. 'If you look through our clothes, you might see the scars of our suffering.'
At the Asia-Pacific Economic Co-operation forum last week in Bangkok, it would be easy to think that the 1997 crash never happened. Remember the crisis? Currency speculators attacked the Thai baht, artificially pegged at 25 to the US dollar, eventually forcing the government to de-peg the currency. The baht plummeted to as low as 55 to the dollar, threatening heart attacks for businessmen burdened by massive dollar debt. Thailand's house of cards, largely propped up by speculative property investment and industrial over-expansion, came crashing down, exposing weaknesses from Hong Kong to Malaysia to Japan. Many of Asia's businessmen lost their shirts and some politicians their jobs.
At the Apec conference, 'Thaksinomics' was the talk of the town. Leaders from the Philippines, Indonesia and China talked of Thai Prime Minister Thaksin Shinawatra's 'dual track' approach to stimulating his country's domestic and international markets. As Kanawat Wasinsungworn, an adviser to Deputy Prime Minister Suwit Khunkitti, puts it, Mr Thaksin has delivered on his promise of 'people-centred' economic schemes, such as village loans, village product development and cheap health care. Asian leaders are listening.
Thailand is being celebrated as a success story. The country has just 'thrown off the yoke' of the International Monetary Fund after it paid its last instalment of a US$12 billion economic rescue loan in July. The economy looks set to post more than 5 per cent growth this year, second only to China. Consumers are spending, partly encouraged by low interest rates. And the stock exchange is bullish.
Thai businessmen are gearing up for another round of heady growth, adamant they have learned their lesson. Many were burned in the crisis. Take petrochemical king Prachai Leophairatana. He learned the hard way that racking up massive short-term foreign currency loans is risky. His Thai Petrochemicals Industry company crashed with a US$3.5 billion debt. Mr Prachai's obstructive behaviour cost him his company as the creditors grabbed control. Others were more co-operative. Plastics king Sanan Angubolkul openly declared the desperate state of his company's US$182 million in foreign debt, working with creditors to put things back on track. Stressing transparency, Mr Sanan says that loss of money is one thing, but loss of credit is everything.
Clearly, a crisis on the magnitude of 1997 will not happen again in Thailand. The Thai baht is free to float. Banks have been chastened. Businessmen are wiser in plotting their debt strategy. But do not forget the key players in Bangkok today are the same businessmen and politicians who, through the mismanagement of their businesses and the economy, sank Thailand. Despite the toughened financial laws and controls put in by the previous government of prime minister Chuan Leekpai, things are slipping. Mr Prachai recently called for an emergency decree to amend the Bankruptcy Act to favour debtors and 'boost investor confidence and economic growth'. Officials are said to be considering watering down the 'harsh economic laws'. Already, the 'old boy' network has allowed certain businessmen to be bailed out.