Thai capital after the Asian crisis Pasuk Phongpaichit and Chris Baker A Decade After, Bangkok,...
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Transcript of Thai capital after the Asian crisis Pasuk Phongpaichit and Chris Baker A Decade After, Bangkok,...
Thai capital after the Asian crisis
Pasuk Phongpaichit and Chris Baker
A Decade After, Bangkok, 12-14 July 2007
Thailand: postwar to crisis
stable macro management
US tutelage
natural and human resources
immigrant entrepreneurs
competitive clientelism
0
10
20
30
40
50
60
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005'0
00 b
aht a
t 198
8 pr
ices
high savings and investment
export orientation
domestic family conglomerates
real per capita GDP
Crisis macro
IMF deflationary package (1 year)
consumer stimulus
5,000
6,000
7,000
8,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
baht
at 1
998
pric
es
private consumption
Finance
Collapse of credit culture
Surgery on financial institutions
Selective rescue
Lift bar on foreign investment
Regulation, prudence
Big four survive
Medium and small closed, sold, merged
End of relationship banking
5-year shrinkage
0
2000
4000
6000
8000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
billi
on b
aht
otheroverseasgovernmentconsumerother commercialindustry
Fig I.5 Distribution of commercial bank lending, 1990-2006
Source: Bank of Thailand
real sector
No policy to rescue
fire-sale of distressed assets
hands-off debt restructuring
lift equity restrictions in manufacturing
selective protection of services
0
1
2
3
4
5
6
7
8
9
10
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
US
$ bi
llion
0
1
2
3
4
5
% o
f gdp
Source: Bank of Thailand
Fig 1.1 Foreign direct investment, 1970-2006
% of GDP, right scale
FDI
crisis decade vs boom decade:
x 3 in US$
x5 in baht
x2 as % of GDP
export manufacturing
finance
construction-related (cement, steel)
big retail
property
services1988: 122 of top 450 MNCs, 214 projects2000: 248 of top 500 MNCs, 630 projects
pre-crisis post-crisis
assemblers c. 12, mostly Thai-majority joint ventures
main assemblers c. 100% MNC-owned
first-tier
(oem parts)
c. 400 firms, mix of domestic, JV, and MNC firms
20 domestic groups, rest are MNCs and their international partners
second-tier
(components)
c. 500 firms, mostly domestic
fdi by MNC international partners
suppliers mostly domestic fdi by specialists from Japan, US, Europe
Automotive industry
2 512 14 17
2433
4352
6070 75
611
19 2020
23
29
33
36
40
44
49
2
67
9
11
15
17
19
20
23
24
0
25
50
75
100
125
150
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Source: Nipon et al., 2002 and corporate websites.
Carrefour
Big C
Tesco
Fig 3.1 Number of hypermarket outlets, 1995-2006
Companies
Quarter of companies de-listed from exchange
Quarter of top 50 corporate groups slid to bottom ranks
Quarter of top 220 corporate groups disappeared
Win or lose? Sector and structure
Sector
manufacturing partner
secondary finance
Structure
“authoritarian conglomerate”
(unreformed kongsi, absolute patriarch, little/no outside professional management, bank-dependent, non-transparent)
Impacts
Concentration
Export dependence
Capital market
Social development
Concentration
By MNC buyout/expansion
three mega-retail chains
two mobile phone suppliers
etc.
‘Few winners, many losers’ effect
merger of steel firms
top five banks
liquor/beer
etc
0
250
500
750
1,000
1,250
25 50 75
100
125
150
billi
on b
aht
Source: Suehiro database
Fig 1.5 Top 150 business groups by assets, 2000
export dependence
Recovery through exports
currency depreciated
companies reorient to export to replace home market
Almost all growth attributable to exports
Large and growing share by MNCs
Trade:GDP up from 90 to 150%
1999 2000 2001 2002 2003
exports 5.0 10.1 -2.6 7.3 4.2
consumption 2.3 2.7 2.1 2.7 3.5
investment -0.7 1.1 0.2 1.3 2.3
GDP 4.4 4.8 2.1 5.4 6.7
export % 113 210 * 135 63
growth accounting
Source: Peter Warr, 2005: 30
0%
25%
50%
75%
100%
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2001
2003
2004
2005
2006
agriculture
process industry
tech-based industry
labour-intensive industry
other
resource-based industry
Fig I. 11 Export shares by sector, 1985-2006
30
40
50
60
70
80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
% o
f GD
P
Imports
Exports
Fig I.10 Trade as percent of GDP, 1995-2006
capital market
Decline in savings and investment
credit promotion to boost consumption
rising household debt, lower household savings
Banks shrink lending to business
reorient to consumer
Stockmarket no substitutesmall, radically affected by speculative i/n flows
political manipulation
values do not reflect company performance
0
10
20
30
40
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
% o
f GD
P
Fig I.8 Gross national savings, 1994-2005
Source : NESDB
Households
Government
Business
0
10
20
30
40
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
% o
f GD
P
Source: NESDB
Fig I.9 Gross domestic investment, 1994-2005
public
private
0
2000
4000
6000
8000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
billi
on b
aht
otheroverseasgovernmentconsumerother commercialindustry
Fig I.5 Distribution of commercial bank lending, 1990-2006
Source: Bank of Thailand
social pattern
41%
26%
15%
8%
10%
agriculture
urban informal
formal industrial
white collar
other
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