Thai capital after the Asian crisis Pasuk Phongpaichit and Chris Baker A Decade After, Bangkok, July 2007

Thailand: postwar to crisis stable macro management US tutelage natural and human resources immigrant entrepreneurs competitive clientelism high savings and investment export orientation domestic family conglomerates real per capita GDP

Crisis macro IMF deflationary package (1 year) consumer stimulus 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

other overseas government consumer other commercial industry Fig I.5 Distribution of commercial bank lending, 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

Source: Bank of Thailand Fig 1.1 Foreign direct investment, % 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 services 1988: 122 of top 450 MNCs, 214 projects 2000: 248 of top 500 MNCs, 630 projects

pre-crisispost-crisis assemblersc. 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 suppliersmostly domesticfdi by specialists from Japan, US, Europe Automotive industry

Source: Nipon et al., 2002 and corporate websites. Carrefour Big C Tesco Fig 3.1 Number of hypermarket outlets,

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

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%

exports consumption investment GDP export %113210*13563 growth accounting Source: Peter Warr, 2005: 30

agriculture process industry tech-based industry labour-intensive industry other resource-based industry Fig I. 11 Export shares by sector,

Imports Exports Fig I.10 Trade as percent of GDP,

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 substitute small, radically affected by speculative i/n flows political manipulation values do not reflect company performance

Fig I.8 Gross national savings, Source : NESDB Households Government Business

Source: NESDB Fig I.9 Gross domestic investment, public private

other overseas government consumer other commercial industry Fig I.5 Distribution of commercial bank lending, Source: Bank of Thailand

social pattern

agriculture urban informal formal industrial white collar other

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