How Bad Was The 1997-1998 Thai Economic Crisis ?

[duiter]

Hi,

How bad was the 1997-1998 Thai economic crisis ?

Was there bank burning ?

was the price of property 3 times higher in 1996-1997 before this crisis ?

Was people going to (ATM ) bank to take out all their money ?

Was it true that around 200 bank ( or lending company ) were almost on the brink of collapse and IMF asked banks' owner to repay the money ?

Were many banks finally closed down ?

Other stories ?

thanks

[Rimmer]

Topic title edited also duplicate topic removed

[Banzai99]

http://www.google.co.uk/search?q=thailand+economic+crisis+1997&aq=1&oq=thailands+financial+crisis&sourceid=chrome-mobile&ie=UTF-8

[JurgenG]

It was really bad, economically speaking, a lot of people lost their job and their money. But the poster boy of this era was the stockbroker-turned-sandwich-vendor

It really shows the fighting spirit and the resilience of Thai people.

[astral]

It depends how you view it.

From the Thai perspective it was bad with locals selling of all kinds of items, including cars to make ends meet.

From my point of view, the baht almost hit 100 to the UK Pound

and made it much easier to buy a new car.

[kblaze]

this gives some financial details about the debt incurred and where Thailand stands today in regards to the 97 crisis

[Chittychangchang]

It depends how you view it.

From the Thai perspective it was bad with locals selling of all kinds of items, including cars to make ends meet.

From my point of view, the baht almost hit 100 to the UK Pound

and made it much easier to buy a new car.

How things have changed.....

[kwonitoy]

I remember a street in Bangkok full of items for sale from the "Formerly Rich", you could buy a real nice car or even an airplane was on offer.

I was working here getting paid in US dollars so it worked well for me.

The difference here in 97 was that a lot of "smart" bankers and rich leveraged folks got burned. In the west in 2005 the same "smart" bankers got protected and bailed out.

[jcgodber]

Prior to the 1997 collapse had several million baht in the Bank of Bangkok. My U.S. dollars that I had changed BEFORE the collapse were valued at 25 baht to one U.S. dollar afterwards the exchange rate went to somewhere around 50 baht to the U.S. dollar. I lost half my money I had saved here inside Thailand.

On the bright side I immediately sent my Thai wife ( with more money) back here from the U.S. to start building our new house. This worked out for me as we started building before prices of wood, cement, fixtures and other building materials readjusted.

I already had our land and blueprints for our home

[Heng]

The export boom that followed (made possible by the 35-43 or so range of Baht to the USD for quite some time after) pretty much gave me the one blind luck type of opportunity that I just happened to be perfectly set up for. Didn't make much on that initial spike, but a lot of people in the export sector did VERY well for years after, which for me allowed me to branch out into a number of other things to hedge against something like that in the future.

[kennedy]

For some, in the right place at the right time= <deleted> house luck.

[kurnell]

Thai baht lost 50% of its value and property condos were going for 20k a metre. Those that bought and sold later made a fortune

[GuestHouse]

Prior to the Meltdown, Thais were spending money like water.

Restaurants were packed with long tables of Thai customers, at the head of every table a collection of imported whiskeys, piles of food - the party was in full swing.

Houses, shop houses, condos where being built everywhere you looked, often in the strangest places.

The roads were clogging with red number plated cars

Sound Familiar?

Then the melt down came (no actually not quite as quick as that - Then the PM exported all his net worth to US dollars, a few days later he announced the Baht was going to float - It tumbled off the charts).

I was trying the buy a car in the run up to the meltdown, I couldn't find one for love nor money. Within days I had all the car dealers I had previously called calling me offering me the car I had ordered (they meant of course the car they told me they could not sell me a week earlier).

As it happens, I bought my car at almost a third of the price I would have paid a month earlier, and since things were going cheap a couple of nice condo's and a house too.

The restaurants were suddenly empty and for a few short weeks the deals were sweet. I went to an upmarket restaurant in BKK with my wife and two friends, a slap up meal with all the drinks we could handle for under £20.

I stayed in a suite at the Oriental for the equivalent of £35/night, I bought a Nikon F4 with a F2.8 300mm lens of just over £500 (then about £3K in the UK).

But it didn't last, the hotels started charging in Dollars, some restaurants started charging in Dollars, Farang Price started to become common for the most stupid things and for the first time I started noticing Nationalist and Xenophobic comments in the press, from politicians and from the occasional Thai person.

I believe this period was a watershed in terms of Thai attitudes towards foreigners, a definite (to my mind) before meltdown and after meltdown difference.

A friend of ours lost her job in BKK, then told my wife that on two occasions she had been to interviews where a job was offered, subject to a deal being made in a local hotel bedroom.

Sitting in a bar in Pattaya, I noticed the staff were watching a woman across the road. She looked for all the world like a teacher, conservatively dressed, mummsie looking but undoubtedly looking into the bar. My thoughts were she was looking for her husband/boyfriend.

She finally plucked up courage to come into the bar and any doubts about what she was looking for were answered. She wanted a job.

I sat and listed to her telling the Mammasan that her husband had left, her with the kids, she had a job but it wasn't paying enough.

The mammasan asked her if she had eaten, she had not, food was ordered for her, the mammasan told her this wasn't the life for her. The hat was passed around, all the girls behind the bar, and the only customer sitting there put some cash in, it was handed to her and she was sent home.

A few days later, or perhaps a few days before I don't recall, a young guy, a university student spoke to me as I waited to cross the Sukhumvit in BKK. he pointed to his 'girlfriend' a young woman, a university student - he was pimping her.

Yes they were good times if you had foreign money in your pocket, bitter times if you had not.

[GuestHouse]

And with each passing day another foreigner turned up - Living was cheap, early retirement had come - a life's savings could last a long time at these exchange rates - why wait to retire!

This is so cheap.... it's just too good to be true.

[JurgenG]

Life was maybe good for the sexpats but not so for the expats. Most found themselves fired or asked to move back to Europe or the US. A lot of them had wife/gf, house, family and friends here and were not willing to leave but were unable to find a new job. A big lot were ready to forget about expat privileges and advantages just to be able to stay in Thailand and wait for better days.

For people with money and bargain hunters it was a time for good deals. For all the others, it was not such a good time.

[Rancid]

I had a business in Thailand that was badly affected so I closed that, but still survived by other means.

What worries me is that none of the problems that caused the crash have been addressed, banks that should have failed are on eternal life support that has cost taxpayers enormous amounts of money and ruined many economies in the process. As the Americans say, the can has been kicked down the road, but the piper will still have to be paid despite the absurd idea that printing money is a solution, however the price goes up with every kick so when it does all collapse it wil be pretty ugly. I suspect Thailand will be one of the better places to see it out. Asian economies don't have the same welfare dependency as the West so won't be hit as hard. Read about how bad things really are in Greece, it is just the apetiser for what is coming to rest of us.

So if the OP missed Part 1, don't be despondent, you will be able to witness the next wave from the front row.

[NeverSure]

Thailand Currency Undervalued, says IMF

By Bahar Karaman - Wed, Oct 10th, 2012

http://thailand-business-news.com/banking/41601-thailand-currency-undervalued-says-imf#.UHWCEYH8vu4

[wordchild]

i came here during that time to work on secondment (for my then employer) trying to help with the mess we had in our Thai and other SE Asian operations. For me, the profligacy and general wastage we had in our Thai business pre 1997 was shocking. We had dozens of farangs on expensive packages, many with drivers (+ one or more cars), kids in international school, expensive houseing etc. The two senior guys here both had the use of a couple of company owned beach houses in Hua Hin for the wkends.Within two years much of that had gone. Like many other businesses we regionalised with many functions for SEA centralised in Singapore or HK. Expensive farang expats in Thailand were either fired (the majority) or relocated to Singapore, HK or London.

I did not know much about the country then having been here just once before as a backpacker in the early 80,s. Perhaps my most vivid memory from that time was, toward the end of the crisis, sitting in the office of the (European born) MD of one of the countries major investment banks. He was about to return to Europe and retire. He had lived and worked in Thailand (and SE Asia) for 30+ years. He was very depressed by what had happened to a country he had spent much of his life working in. I remember him saying that he had now completely lost faith in Thailands ability to make it as a country, a" failed state" riddled to the core by corruption and fraud. He was glad to be leaving.

Things were bad esp for those directly exposed to the baht weakness, mainly the rich property speculators with dollar denominated loans. But, in the main, for the country, the IMF medicine eventually worked. The basic rescource strength of the country together with a weakened currency worked its way through, balance sheets started to get re-built, the central bank chipped in (and also helped save a bank or three). A new night plaza opened on sukhumvit named after a former US president. Thaksin came along a little later and, in the early stages, probably did more good than harm.

[farang000999]

It was really bad, economically speaking, a lot of people lost their job and their money. But the poster boy of this era was the stockbroker-turned-sandwich-vendor

It really shows the fighting spirit and the resilience of Thai people.

I heard this story many times. Is it even true?

Sorry but it seems like every well connected very wealthy Thai claims to have been poor and that all their success came from hard work. Every time I read an article about a Thai CEO or businessman, it must always start that his father pushed a noodle cart.

[roamer]

Prior to the Meltdown, Thais were spending money like water.

Restaurants were packed with long tables of Thai customers, at the head of every table a collection of imported whiskeys, piles of food - the party was in full swing.

Houses, shop houses, condos where being built everywhere you looked, often in the strangest places.

The roads were clogging with red number plated cars

Sound Familiar?

Then the melt down came (no actually not quite as quick as that - Then the PM exported all his net worth to US dollars, a few days later he announced the Baht was going to float - It tumbled off the charts).

I was trying the buy a car in the run up to the meltdown, I couldn't find one for love nor money. Within days I had all the car dealers I had previously called calling me offering me the car I had ordered (they meant of course the car they told me they could not sell me a week earlier).

As it happens, I bought my car at almost a third of the price I would have paid a month earlier, and since things were going cheap a couple of nice condo's and a house too.

The restaurants were suddenly empty and for a few short weeks the deals were sweet. I went to an upmarket restaurant in BKK with my wife and two friends, a slap up meal with all the drinks we could handle for under £20.

I stayed in a suite at the Oriental for the equivalent of £35/night, I bought a Nikon F4 with a F2.8 300mm lens of just over £500 (then about £3K in the UK).

But it didn't last, the hotels started charging in Dollars, some restaurants started charging in Dollars, Farang Price started to become common for the most stupid things and for the first time I started noticing Nationalist and Xenophobic comments in the press, from politicians and from the occasional Thai person.

I believe this period was a watershed in terms of Thai attitudes towards foreigners, a definite (to my mind) before meltdown and after meltdown difference.

A friend of ours lost her job in BKK, then told my wife that on two occasions she had been to interviews where a job was offered, subject to a deal being made in a local hotel bedroom.

Sitting in a bar in Pattaya, I noticed the staff were watching a woman across the road. She looked for all the world like a teacher, conservatively dressed, mummsie looking but undoubtedly looking into the bar. My thoughts were she was looking for her husband/boyfriend.

She finally plucked up courage to come into the bar and any doubts about what she was looking for were answered. She wanted a job.

I sat and listed to her telling the Mammasan that her husband had left, her with the kids, she had a job but it wasn't paying enough.

The mammasan asked her if she had eaten, she had not, food was ordered for her, the mammasan told her this wasn't the life for her. The hat was passed around, all the girls behind the bar, and the only customer sitting there put some cash in, it was handed to her and she was sent home.

A few days later, or perhaps a few days before I don't recall, a young guy, a university student spoke to me as I waited to cross the Sukhumvit in BKK. he pointed to his 'girlfriend' a young woman, a university student - he was pimping her.

Yes they were good times if you had foreign money in your pocket, bitter times if you had not.

"It was the best of times, it was the worst of times" Dickens.

Thanks GH. I remember it well but I could never have summed it up so eloquently.

[JurgenG]

It was really bad, economically speaking, a lot of people lost their job and their money. But the poster boy of this era was the stockbroker-turned-sandwich-vendor

It really shows the fighting spirit and the resilience of Thai people.

I heard this story many times. Is it even true?

Sorry but it seems like every well connected very wealthy Thai claims to have been poor and that all their success came from hard work. Every time I read an article about a Thai CEO or businessman, it must always start that his father pushed a noodle cart.

As far as I know the story about the stockbroker-turned-sandwich-vendor is true. It is not something that has been made up ten years later, it was on the news at that time, I still remember him being interviewed on TV, But I've absolutely no idea what happened to him since

On the other hand, the claim from GuestHouse that Thai women at that time turned to prostitution en-masse ... is of course not true. Just some may have put themselves in a position to take advantage of the most vulnerable and it says more about their character that about Thailand at that time.

[GuestHouse]

On the other hand, the claim from GuestHouse that Thai women at that time turned to prostitution en-masse ... is of course not true. Just some may have put themselves in a position to take advantage of the most vulnerable and it says more about their character that about Thailand at that time.

On the other hand GH has made no claim whatsoever that Thai women turned to prostitution en-masse.

Obviously there is a reason why you yourself read that into what I have said ( it is not actually in what I have said) - I'd advise you to spend less time actively looking for reasons to be offended, or if you insist on looking for stuff that offends you, do at least try to only be offended by what has been said, not what you imagine has been said.

[IsaanAussie]

The crisis has yielded the opportunity for Thailand to draw in foreign investment and become a significant manufacturing nation in industries like motor vehicles. So to me it is not all bad, painful at the time but vastly accelerated the nations standing as a developed nation. Most of the "excessive" development that had been happening pre-crisis would probably have failed anyway as more recent history has shown. Much had been funded on "soft" loans and easy credit and I can remember the regular reports of the number of nonperforming loans held by each bank even four years after the crash.

Many people lost out but not many in the rural population that have never been trustful of banks and can survive on little. So a flood of disposed workers simply went back home to a traditional farming life. At that time over 60% of Thai people were involved in agriculture. No so today. Today tractors (financed by cheap loans) do much of the work, the farmers are aging and the better educated youth are not so keen on getting their hands dirty.

I wonder if Thailand could feed itself as well anymore. But I have no doubt that the debt mess existing today in rural areas would make the impact of a recurrence many times worse.

[Heng]

It was really bad, economically speaking, a lot of people lost their job and their money. But the poster boy of this era was the stockbroker-turned-sandwich-vendor

It really shows the fighting spirit and the resilience of Thai people.

I heard this story many times. Is it even true?

Sorry but it seems like every well connected very wealthy Thai claims to have been poor and that all their success came from hard work. Every time I read an article about a Thai CEO or businessman, it must always start that his father pushed a noodle cart.

Like all revisionist history anywhere in the world, there is no doubt some embellishment and marketing factored in the truth. A lot of my college friends who are all branched out now have 'internet media company' (and typically started in their garage, dorm, basement, etc.) on their business history, which is just a nice way of saying they got in early developing porn and casino websites. But at the end of the day, they did make something of themselves regardless.

:-)

[thaibeachlovers]

As a twice a year tourist, it was brilliant. My money was worth more, so in effect a huge price cut on everything for me.

The most noticeable change was that the traffic in Bkk was far less, so easier to get around.

Another thing was that many building sites came to a standstill, workers gone etc.

Also, in Nana Plaza, the expats virtually all disappeared.

[Travel2003]

I remember someone told me they went to Thailand on vacation during those days, and the value of their money/travellers cheques (not changed yet) had increased a lot only during the flight from Europe.

Other, whom had already changed their money prior to their flights were not so happy.

[jcgodber]

I can remember pushing 2 shopping carts at a time thru Big C . It seemed that everything was 1/2 price.