Painful Lessons From 1997 Must Not Be Forgotten: Thai Editorial

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EDITORIAL

Painful lessons from 1997 must not be forgotten

The Nation

Massive debt still needs to be paid off, focus on good governance maintained

BANGKOK: -- This month marks the anniversary of the change in the exchange rate regime in the aftermath of the 1997 financial crisis. After 15 years, there remains a question on whether we have learned from the crisis, which resulted in the shutdown of dozens of financial firms and massive layoffs by many companies.

Although time has passed, the ghost of the financial crisis is still there. One of the biggest issues is how to deal with the Financial Institutions Development Fund debt, accumulated from the crisis. It could be a political bombshell for any government.

The 15th anniversary of the crisis comes amid a simmering financial crisis in Europe. Greece has sought an International Monetary Fund (IMF) bailout. Some financial institutions in Europe are in bad shape. When the crisis struck in Asian countries, there was talk about the possibility of an Asian currency as a way to help make Asian countries "immune" to such a crisis. Ironically, the ongoing crisis in Europe has shown Asian countries that a region-wide currency in Asia still has a long way to go.

Painful reforms led to speedy recovery

More than a decade ago, Thailand underwent austerity measures to fight its way out of the financial troubles. The European governments' difficulties in convincing their peoples to tighten their belts should serve as a reminder of the political risks that Finance Minister Tarrin Nimmanahaeminda had to go through to curb the damage and win back backing from foreign investors in Thailand at that time.

The austerity policies and the painful financial reforms have led to a speedy recovery for Thailand. Our financial institutions were reformed after the crisis. Asian financial regulators have adopted restrictive measures to cope with the capital flows and protect financial markets from being too exposed to the subprime crisis in the US and the ongoing economic woes in the eurozone.

However, Thailand cannot be complacent with the positive economic performance that the kingdom has enjoyed so far. In fact, the ghosts of the financial crisis can still be haunt us if we do not learn lessons from 15 years ago.

Excessive spending beyond our means

Firstly, the crisis was a glaring example of the severe impact that can come from excessive spending beyond our means, especially for politicians who prefer to promise the world to voters to win electoral seats. The Thai government in 1997 did not face a fiscal crisis. But that could be an issue in the future because of excessive spending on populist policies. If public money is not spent wisely and populist programmes fail to produce an economic output (or multiple economic impacts) as the government hoped, there could be fiscal problems. Public debt could rise from the current level of 40 per cent of GDP with excessive spending. If public debt is not controlled, the government could run into fiscal trouble and fall into a similar situation to the Greek tragedy.

Moreover, the campaign to ensure good corporate governance should continue to prevent any future strife. The crisis in 1997 was partly a result of financial frauds and mismanagement in some companies. The economic woes led to a campaign for good governance. The campaign must continue in earnest to serve the best interest of all stakeholders.

The 1997 crisis also reminded us of the importance of a strong agricultural base in rural areas. Thailand did not face social unrest in spite of the massive layoffs because people

who were unemployed went back to provinces. Their families in the provinces provided them with a social safety net. Unfortunately, the rural sector seems to be weaker these days as many farmers have sold their land plots for industrial or property development. Society has changed over recent years. Many people have become more dependent on the government's subsidy policies.

In fact, people in power at the moment should be in the best position to learn lessons from the financial crisis. People who were familiar with what occurred in 1997 are decision-makers right now. The lesson from the crisis has led us to where we are right now. It would be a shame if we fail to gain from our loss.

-- The Nation 2012-07-02

[MaxLee]

Dream on, those politicians are just greedy and greedier and don't really care about their people... Those who stay in power become greedier and more corrupt and force-brainwash their next generation after generation to think exactly like a political A-Hole...

[kerryk]

"However, Thailand cannot be complacent with the positive economic performance that the kingdom has enjoyed so far. In fact, the ghosts of the financial crisis can still be haunt us if we do not learn lessons from 15 years ago."

I know dats right.

[chotthee]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

[MEL1]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

Everybody knows that Thaksin bad, bad, bad. That's why his party won a sweeping victory in the 2001 election. Thai Rak Thai won 248 parliamentary seats (more than any other party previously). Thaksin bad bad bad. 1997 he wrecked the country and 4 years later everyone in love with him. Academics called the election the most open and corruption free in Thai history. Thaksin bad man, bad bad bad.

Academics called the election the most open and corruption free in Thai history.

Which academics were these? Can you give me a URL pls...

-mel.

[Unkomoncents]

The real lesson that needs to be learned (but cannot be given the nature of Thai culture) is that Thai corruption, incompetence, and greed directly triggered the 1997 Asian financial crisis. I've been consistently surprised at how short other Asian countries' memories have been of this (they seem very forgiving). I suppose a lot of people make a lot of money off of Thais. Just keep you mouth shut to keep your hand in the pot.

[bigbamboo]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

Everybody knows that Thaksin bad, bad, bad. That's why his party won a sweeping victory in the 2001 election. Thai Rak Thai won 248 parliamentary seats (more than any other party previously). Thaksin bad bad bad. 1997 he wrecked the country and 4 years later everyone in love with him. Academics called the election the most open and corruption free in Thai history. Thaksin bad man, bad bad bad.

Academics called the election the most open and corruption free in Thai history.

Which academics were these? Can you give me a URL pls...

-mel.

Mel, you have to believe it. Those academic's opinions were the best money could buy.

[kerryk]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

Everybody knows that Thaksin bad, bad, bad. That's why his party won a sweeping victory in the 2001 election. Thai Rak Thai won 248 parliamentary seats (more than any other party previously). Thaksin bad bad bad. 1997 he wrecked the country and 4 years later everyone in love with him. Academics called the election the most open and corruption free in Thai history. Thaksin bad man, bad bad bad.

Academics called the election the most open and corruption free in Thai history.

Which academics were these? Can you give me a URL pls...

-mel.

Would you believe it? Right out of Wiki. Dumb that so many millions of people believe that. We know better on Thai Visa eh?

[flying]

Painful reforms led to speedy recovery

More than a decade ago, Thailand underwent austerity measures to fight its way out of the financial troubles.

It is a good thing.... Like Iceland they took their medicine & hopefully learned from it....

As in "Excessive spending beyond our means"

Many always rush to say how this government rates zero's but.....Unlike some supposed greater nations they did not

just kick the can down the road.

Which is why now like Iceland they are in fact recovering & getting stronger.

I say..Good for them & hope it continues.

Edited July 2, 2012 by flying

[Suradit69]

"However, Thailand cannot be complacent with the positive economic performance that the kingdom has enjoyed so far. In fact, the ghosts of the financial crisis can still be haunt us if we do not learn lessons from 15 years ago."

I know dats right.

There's also a lot to be learned from bungling incompetence of the EU and the USA. Even now the corrupt management of the British Bankers

Association is under fire for their illegal manipulation on the LIBOR rates and of course the Eurozone is on life-support.

Edited July 2, 2012 by Suradit69

[MEL1]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

Everybody knows that Thaksin bad, bad, bad. That's why his party won a sweeping victory in the 2001 election. Thai Rak Thai won 248 parliamentary seats (more than any other party previously). Thaksin bad bad bad. 1997 he wrecked the country and 4 years later everyone in love with him. Academics called the election the most open and corruption free in Thai history. Thaksin bad man, bad bad bad.

Academics called the election the most open and corruption free in Thai history.

Which academics were these? Can you give me a URL pls...

-mel.

Would you believe it? Right out of Wiki. Dumb that so many millions of people believe that. We know better on Thai Visa eh?

URL please.

[flying]

URL please.

http://lmgtfy.com/?q=Thaksin+Shinawatra

[garyk]

My GF from issan said she got 300 bhat for voting for Thaksin. And said all the people who voted for him in there village got the money. From 100-300 bhat. I don't know for a fact if it is true. But she swears by it. Hummmmmm

[kerryk]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

Everybody knows that Thaksin bad, bad, bad. That's why his party won a sweeping victory in the 2001 election. Thai Rak Thai won 248 parliamentary seats (more than any other party previously). Thaksin bad bad bad. 1997 he wrecked the country and 4 years later everyone in love with him. Academics called the election the most open and corruption free in Thai history. Thaksin bad man, bad bad bad.

Do you have any other garbage you would care to spew forth?

George Soros shorted the Ringgit in 1997 which I am sure Thaksin put him up to.

[kerryk]

My GF from issan said she got 300 bhat for voting for Thaksin. And said all the people who voted for him in there village got the money. From 100-300 bhat. I don't know for a fact if it is true. But she swears by it. Hummmmmm

I bet you think this thread is about Thaksin don't you?

[Koratpat]

"Painful lessons from 1997 must not be forgotten"

Nothing painful about it for me.

Getting 44 baht to the dollar was actually painless and I would like to see it again!!!

1998 was efven less painful when it was over 50.

Edited July 2, 2012 by Koratpat

[whybother]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

Everybody knows that Thaksin bad, bad, bad. That's why his party won a sweeping victory in the 2001 election. Thai Rak Thai won 248 parliamentary seats (more than any other party previously). Thaksin bad bad bad. 1997 he wrecked the country and 4 years later everyone in love with him. Academics called the election the most open and corruption free in Thai history. Thaksin bad man, bad bad bad.

Didn't Thaksin make a fortune from the crash by having inside knowledge of when the devaluation was going to happen?

[hellodolly]

"However, Thailand cannot be complacent with the positive economic performance that the kingdom has enjoyed so far. In fact, the ghosts of the financial crisis can still be haunt us if we do not learn lessons from 15 years ago."

I know dats right.

That is not what the article said. Here is what it says.

"Although time has passed, the ghost of the financial crisis is still there. One of the biggest issues is how to deal with the Financial Institutions Development Fund debt, accumulated from the crisis. It could be a political bombshell for any government."

I am no expert on the way finances are handled. But I do know that they were still caring so much of that debt that they could not even if they wanted to carry out there election policies

. And then came the unexpected cost of the floods. They had to get rid of those 1997 caused debts or they would have no credit so they passed them off to another institution or branch of the Government. And even after doing that they can't provide pads to all students. It is looking like only some of the first year students will get them.

Had to edit said election polices meant promises two different animals.

No they have learned nothing.

Edited July 2, 2012 by hellodolly

[PoodMaiDai]

"Painful lessons from 1997 must not be forgotten"

Nothing painful about it for me.

Getting 44 baht to the dollar was actually painless and I would like to see it again!!!

You probably will see it again, only next time around your home currency may not be in such a good position. The global economic crisis is just getting started.

[kerryk]

"However, Thailand cannot be complacent with the positive economic performance that the kingdom has enjoyed so far. In fact, the ghosts of the financial crisis can still be haunt us if we do not learn lessons from 15 years ago."

I know dats right.

That is not what the article said. Here is what it says.

"Although time has passed, the ghost of the financial crisis is still there. One of the biggest issues is how to deal with the Financial Institutions Development Fund debt, accumulated from the crisis. It could be a political bombshell for any government."

I am no expert on the way finances are handled. But I do know that they were still caring so much of that debt that they could not even if they wanted to carry out there election policies

. And then came the unexpected cost of the floods. They had to get rid of those 1997 caused debts or they would have no credit so they passed them off to another institution or branch of the Government. And even after doing that they can't provide pads to all students. It is looking like only some of the first year students will get them.

Had to edit said election polices meant promises two different animals.

No they have learned nothing.

What do you mean that is not what the article says? "However, Thailand cannot be complacent with the positive economic performance that the kingdom has enjoyed so far. In fact, the ghosts of the financial crisis can still be haunt us if we do not learn lessons from 15 years ago." Is exactly what the article says.

[Reasonableman]

Thailand still carries about 1.14-trillion-baht (principal only, without interest) debt from the 1997 crisis, which will take an estimated 20-30 years to pay off, even longer if Governments continue to make major borrowings for impressive but otherwise unnecessary megaprojects.

[kerryk]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

Everybody knows that Thaksin bad, bad, bad. That's why his party won a sweeping victory in the 2001 election. Thai Rak Thai won 248 parliamentary seats (more than any other party previously). Thaksin bad bad bad. 1997 he wrecked the country and 4 years later everyone in love with him. Academics called the election the most open and corruption free in Thai history. Thaksin bad man, bad bad bad.

Didn't Thaksin make a fortune from the crash by having inside knowledge of when the devaluation was going to happen?

No

[kerryk]

Thailand still carries about 1.14-trillion-baht (principal only, without interest) debt from the 1997 crisis, which will take an estimated 20-30 years to pay off, even longer if Governments continue to make major borrowings for impressive but otherwise unnecessary megaprojects.

I don't think the above is one of your reasonable posts. What is the ratio of debt to GDP of Germany? Is it twice as much as Thailand? How about the UK or US? Is it three times as much?

Thailand debt is quite low. One of the lowest.

[LomSak27]

1997 Tom Yum King crisis was allegedly a result of Thaksin siphoning too much Baht out of Thailand, allegedly causing Bank of Thailand to run low on Baht to pay Farang's bank.

Come on Chottee

you need to calm down and have a krating dang don't sound so desperate

[Yunla]

I've always believed that Thailand's problems are not so much debt or resource-scarcity, but the ongoing self-inflicted wounds of mismanagement, both resource and the related economic mismanagement. Thailand has potential far above its current achievements, but it is held back by poor leadership and catastrophic mismanagement across the whole spectrum from flood mismanagement all the way to labour and training mismanagement. Not tackling corruption only compounds the existing administrative problems. The sad part is that with an intelligent and hard-working government, this country could turn its fortunes around and the current debt would not be an issue at all.

[Reasonableman]

Or you could try to sweep it under the carpet and hope it's forgotten. "Thai people forget easily"... almost proverbial, especially among the Thais themselves.

[Reasonableman]

"Your knowledge of Thailand is laughable".

"False innuendo is the same as lying in my book". And showing disrespect and attempting to discredit other posters with snide off-topic backchat appears normal in your book. Along with hypocrisy.

Edited July 3, 2012 by Reasonableman

[flying]

Or you could try to sweep it under the carpet and hope it's forgotten. "Thai people forget easily"... almost proverbial, especially among the Thais themselves.

On the other hand & IMHO only....As I said before at least they seem to be making the effort/austerity/changes needed to at least start & hopefully maintain recovery.

I wish the same could be said for the country I came from.

Talk about sweeping it under the carpet/ kicking the can down the road.

If for instance I apply the country I came from to Yula's statement....

Not tackling corruption only compounds the existing administrative problems. The sad part is that with an intelligent and hard-working government, this country could turn its fortunes around and the current debt would not be an issue at all.

I see that the country I came from not only has corruption that makes Thailands government look like petty theft but I also see they not only did not tackle corruption nor jail a single offender but instead they gave them Billions in tax dollars as a reward/patch. That these folks could take say 25 billion of a 700+ billion package & end up with year end bonuses of 25 million each is not surprise.

If you gave one of us that kind of taxpayers $$$ we too could move markets & afford a profit.

Lastly when you said....

Thailand still carries about 1.14-trillion-baht (principal only, without interest) debt from the 1997 crisis, which will take an estimated 20-30 years to pay off, even longer if Governments continue to make major borrowings for impressive but otherwise unnecessary megaprojects.

Again I think the country I came from would give their right arm to be able to say they can pay off their debt in 20-30 years.

As it stands all their revenues cannot even pay the interest alone. They now have no option but a form of default one way or another

( no it will not be called defaulting ) much to the displeasure of those who saved & played by what they were taught were the rules.

Edited July 3, 2012 by flying

[Yunla]

I see that the country I came from not only has corruption that makes Thailands government look like petty theft but I also see they not only did not tackle corruption nor jail a single offender but instead they gave them Billions in tax dollars as a reward/patch. That these folks could take say 25 billion of a 700+ billion package & end up with year end bonuses of 25 million each is not surprise.

If you gave one of us that kind of taxpayers $$$ we too could move markets & afford a profit.

Assuming you mean the US, yes there are bigger figures involved in their corruption, but there is also a much larger economy. Thaksin is accused of walking away with 30% of the Thai state funds while he was in office, which is 400bn, and that is a big corruption for a small rice-growing developing nation. The fact that he was allowed to flee justice and not face charges for this and other crimes including massmurder, is also a sign of serious corruption.

Perhaps in the US Obama can pocket 30% of the state funds and then kill 2500 people and leave the country as a free man. If the answer is no, then they are less corrupt than Thailand, and it impacts worse in Thailand because it is a smaller and developing nation.

Edited July 3, 2012 by Yunla

[kerryk]

I see that the country I came from not only has corruption that makes Thailands government look like petty theft but I also see they not only did not tackle corruption nor jail a single offender but instead they gave them Billions in tax dollars as a reward/patch. That these folks could take say 25 billion of a 700+ billion package & end up with year end bonuses of 25 million each is not surprise.

If you gave one of us that kind of taxpayers $$$ we too could move markets & afford a profit.

Assuming you mean the US, yes there are bigger figures involved in their corruption, but there is also a much larger economy. Thaksin is accused of walking away with 30% of the Thai state funds while he was in office, which is 400bn, and that is a big corruption for a small rice-growing developing nation. The fact that he was allowed to flee justice and not face charges for this and other crimes including massmurder, is also a sign of serious corruption.

Perhaps in the US Obama can pocket 30% of the state funds and then kill 2500 people and leave the country as a free man. If the answer is no, then they are less corrupt than Thailand, and it impacts worse in Thailand because it is a smaller and developing nation.

You keep trying to ram home your talking points of theft and murder but it has nothing to do with 1997. He didn't steal anything or kill anyone during the financial crisis of 97 which is the topic of this thread.

Thailand is in better shape financially now than it has been since 1997. Everything is fine. Most of Europe if adjusted for scale would love to be in Thailand's shoes. Detroit went broke and lost the auto business. Who got it? Thailand. Thailand is not a small rice growing nation. The hookers are responsible for more revenue than the rice export business. Thailand is a major respected power in ASEAN.