Does Thailand Exist In A Bubble ?

[roamer]

Civil dissent rages, deeply polarised electorate, next coup around the corner. Civil war in the south. The glue that has held the fabric together weakening. Tourism due to suffer a double whammy from both the political uncertainties and the ever tightening credit crunch in the west, manufacturing and exports sure to feel the effects. The Banks ? Well the Thai banking system is not exactly transparent but hard to believe they will ride this out with no effect. Property, who is going to fill all those condos being built ?

The arguements are simplistic, I'm a simple kind of guy, the same simple kind of guy who said on this forum more than a year ago that I knew Thai's that were buying condos that they were never able to afford to continue to pay for if the price didn't go up and they couldn't sell, the letting option not viable due to Thai buyers not wanting to buy "secondhand". Those folk are up s**t creek without a paddle. Take a look around, the lights are out.

What I am saying is that all the factors are in place for LOS to take a massive hit. It will ride it, no question. Might even emerge stronger, could emerge stronger if it were to realise its stengths were in its people and start to educate the masses, I diverge, blame it on the wine ! No doubt you will...however my point remains the same. I believe LOS is is in a bubble, there are no sound economic factors to back up the strength of the baht. Dollar, sterling, euro may weaken and should they do so I think the fall of the baht will be exponential.

Am I wrong ?

Edited September 27, 2008 by roamer

[CroBiker]

Roamer, you are absolutely spot on, some valid points you made there.

I experienced civil unrests in former Yugoslavia and last thing I want to see is another civil war or destroyed economy.

I really care about this country and their people but sometimes they seem to be their own enemies. With incredibly corrupt government, poor education system and deeply rooted xenophobia, any changes in near future are very unlikely.

[kmart]

Thailand has always seemed to lurch from one political / economic crisis to another. In fact the country is remarkably consistent in this, and the status quo remains thus. But apart from oil, the country is pretty self-sufficient, and is not reliant on tourism. The way forward is through a better system of education, but don't hold your breath.

[Howsitgoin]

I'm a simple kind of guy, the same simple kind of guy

The present situations clearly shows that "simple kind of people" are seemingly the only people with an ounce of common sense left, while the supposedly educated don themselves in yellow and follow mad utopian brainfarts labelled, but never defined, "New Politics".

No, you are not wrong - the system is clearly in a process of collapse, and nobody can predict what may happen.

[lifeisrandom]

i don't think there is anywhere near as much home financing here as there is in the usa.

the economy here is already ugly, SET is down a lot but you barely notice it going out on the street.

as for the political stuff, meh, same same.

[wayfarer108]

Thailand has always seemed to lurch from one political / economic crisis to another. In fact the country is remarkably consistent in this, and the status quo remains thus. But apart from oil, the country is pretty self-sufficient, and is not reliant on tourism. The way forward is through a better system of education, but don't hold your breath.

Sums it up well. Not to worry, Thailand always lands on its feet.

[Samuian]

Civil dissent rages, deeply polarised electorate, next coup around the corner. Civil war in the south. The glue that has held the fabric together weakening. Tourism due to suffer a double whammy from both the political uncertainties and the ever tightening credit crunch in the west, manufacturing and exports sure to feel the effects. The Banks ? Well the Thai banking system is not exactly transparent but hard to believe they will ride this out with no effect.............edit.... Those folk are up s**t creek without a paddle. Take a look around, the lights are out.

I believe LOS is is in a bubble, there are no sound economic factors to back up the strength of the baht. Dollar, sterling, euro may weaken and should they do so I think the fall of the baht will be exponential.

Am I wrong ?

spot on!

Here on samui, the same, condos, offices residences, hotels are going up as if there are ten Airbus 380 coming in every day with people who all want to buy property ans stay here indefinitely!

it's only a question of time, if one looks, it seems to be right in the making!

in 1998 Paul Krugman made a 5or 10 point list if Thailand will go this road it will take approx. 10 years to default again but then it might be a much harder crash... was in the Bangkok post - can't find it anymore...well it doesn't take a genius, neither a crystal ball...

[elkangorito]

If Thailand is to "move forward" at all, it will need to stop clinging to outmoded ideas, which are being maintained by the authoritarian "Thai culture".

[Maizefarmer]

Civil dissent rages, deeply polarised electorate, next coup around the corner. Civil war in the south. The glue that has held the fabric together weakening. Tourism due to suffer a double whammy from both the political uncertainties and the ever tightening credit crunch in the west, manufacturing and exports sure to feel the effects. The Banks ? Well the Thai banking system is not exactly transparent but hard to believe they will ride this out with no effect. Property, who is going to fill all those condos being built ?

The arguements are simplistic, I'm a simple kind of guy, the same simple kind of guy who said on this forum more than a year ago that I knew Thai's that were buying condos that they were never able to afford to continue to pay for if the price didn't go up and they couldn't sell, the letting option not viable due to Thai buyers not wanting to buy "secondhand". Those folk are up s**t creek without a paddle. Take a look around, the lights are out.

What I am saying is that all the factors are in place for LOS to take a massive hit. It will ride it, no question. Might even emerge stronger, could emerge stronger if it were to realise its stengths were in its people and start to educate the masses, I diverge, blame it on the wine ! No doubt you will...however my point remains the same. I believe LOS is is in a bubble, there are no sound economic factors to back up the strength of the baht. Dollar, sterling, euro may weaken and should they do so I think the fall of the baht will be exponential.

Am I wrong ?

Does Thailand exsist in a bubble?

The problem Thailand has is the strength of its Baht on the interntional scene. Not so bad from a tourist perspective (though it could be a lot better), but its real significant impact is in the manufacturing sector - the great forex earner for Thailand at least in terms of BoT funds in reserve offshore (thes account that keep the manufacturing and LOC's running for Thailand).

The Baht will have to come down from its lofty highs at some point in the near future. A timetable I originaly forsoaw as been as much as 18 - 24 months I can quite realisticaly see dropping now to 12 - 18 months - as foreign buyers (of Thai manufactured goods) and the big Western brand names that sub contract manufacturing to Thai based co's, find it incresingly difficutl to justify Thai Baht figures on their accounts - versus the savings they make contracting equivilant enterprizes in places like Vietnam and China.

The Baht is simply to strong for its own good - the "bubble" has to burst.

The question I don;t belive is "if", but "when" - and how much warning wil come with it?

[sleir]

Thailand pays its raw material imports with foreign currency earned with tourism, if the Baht goes down significantly as you predict tourists will hardly compensate by just spending more, so petrol & diesel will get more expensive and thus inflation rising, or am I wrong here ? I think the main problem for Thailand isn't just a strong or weak baht, it's simply that costs and salaries increased a lot without productivity rising accordingly.

Thailand isn't such a cheap country anymore, but the productivity is that of a third-world country, which makes Vietnam far more competitive.

[Carib]

Look at all the advice given, we want Thailand to step forward, to improve, to make more.....whatever..

And this all coming from people looking with "western eyes".

I think it is time the western world does a few steps back to level things out, why do we always think that "our " level is "the" level??

Look at the mess created right now in the western world, look at the wars and what it does, look at the way the "money world" is collapsing.

Well I could go on and on and on.. and we want Thailand to " improve " ???

To what level? The same level the so called western superior way of life has??. Well we are not really giving the right example are we, and the really bad thing about is that we still keep on being superior in our way of thinking.

Much older people than I will know, that a country like Thailand has been said always to go to the dogs, but it is still around, and the people in countries like this, have more fun in life than we will ever have. We always seem to connect fun with money. We worry about the western problems, well that takes a huge burden away from Thailand, because they have not got those.

Call me naive, but try to get the general gist of what I am saying, and take a good look at our own `great societies` and how they are doing right now.

I choose countries like Thailand anytime over the "so called" really developed ones. They are ruled by greed, prestige and power hunger and the idea that "our" way is `the` way. It is not, and right now the whole west is taught a lesson again, which like all our other lessons will be forgotten soon too, and we will go on until the next " disaster " in what ever way or form.

[roamer]

Look at all the advice given, we want Thailand to step forward, to improve, to make more.....whatever..

And this all coming from people looking with "western eyes".

I think it is time the western world does a few steps back to level things out, why do we always think that "our " level is "the" level??

Look at the mess created right now in the western world, look at the wars and what it does, look at the way the "money world" is collapsing.

Well I could go on and on and on.. and we want Thailand to " improve " ???

To what level? The same level the so called western superior way of life has??. Well we are not really giving the right example are we, and the really bad thing about is that we still keep on being superior in our way of thinking.

Much older people than I will know, that a country like Thailand has been said always to go to the dogs, but it is still around, and the people in countries like this, have more fun in life than we will ever have. We always seem to connect fun with money. We worry about the western problems, well that takes a huge burden away from Thailand, because they have not got those.

Call me naive, but try to get the general gist of what I am saying, and take a good look at our own `great societies` and how they are doing right now.

I choose countries like Thailand anytime over the "so called" really developed ones. They are ruled by greed, prestige and power hunger and the idea that "our" way is `the` way. It is not, and right now the whole west is taught a lesson again, which like all our other lessons will be forgotten soon too, and we will go on until the next " disaster " in what ever way or form.

I can agree with nuch of what you said, however, "I choose countries like Thailand anytime over the "so called" really developed ones. They are ruled by greed, prestige and power hunger and the idea that "our" way is `the` way." to believe that those same problems do not exist in LOS is flying in the face of reality, setting aside wider economic problems,... you would have to go a long way to find a goverment more open to the charges of greed, prestige, power hungry, than what you have in LOS. The people are great, the gov is s**t.

I believe that in international finance markets Thailand is a side show to what is happening elsewhere and I believe when the fall-out hits the baht will go south. Time will tell.

[Soutpeel]

I choose countries like Thailand anytime over the "so called" really developed ones. They are ruled by greed, prestige and power hunger and the idea that "our" way is `the` way.

And Thailand is not.??.. .....you really must live in a really rual backwater somewhere and live a rather sheltered life...

[Plus]

I choose countries like Thailand anytime over the "so called" really developed ones. They are ruled by greed, prestige and power hunger and the idea that "our" way is `the` way.

And Thailand is not.??.. .....you really must live in a really rual backwater somewhere and live a rather sheltered life...

People who actually govern this country, people who set and implement actual policies, are not as greedy as you think. The government is another entity, completley separated form reality.

[Soutpeel]

I choose countries like Thailand anytime over the "so called" really developed ones. They are ruled by greed, prestige and power hunger and the idea that "our" way is `the` way.

And Thailand is not.??.. .....you really must live in a really rual backwater somewhere and live a rather sheltered life...

People who actually govern this country, people who set and implement actual policies, are not as greedy as you think. The government is another entity, completley separated form reality.

You proberly right....they have already had their turn at the trough..

[geriatrickid]

Mr. Roamer, you are so right. Sort of like a weather system though, steady bubble with and overlay of denial.

[dumball]

I choose countries like Thailand anytime over the "so called" really developed ones. They are ruled by greed, prestige and power hunger and the idea that "our" way is `the` way.

And Thailand is not.??.. .....you really must live in a really rual backwater somewhere and live a rather sheltered life...

People who actually govern this country, people who set and implement actual policies, are not as greedy as you think. The government is another entity, completley separated form reality.

Greed? What is double pricing ? .

Prestige ? , What is Thai 'Face ?

Power hunger ? What is 'I want it now attitude' ?

Our way ? What is "I know , i know "?

Does this not apply to Thais in general not just those at the top ?

[sleir]

@carib: I'd agree with you if only it were so... but unfortunately Thais perceive the problems of their country exactly the same way we foreigners do. Whenever they don't profit, they don't like corruption, inefficiency, cheating etc. It's not really true that Thais are perfectly happy with their country and it's just Farang who desperately try to talk it down and change it into another western country. Simply not true.

Thais worry about their personal and the future of their country, they are more worried about criminality and unsafety in Thailand than most Farang are, me included. (Just how many Thai women, for example, do you know who'd take a cab back home alone at night ? Personally I feel quite fine

with the vast majority of Taxi drivers, Thais seem to see that differently)

Nobody would care if Thais just wanted to keep their simple laid-back lifestyle and be left alone with the rat race and consumerism, but they don't, at least certainly not with consumerism.

So it's not at identifying the problems that our views differ, it's how to solve them. And unfortunately there are a few mechanisms and basic truths in politics and economy that work the same the world over, where you can learn from others. It's not just the western countries Thailand can learn from, it's also Malaysia, Vietnam, China, Korea and so on, basically every country that had similar problems in the past and has improved them significantly.

Thailand is not as "unique" in its way as Thais seem to think, and only thai solutions work. An independant anti-graft body with wide ranging powers would be a start, for instance.

[thaihome]

How about some facts and expert opinions?

Economic News (September 15-19, 2008)

Central bank expects no liquidity shortage

The Thai financial system is unlikely to suffer a liquidity shortage due to the bankruptcy of Lehman Brothers, according to Tarisa Watanagase, the governor of the Bank of Thailand.

The collapse of Lehman has sparked investor concerns over a possible liquidity shortage as the investment bank had a diversified portfolio worldwide. But Dr.Tarisa said local banking had exposure of just Baht 7 billion to Lehman, in derivatives or direct lending. Thai banks had total loan base of Baht 7.45 trillion as of July.

Central banks around the world, including the Bank of Japan, have been pumping liquidity into their money markets to ease the potential impact of the Wall Street crash on their markets. Locally, the Bank of Thailand sold Baht 10 billion worth of government bonds, following the sale of Baht 70 billion in 14-day bonds and Baht 10 billion in three-year floating rate notes on Monday. Dr.Tarisa said the high demand for bonds was a sign that liquidity remained ample in the market.

Thailand’s stability could be seen in an increase in foreign reserves, low public debt and the banking sector’s compliance with the new IAS 39 accounting standard and the Basel II capital accord. Dr.Tarisa said potential growth of the economy, based on a recent central bank study, was in the range of 5.5 per cent and 6.1 per cent annually between 2008 and 2015.

ADB maintains Thailand growth forecast

The Asian Development Bank (ADB) expects Thai economic growth to hold up at 5.0 per cent this year but has reduced its forecast for growth in 2009 from 5.2 per cent to 5.0 per cent when it expects sustained high oil and agricultural prices.

Country director Jean-Pierre Verbiest said stronger-than-expected exports this year had helped offset the impacts of inflation and weakening private investment. But in 2009 the bank expects a slowdown in world trade led by the United States, Europe and Japan, together with political turmoil, to depress economic growth. Thai growth has been maintained well. Countries like the Philippines and Singapore would be more affected by inflation than Thailand and would see growth slow down sharply.

The ADB forecasts Thai inflation to stand at 7 per cent in 2008 and to start to decline in 2009. It expects the price of oil (Brent), which peaked in July, to remain above US$ 100 per barrel in the foreseeable future due to supply constraints and robust demand from Asia and the Middle East. The bank expects the price of rice – which has fallen to $ 730 per tonne in early September from a peak of nearly $ 1,110 in April – to be sustained at a high level, above that of the past seven to eight years.

The ADB found that expectations and aggregate demand accounted for nearly two thirds of Asia’s inflation in 2007. Mr.Verbiest said the region’s central banks should adopt tightening monetary policy to curb inflation expectations. At the same time, governments should lift subsidies on utilities and fuel as these could fan inflation.

Export growth set to hit 25 per cent this year

Export growth this year may reach 25 per cent despite ongoing political strife, as shipments to new markets including Africa and the Middle East offset cooling demand in the United States, according to the Commerce Ministry.

Exports to conventional markets such as the US, Japan and the EU are still growing despite their slowdown. And shipments to new markets such as the Middle East, Africa, China, and Asean countries have seen healthy growth. For the first seven months, exports were $ 104.17 billion, a rise of 26.1 per cent, accounting for 60.9 per cent of the country’s export target. Imports for the period rose 36.8 per cent to $ 106.26 billion, resulting in a deficit of $ 2.09 billion.

In 2007, total exports stood at $ 152 billion, and the ministry set an official growth target of at least 12.5 per cent this year.

Meanwhile, exports next year are set to expand beyond their original 10 per cent target, as shipments have been only affected marginally by political uncertainty. Importers from the US and Japan have also switched some orders to Thailand from China and Vietnam where costs are rising, according to Piramol Charoenpao, deputy director-general of the Department of export Promotion. Demand from new markets, including the Middle East, South Africa and Western Europe has been strong, she added.

Strong economic growth will be slowed by US crash

Asian economies should brace for more impact from the global credit crisis and also prepare for a prolonged global economic recession, warns Supachai Panitchapakdi, secretary-general of the United Nations Conference on Trade and Development (Unctad). The insolvency of Lehman Brothers and the bailout of the insurer AIG have shed new light on the depth of the meltdown of financial institutions in the United States.

The breakdown of the US financial system could result in a decline in world economic growth this year and next, and complicate efforts to forge a new global trade agreement under the World Trade Organization, which Dr.Supachai headed from 2002-05.

UNCTAD had predicted a global economic slowdown by 1 per cent this year. But watching the situation in the financial market as it has unfolded over the last few days. The anticipated decline in US financial market asset prices, recognition of losses, deleveraging of the private sector and the need to recapitalize the financial system would be a prolonged process, Dr.Supachai said.

Asia economies are expected to post strong 6 per cent growth this year due to growing incomes in China and India which will be buoyed by agricultural product prices. But Asian economic policymakers should avoid repeating stagflation which occurred in the 1970s when global economies were hit with high inflation pushed by fuel prices against a backdrop of weaker international trade than today. Asian countries should continue to improve labour productivity and strengthen trade liberalization to cushion the impact of the world slowdown.

[thaihome]

Thailand pays its raw material imports with foreign currency earned with tourism, ....

Would you please provide a reference for this remarkable statement?

thank you,

TH

[brahmburgers]

Nobody would care if Thais just wanted to keep their simple laid-back lifestyle and be left alone with the rat race and consumerism, but they don't, at least certainly not with consumerism.

Thais would like to maintain a laid-back lifestyle and have their business run by Thais - at the same time, have rich foreigners coming in as tourists to spend and enjoy the sights. It's a mild form of isolationism. However, much of the Thai economy is intertwined with international economy (and resident farang, whether retired or doing businesses here), so isolationist micro-management can't be as effective as some Thais would hope.

[palm]

Thailand pays its raw material imports with foreign currency earned with tourism, ....

Would you please provide a reference for this remarkable statement?

thank you,

TH

Yes, I would like to see a reference about this too.

[roamer]

How about some facts and expert opinions?

Economic News (September 15-19, 2008)

Central bank expects no liquidity shortage.

You really don't get it do you ? Its the EXPERTS who got us into this in the first place. I've seen god knows how many "expert" reports telling me the Thai condo boom is sustainable but if Joe Bloggs looks around and see's how many lights are off and does a little bit of math he might reach a different conclusion.

The "experts" have failed to take into account that for the last decade or so that the inmates have been running the asylum.

Edited September 30, 2008 by roamer

[thaihome]

That is actually one of my personal favorite metrics for the health of the condo business,

Not land registration statistics,

Not income statements from publicly listed developers

Not building permit applications

Not construction employment figures

Not income statements from publicly listed construction companies

But!!!!

WAIT FOR IT

how many lights are on at night.

Cheers

TH

[roamer]

That is actually one of my personal favorite metrics for the health of the condo business,

Not land registration statistics,

Not income statements from publicly listed developers

Not building permit applications

Not construction employment figures

Not income statements from publicly listed construction companies

But!!!!

WAIT FOR IT

how many lights are on at night.

Cheers

TH

You have already demonstrated your devotion to what others prefer to tell you rather than look for yourself. Doing it your way tells me the health of the condo building industry, not the future for the market. Prefer to do it my way.

The lights are on but no ones home. Doesn't only apply to condo buildings now I think about it.

[thaihome]

I do look for myself as I am in the construction business in Thailand and have a very good idea what the forecast is for the next few years, what are your credentials? other then the ability to count windows with lights on at night?

Look, I don’t doubt that the housing industry in Thailand is in for a bit of a hard time over the next couple of years. But it and the rest of the Thai economy is not crashing,. It will probably slowdown some, with smaller growth then one would hope, as the BOT has acknowledged, but that is a long way from crashing.

TH

[zorro1]

That is actually one of my personal favorite metrics for the health of the condo business,

Not land registration statistics,

Not income statements from publicly listed developers

Not building permit applications

Not construction employment figures

Not income statements from publicly listed construction companies

But!!!!

WAIT FOR IT

how many lights are on at night.

Cheers

TH

Yes this is my personal favorite along with "never invest more than blah blah blah "

[thaihome]

I'm still waiting for the reference backing up the statement that the tourism industry provides the foreign exchange to buy the raw material for Thailand’s manufacturing industry.

That pretty much topped any crackpot economic theory I have ever heard.

This has been a fun thrread though...

TH

[roamer]

I do look for myself as I am in the construction business in Thailand and have a very good idea what the forecast is for the next few years, what are your credentials? other then the ability to count windows with lights on at night?

Look, I don’t doubt that the housing industry in Thailand is in for a bit of a hard time over the next couple of years. But it and the rest of the Thai economy is not crashing,. It will probably slowdown some, with smaller growth then one would hope, as the BOT has acknowledged, but that is a long way from crashing.

TH

I'm still waiting for the reference backing up the statement that the tourism industry provides the foreign exchange to buy the raw material for Thailand’s manufacturing industry.

That pretty much topped any crackpot economic theory I have ever heard.

This has been a fun thrread though...

TH

Accepted, thats a pretty bizzare economic theory. Surprised you think counting windows with lights on at night is equally crackpot. My credentials ? Small time buy- to- let landlord, and I was taught the tactic by someone who parks his Bentley up night after night and walks around doing exactly the same, when you see whole floors with the lights off night after night, block after block, the alarm bells should start ringing. You don't think a 236% increase in condo building in a city that hardly had a shortage of em to start with is not alarming ? Sorry but I do. Don't get me wrong, I'm a buyer but not with a 10 foot bargepole at the moment.

I'll keep counting lights. If it works for someone with £300 million in property it will do for me.

[dumball]

I do look for myself as I am in the construction business in Thailand and have a very good idea what the forecast is for the next few years, what are your credentials? other then the ability to count windows with lights on at night?

Look, I don't doubt that the housing industry in Thailand is in for a bit of a hard time over the next couple of years. But it and the rest of the Thai economy is not crashing,. It will probably slowdown some, with smaller growth then one would hope, as the BOT has acknowledged, but that is a long way from crashing.

TH

I'm still waiting for the reference backing up the statement that the tourism industry provides the foreign exchange to buy the raw material for Thailand's manufacturing industry.

That pretty much topped any crackpot economic theory I have ever heard.

This has been a fun thrread though...

TH

Accepted, thats a pretty bizzare economic theory. Surprised you think counting windows with lights on at night is equally crackpot. My credentials ? Small time buy- to- let landlord, and I was taught the tactic by someone who parks his Bentley up night after night and walks around doing exactly the same, when you see whole floors with the lights off night after night, block after block, the alarm bells should start ringing. You don't think a 236% increase in condo building in a city that hardly had a shortage of em to start with is not alarming ? Sorry but I do. Don't get me wrong, I'm a buyer but not with a 10 foot bargepole at the moment.

I'll keep counting lights. If it works for someone with £300 million in property it will do for me.

Your reasoning sounds very practical , but there are always those with their heads buried in the sand , the existing vacancy rates should give an indication of what is already a fact , prophecy is pure fiction for dreamers .