7.49am Bot Intervenes To Rescue The Baht

[pumpuiman]

How do we know they are intervening? What does it mean when they 'are' intervening? Are they buying up / selling dollars or just changing the numbers as they feels like it???

Are these currency spikes a game the bored money men like to watch go up and down

OT but my head always gets in a whirlwind when I hear how if 'Governemnt buys up xy amount of dollars with yx amount of baht this will cause the baht to appreciate / depreciate by zz.xx. How the hel_l does it change the rate??? Does having lots less baht around in Thailand (due to buying dollars) cause the baht to be weaker? And lots more baht lying around (due to selling dollars) make the baht stronger. Or is it the other way round? Either way the riddles always cooked my goose when I try to work out which one!

Topfield where are you?

The easiest way to get your head around why currencies move is to think of them simply as any other commodity; if everyone wants to buy houses, then the price will go up. If everyone wants to sell something, then of course the opposite occurs.

The BOT has been intervening via agent banks (rather than directly entering the market) to sell THB in the offshore market in the hope that such sales will push the market down. With all that extra baht sloshing around in the offshore market a corollary is that interbank interest rates get pushed down too. Again, think of it as another commodity; if there are thousands of houses empty, then it's cheap to rent one – if there's tons of baht lying around, it's cheaper to borrow some. This lowering of interest rates in turn makes owning baht less desirable (let's use the house analogy again – if you're getting less rent because there's such a large supply in the rental market, it reduces your desire to buy houses to rent out), and so (in theory) the baht will fall further.

That virtuous circle is what the BOT have been trying to implement. It's not happening though – the market still seems to be putting a higher fundamental value on the baht and that's why you're seeing the graphs with all that volatility.

It's not quite that simple, and I doubt I'd ever get a job as a teacher, but I hope that gives you an idea of how it all works.

An excellent explanation...even got through my fat head!!

Thanks for that informative post.

[somtaamgaiyang]

This is silliness. As they found out in 1997, you can't buck the market.

If she should learn one thing, is that even with capital controls in effect, they cannot keep selling baht and buying dollars to try to keep this at 35 indefinitely.

These problems are not only theirs. There are 300,000 mn americans and a US government borrowing like crazy. Maybe they are hoping to god that Bush goes, the US pulls out of Iraq, and someone makes a statement along the lines "I will balance the books in the US". If that is their plan I wish them all the luck in the world because they cannot arbitrarily keep weakening the baht like this.

They should have learnt their lesson in 97. Didn't they read anything about the ERM in their golden highschools or uni's? You cannot fight the market in the MEDIUM term

[JohnC]

All this is a bit beyond my grey matter all I know is I went to the atm at around 9.45 and drew out some money, tonight checking my UK bank statement showed I got 70.82 baht to the pound which is more than I have had any month previous.

[the gent]

Still trying to get to grips with the economics of this!

References to George Soros' attack on the Pound when it was hamstrung by the ERM back in 1989/1990 (?) have been made in the context of the baht's volatility. My understanding of the former is the British Government of the day was trying to prop up a Pound that was hopelessly overvalued but it seems the BoT is attempting the opposite. Why should they do this? I appreciate a high baht means exports may be hit but this is offset by cheaper imports and the economy adjusts accordingly....inflation is of course the bugbear but surely a weaker baht will inevitably follow if the market is allowed to find its own level irregardless of intervention by a central bank trying to weaken its own currency? Or is it a case of the Bank defending the baht against a concerted attempt to ramp its value by a specific party, possibly by Thaksin? Does he have the clout to manipulate the market?

Edited January 19, 2007 by the gent

[somtaamgaiyang]

Absolutely, they are trying to do the opposite, to no great effect.

They are trying I believe to overwhelmingly protect the low value, low tech agricultural sector. Since by definition this employs indirectly, a lot of farmers, this idea has some very short terrm merit. However, where do the profits from this industry really end up? In the hands of a few selected families who hold the majority of the export licenses. They are facing massive competition from China, Vietnam and just about every country that can plant a rice or pineapple seed.

The lack of investment in education over the generations means that there are a disproportionate amount of farmers and not enough factories. These families have done very well thankyou for decade after decade and now they are bleating. Because the so called nasty foreign investors particularly the Japanese have no real voice they will bear the brunt of the capital controls and the investment money will flow where it is easy and safe to invest. The only companies exporting anything with any technological value are foreign and in vast majority Japanese. They will continue to produce and export and rejuvenate their products as long as they can in Thailand, be the baht 40 or 38. What they will not do is invest more if the government imposes unfair restrictions on them.

Thailand cannot compete anymore on most issues when it comes to being the destination for investment, so they are losing investment to Vietnam, Malaysia and in no short time to Cambodia I am sure. China has already taken their low wage competitiveness away.

There has been absolutely no word about what percentage of Thai exports are reassembled exports. I believe this to be a very high percentage of their electronics/electrical and automotive exports. Where does all the steel for your pick up come from? Imported ore. Various parts come in are added to some domestic products and re-exported. I cannot say for any individual company, but I would imagine many exporters are importing high value/advanced inputs for their products. There is no analysis of the effect of a weak baht on these type of companies but there should be a trade off of costs for foreign v domestic costs. All we here is that "Exporters say they will get hurt". All I read over and over again is agricultural exports will get hurt.

It is too late to get out of this one. They already produce more rice than they can consume or export in a year. They needed to be educating the populous 30 years ago to reduce the amount of people in low value agricultural jobs, but that would be like turkeys voting for xmas.

[Cyberstar]

Who might be the hoarders?

It seems that what what one could call 'ordinary currency dealers' throughout the world are having problems buying Bahts to deal ... So someone must be hoarding - who and why?

[xbusman]

Honestly, the real answer is not that the baht is over valued. The crux of the matter is that the remimbe is undervalued. In 2002 when the baht was 41 - 42 to the dollar, I did lots of comparison pricing and the cost of goods in China were pretty much on par with the costs of goods in Thailand. The VAT made Thailand about 7% over chinese prices but sometimes you get a little of that back. Add the higher freight costs and port corruption taxes and Thailand charges a premium to be here but some real advantages in a very few areas such as quality of living, etc.

Today the baht has depreciated almost 20% while the remimbe has held very close to what it was. That huge sucking noise you hear is business moving to China over the past three years to take advantage of the easier business structure, stable pricing and more favorable terms. Those decisions take time. Small guys like me are usually the first to go, less capital investment, quicker decision making, less excess capital to ride the lower margins. So when it goes upside down, the business moves slowly behind. I think the real exodus started three years ago, I think the numbers show this and was the reason Thaksin cashed in and moved on. WHen the pilot walks down the aisle with a parachute, time to put the magazine down and look out the windows.

I believe the underlying numbers are beginning to show that 67% of the GDP is beginning to evaporate at a time that people are speculating wildly on the baht and the SET. Thats the reason for the almost hysterical knee jerk attempts to right the ship. These are actions of some very scared people.

Yes, the fundamental reasons behind it is that they had a thirty year head start on the Chinese. Thailand could have been building infrastructure, taming corruption, stressing education, think Singapore..... In the end, they decided to rely on warm weather and good golf courses but unfortunately that wont make up for a 30% increased cost and visa hassles when it comes to selling overseas.

This new group has some very serious fundamental problems with the economy that are screaming alarm bells at every stage. From NPLs still on the books from 97 to the vast amount of empty property to watching 67% of their GDP evaporate, it could be a real show.

[cclub75]

I share your analysis, and the one of Somtaamgaiyang.

I would like to add that, plus the RMB issue, we have the USD issue too. Both are linked.

And regarding your last comment "This new group has some very serious fundamental problems with the economy that are screaming alarm bells at every stage", well not necessarily... If they want to implement their "sufficiency economy" concept...

That's the theory of Newsweek for instance.

http://www.msnbc.msn.com/id/16609279/site/newsweek/

By the way, now Times is getting on the train too. Another interesting article.

http://www.time.com/time/magazine/article/...1580046,00.html

Honestly, the real answer is not that the baht is over valued. The crux of the matter is that the remimbe is undervalued. In 2002 when the baht was 41 - 42 to the dollar, I did lots of comparison pricing and the cost of goods in China were pretty much on par with the costs of goods in Thailand. The VAT made Thailand about 7% over chinese prices but sometimes you get a little of that back. Add the higher freight costs and port corruption taxes and Thailand charges a premium to be here but some real advantages in a very few areas such as quality of living, etc.

[Orangutan]

cclub75,

Thanks for the Newsweek and Times links. It's interesting to to see alll this happening in real-time, and never knowing what is just around the corner.

-O

[DFCarlson]

So if Thailand is "turning inward" and rejecting the capitalistic tendencies of Thaksin, what are the consequences down the road. Do you think that Thailand will see another crisis similar to the 1997 event? Will the baht eventually weaken significantly over the next year or two?

What do you think will happen?

[PeaceBlondie]

So if Thailand is "turning inward" and rejecting the capitalistic tendencies of Thaksin, what are the consequences down the road. Do you think that Thailand will see another crisis similar to the 1997 event? Will the baht eventually weaken significantly over the next year or two?

What do you think will happen?

Good point, DFC - if this Thai economy is a house of cards - if the economy depends too much upon a cheap currency - then it could fall faster and harder than the US dollar. The international bankers and traders have no qualms about abandoning a sinking Thai or Burmese rowboat, but if the aircraft carrier USA starts to float unsteady in the water, entire financial flotillas might come to the rescue, at least in the short or medium terms. China can afford to see Thailand fail (it's a competitor, and the folks in Bejing aren't too worried about the price of imported Thai fruit such as lamyai). Holding up to a trillion dollars of US treasury bonds, China can't afford to see its biggest customer fail and the yuan currency be worth 3 to the dollar.

[farangsay]

Meanwhile the Euro is hanging on to the 46b ledge

by it's fingernails and I hear Chang might be

going up soon.

Edited January 20, 2007 by farangsay

[Naam]

"..if you are holding dollars then im sorry"

*****

i appreciate your sympathy for my miserable position of holding the majority of my assets (all bonds) in us-dollars. fortunately -even now in a worldwide low interest phase- i am still achieving a yield of 15-18% p. a. with my dollar bonds. that yield includes of course a wee bit currency hedging and capital gains.

no GBP, no €UR and no other currency can provide these yields as the opportunities to invest broadly diversified are extremely meagre.

[cclub75]

i appreciate your sympathy for my miserable position of holding the majority of my assets (all bonds) in us-dollars. fortunately -even now in a worldwide low interest phase- i am still achieving a yield of 15-18% p. a. with my dollar bonds. that yield includes of course a wee bit currency hedging and capital gains.

Well it would be interesting to know what is the part of currency hedging and capital gain in your "yield of 15-18 % pa"...

Because, from a strict exchange of point of view... well a USD bond at 5 or even 8% interest in a currency that has lost 10 to 20 % against many other currencies in one year... it's not an astonishing performance.

[Martin]

I think the point about there being a very different philosophy among those who are making this year's decisions is well made.

There is also a generational difference. And it is one that very rarely occurs---an older generation has taken over from a younger one.

A few weeks ago, I was looking through research done into educational gerontology, or 'geragogy' as it is beginning to be called. Practitioners are finding that retirees who participate in Institutes of Learning in Retirement are keenly interested in the future. It is as if they are concerned about what lies 20, 40, 60 years ahead for their grandchildren, more than 'understanding today's rates'.

Once we start looking at the big, long-term fundamentals and comparing emerging issues with established trends, and looking for the point at which the first may overtake the second, some very different pictures emerge.

When material consumption has to start reducing, countries like Thailand that came late to industrialism and haven't got an appropriately-schooled population to enable them to compete in shrinking industrial markets, will be in difficulty, except where they can sell food to those who have to import it, and have the wealth to do so.

My own gut feeling is that Thailand's fundamentals leave it better placed than many countries. It has plenty of productive land and an easy climate that means the basic cost of living is low.

Recently, I met a retired headmaster from Scotland. He reckoned that shutting up his house for the winter reduced his heating costs by as much as it cost him in airfare and rent to come and spend seven months in Jomtien. And as his food costs here were lower, he was getting all the sunshine for less than nothing!

I wouldn't be surprised if those who now decide policy are thinking that Thailand should now start being very choosy about what foreign money and people it lets in.

[PeaceBlondie]

"The sultry Siamese sun sunk into the stinking soi as the sick sons seemed satisified to see six satang...."

[Dupont]

They say it represents a "middle path" between excessive globalization and inwardness, between unbridled capitalism and the welfare state, and between "backwardness and impossible dreams," as the UNDP report puts it. One main aim is to mitigate "the inevitable boom-bust cycles" that haunt many developing economies, says Wisarn Pupphavesta, a senior economist at the Thailand Development Research Institute. "

Think they are 50% right there. They certainly seem to be set to avoid any booms in the near future. Hope they can avoid the busts!

Theres also a lot of confusion with this direction. Last week, the Bank was looking at reducing interest rates to stimulate spending. This as far as I can see, is in direct contradiction to the Sufficiency Economy! Surley they are supposed to be spending less, or have I missed something? I often do!

Edited January 20, 2007 by Dupont

[Martin]

"Spending" can be in a good direction, or a bad one, as far as Sufficiency is concerned.

If there is a farmer who has the money-management skills to handle working with borrowed working capital and he borrows so that his youngish 'apprentice-farmer' son (or his retiree father) has six cows to take out grazing instead of two, that is a 200% increase in productivity and good for Sufficiency.

But if a property developer borrows and builds condos for which he fails to find buyers when they are completed a couple of years from now, that is bad.

At one end of a continuum of spending there is investment to produce an improvement-in-living social return (good), and at the other end there is spending to produce a speculative capital gain (bad), and a whole spectrum of shades of grey between.

[hanuman1]

"Spending" can be in a good direction, or a bad one, as far as Sufficiency is concerned.

If there is a farmer who has the money-management skills to handle working with borrowed working capital and he borrows so that his youngish 'apprentice-farmer' son (or his retiree father) has six cows to take out grazing instead of two, that is a 200% increase in productivity and good for Sufficiency.

But if a property developer borrows and builds condos for which he fails to find buyers when they are completed a couple of years from now, that is bad.

At one end of a continuum of spending there is investment to produce an improvement-in-living social return (good), and at the other end there is spending to produce a speculative capital gain (bad), and a whole spectrum of shades of grey between.

Yo Martin

what are you doing in Rural Udon Thani? get a suit on, get a desk, and make the world a better place! or did you try that already?

H.

[Gaudente]

Opinion :Why do they not lower interest rates drastically as K.Sontee Limtongkun suggested. ie to 2%pa. ?

No need then to intervene and just about everyone in the country would benefit (except savers).

This has to be K.Tarisa's next move, as tonight after the BOT closes, the baht will again rise to 34.90.

The short answer is inflation. Cutting rates to 2% (ie to a negative real rate) to dampen the currency would be like chopping off your dog's legs to stop him running away.

Hmm...considering the BOT's recent record of financial mismanagement, you never know...

I do not agree. Inflation is not due to domestic demand, which is actually quite downbeat, but to high oil and energy prices that increased cost of transport and energy intensive materials (like cement and ceramic). So if you cut interest rates to 2% you actually help in containing inflation as you cut interest expenses for industries and lower their costs. Also the recent downtrend in oil prices should show its benefit to inflation rate soon. So there are only advantages in strong rate cut.

[Gaudente]

I remember years back a South Americna nation (Venezuela I think) having the same type of problems and they merely switched their currency to be the U.S. Dollar. What would be the effect if Thailand made such a move, not to mention the savings from printing the ever needed new currency. Is this a viable solution for Thailand? I know it will never happen, but, the quesiton is valid.

It was Ecuador, and it did not make them any good. In fact they are going to declare default again , robbing 60% to their lenders.

But Ecuador aside, I think it is very stupid to give away currency sovereignty. As 1$ in the USA buys about what 15 baht buy here, if you change all THB to $ at 35 you would trigger huge inflationary pressures. (that is prices would move up so that 1$ here buys what it buys back in the USA)

[DFCarlson]

But Ecuador aside, I think it is very stupid to give away currency sovereignty. As 1$ in the USA buys about what 15 baht buy here, if you change all THB to $ at 35 you would trigger huge inflationary pressures. (that is prices would move up so that 1$ here buys what it buys back in the USA)

That's what we're doing now. $1 buys about 35 baht.

But I can't agree that $1 in the US buys what 15 baht buys here!

[gharknes]

As the writer anticipated, following similar moves over the last few weeks and days, K.Tarisa intervened the moment the BOT staff opened their doors !

See below high and low in last ten minutes (copied and pasted from forex live website)

36.01 34.93

Evidence of massive BOT intervention

Opinion :Why do they not lower interest rates drastically as K.Sontee Limtongkun suggested. ie to 2%pa. ?

No need then to intervene and just about everyone in the country would benefit (except savers).

This has to be K.Tarisa's next move, as tonight after the BOT closes, the baht will again rise to 34.90.

NB Above writer's own interpretation of events ......nothing confirmed officially yet !

OOPS....sorry in fact .the baht fell 110 satang did not rise 110 satang, the aim being for the baht to fall !

...............the baht will again rise to 34.90..................

I'm confused, if the baht drops from 36 to 34 surely the baht has dropped and not risen i.e. dropped in value against other currencies ???

[sibeymai]

nope...it's risen in value because you only need 34 baht to buy a dollar.....not 36 baht.

[somtaamgaiyang]

Honestly, the real answer is not that the baht is over valued. The crux of the matter is that the remimbe is undervalued. In 2002 when the baht was 41 - 42 to the dollar, I did lots of comparison pricing and the cost of goods in China were pretty much on par with the costs of goods in Thailand. The VAT made Thailand about 7% over chinese prices but sometimes you get a little of that back. Add the higher freight costs and port corruption taxes and Thailand charges a premium to be here but some real advantages in a very few areas such as quality of living, etc.

Today the baht has depreciated almost 20% while the remimbe has held very close to what it was. That huge sucking noise you hear is business moving to China over the past three years to take advantage of the easier business structure, stable pricing and more favorable terms. Those decisions take time. Small guys like me are usually the first to go, less capital investment, quicker decision making, less excess capital to ride the lower margins. So when it goes upside down, the business moves slowly behind. I think the real exodus started three years ago, I think the numbers show this and was the reason Thaksin cashed in and moved on. WHen the pilot walks down the aisle with a parachute, time to put the magazine down and look out the windows.

I believe the underlying numbers are beginning to show that 67% of the GDP is beginning to evaporate at a time that people are speculating wildly on the baht and the SET. Thats the reason for the almost hysterical knee jerk attempts to right the ship. These are actions of some very scared people.

Yes, the fundamental reasons behind it is that they had a thirty year head start on the Chinese. Thailand could have been building infrastructure, taming corruption, stressing education, think Singapore..... In the end, they decided to rely on warm weather and good golf courses but unfortunately that wont make up for a 30% increased cost and visa hassles when it comes to selling overseas.

This new group has some very serious fundamental problems with the economy that are screaming alarm bells at every stage. From NPLs still on the books from 97 to the vast amount of empty property to watching 67% of their GDP evaporate, it could be a real show.

You are right to say that the Reminbi is undervalued. What has Bush and his economic team been bleating about for the last 4 years. I was there last week, and everything is disproportionately cheap. However, they still have 700mn farmers. The Chinese govt, could go about spending all their dollars very responsibly and developing the country. However, they have learnt very quickly from watching the Japanese and Koreans that the way to insure growth and your place at the big boys table is to also hold a large amount of USD.

However, the USD has not been so weak in the last 30 years, and every country bar China has seen it's currency appreciate v the USD. It has obviously been a policy of Bush's to devalue the USD to protect his domestic industry. Let us not forget that under Clinton, they were looking at a balanced budget and an eventual surplus to pay down national debt. The USD was trading at 1.65 to the GBP, now it is nearly 2, Euro likewise, and they have a massive national debt all in the space of 6 years. The Thai central bank and govt and everyone who could read the economist could see this coming ages ago. However, the way out of this is not to artificially keep the baht low. The way is to encourage investment in the country as much possible. Investment brings jobs, jobs brings wealth, and slowly but surely the country will become more industrialised and wealthier.

What they are doing now is effectively saying, we like the status quo balance of our economy, which with a GDP per head of very little is quite scary. They are encouraging investment to move elsewhere at the very time they need to move this country forward. One tonne of rice value is about the same as one hi end laptop.

I read a letter about the fact that Thailand has the right to protect it's national interest. Of course it does. But should the government not realise that it is in their interest to encourage foreign investment. What the letter was actually saying, is we the government have the right to protect the rights of a few priveliged families who are seeing their business suffer because they add no value to anything and have been granted a monopoly license to export, for which I get paid a boatload of cash under the table. Closing Thailand off from more foreing investment will cruxify this country very quickly.

[Martin]

Timing is all. And whilst the quote below was the spot-on truth twenty years ago, I don't think it holds today.

"The way is to encourage investment in the country as much possible. Investment brings jobs, jobs brings wealth, and slowly but surely the country will become more industrialised and wealthier."

For manufactured goods, export markets are getting tougher and tougher, especially with competition increasing from China and India.

Inflowing foreign capital wouldn't go into investment in factories now.

Reading the speeches of his Majesty, I see a realisation that the Thai people will serve themselves best by NOT trying to industrialise more, and get themselves prepared to cope with gradual industrial downturn. (Hoping that there isn't a rapid collapse of the dollar, which would threaten to bring on another world-wide depression like 1929.)

But that downturn can be expected to be accompanied by a big demand for food, which Thailand can produce economically.

The overseas customers are likely to be reserving their money for buying rice and carrying on with their clunky old laptops (or even living without one after the old clunker passes out).

The strong baht at the moment is hurting exporters who entered into dollar-denominated contracts and have to fill them, but are not getting as many bahts as they expected from what their customer is paying them, and so have more difficulty meeting their wages bill.

So there is a short term problem, but the long-term fundamentals relative to other countries look good (which is why the overseas money wanted to come here and had to be discouraged by the 'withholding' rule).

Over the past few months the prices at which wheat etc can be reserved for future delivery have really gone up. (As much as 100% in some cases, I have seen said.)

That is 'writing on the wall' that tells me that, had I some money to invest, I would be wise to buy more cane fields and turn them back into rice fields and make work for rice farmers.

Thailand is probably lucky that so many of its laptop-assembly operatives, and automobile assemblers, still have the skills needed in the ricefields, and the village-sufficiency skills.

[Martin]

Re post #49, "Yo Martin,

what are you doing in Rural Udon Thani? get a suit on, get a desk, and make the world a better place! or did you try that already?".

Hi, 'hanuman',

I hope never to wear a suit again. Neither a boiler suit (for going out on the plant), nor a business suit (for strife in the Committee Room).

Though the boiler suits were useful to take home, when old, to wear whilst mucking out the cow shed.

Now, at 71, it is sufficient to have a long-sleeved white shirt, and long trousers, to wear whilst mingling with the other students at the local University.

[topfield]

Re post #49, "Yo Martin,

what are you doing in Rural Udon Thani? get a suit on, get a desk, and make the world a better place! or did you try that already?".

Hi, 'hanuman',

I hope never to wear a suit again. Neither a boiler suit (for going out on the plant), nor a business suit (for strife in the Committee Room).

Though the boiler suits were useful to take home, when old, to wear whilst mucking out the cow shed.

Now, at 71, it is sufficient to have a long-sleeved white shirt, and long trousers, to wear whilst mingling with the other students at the local University.

[topfield]

7.58am BOT 5th cavalry to the rescue 71 to the pound 36 to the dollar !!

[on-on]

Today the baht has depreciated almost 20% while the remimbe has held very close to what it was. That huge sucking noise you hear is business moving to China over the past three years to take advantage of the easier business structure, stable pricing and more favorable terms. Those decisions take time. Small guys like me are usually the first to go, less capital investment, quicker decision making, less excess capital to ride the lower margins. So when it goes upside down, the business moves slowly behind. I think the real exodus started three years ago, I think the numbers show this and was the reason Thaksin cashed in and moved on. WHen the pilot walks down the aisle with a parachute, time to put the magazine down and look out the windows.

In the interest of disclosure, I have never known people anecdotally who have done business both places and I have never read one to one comparisons, so all of my knowledge on the topic exists in separate vacuums that I try to compare and adjust for perceived reality. That being said, everything I've read has China as a bit of a nightmare to do business in as a Westerner without massive name recognition. While criticisms of the foreign investment rules have decreased as they have been liberalized, there's still a well of criticism that I see rear its head in mainstream sources about selective enforcement of contract law, embezzlement, corruption in the banking sector and what not.

For all the complaints I hear about Thailand including the general complaints (warranted and unwarranted) about xenophobia both socially and institutionally, I don't hear a ton of complaints about the courts actually abdicating their duties. In fact, even when regulations are overlooked it's usually to the benefit of the foreign investment crowd - the nominees game that ran for so many years unimpeded is probably a good example. Again, maybe I've just been exposed to some xenophobic foreigners with bones to pick, but even the closest acquaintance I have there now, who recently went from working for a Chinese IT firm to working for a Japanese owned firm, says that he can't believe the level of dishonesty that one has to deal with on a regular basis doing business there. Everything from lease contracts on living quarters to salary disputes, etc. I guess my point is that while China competes on a number of factors on a playing field all its own based on size, potential and cost, I've read that the actual (as opposed to the "legal") working environment is not one of them. None of that would tip the balance in Thailand's favor, but I'd think from what I've heard that any small or medium size investor who is concerned primarily with a stable investment environment wouldn't necessarily pick China without serious consideration. Then again, most people probably aren't comparing Thailand to China so much as Thailand to Malaysia (Dell) or Thailand to Cambodia (textiles) etc, that's before taking into account the Byzantine "free trade" rules that govern various intra-WTO relationships (who can make how many soccerballs per year in what country, etc).

I'd certainly welcome any enlightenment on the topic because, as I said, what I don't know would just about fill the internet, heh.