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Dr John Funston
Thailand often gets an unflattering international press. Newsweek last year declared it only had two comparative advantages, sex and golf courses, and had done little to address underlying problems that sparked the regional economic crisis. The Far Eastern Economic Review (22 June) described it is a mai pen rai (“never mind”) country, that leaves until tomorrow the imperatives of today – it hadn’t followed through in areas as diverse as banking reforms, corporate restructuring, or election reforms.
Leaving aside the vexed issue of the origins of the crisis, what has been happening in Thailand for the past three years?
On the economic front reforms began at the Bank of Thailand, which underwent a wholesale reorganisation based on recommendations of a high-level international advisory group. In the financial sector, 56 finance companies and a bank were closed down, other finance companies and banks merged, four banks sold to foreigners, and remaining banks extensively reorganised. Many scions of the Sino-Thai business elite were forced to accept drastic write-downs of their holdings. A raft of bills was passed dealing with issues such as greater corporate transparency, strengthening the securities commission, enforcement of bankruptcy, competition policy, money laundering, alien business (expanding businesses open to foreigners), the land code (allowing foreigners some ownership of land), labour reform, privatisation, and educational reform. The March decision of the Bankruptcy Court to declare insolvent Thailand’s most notorious debtor, Thai Petrochemical Industries (US$3.5 billion in arrears), showed the new laws do have teeth.
A new constitution, and Freedom of Information Act, both passed in 1997, have ensured far-reaching political changes also. The constitution has flaws – including an elitist requirement that parliamentary candidates must posses a university degree – but heralds a radical shift in Thai politics, promoting democracy, accountability, transparency and strengthening measures against corruption. New independent watchdogs have already demonstrated their resolve. In March Sanan Kachornparasart, the second most powerful politician in the country – Deputy Prime Minister and Minister of Interior – was forced to resign from public office after the National Counter Corruption Committee found he had concealed assets of US$1 million. In the same month the Election Commission disqualified 78 of 200 newly elected senators – most from rich and powerful families – for fraud.
The reform process has been messy - encountering powerful opposition from vested interests, and logjams from so much legislation introduced at once. The media’s mistake has been to focus on these, and neglect the overall forward trend. They want a quick fix, showing little understanding for the complexity of tackling reform on multiple fronts, and zero tolerance for the delays of democratic decision-making. Perhaps this should not surprise, as the media did little better in interpreting Thailand during the boom times. In 1995 The Economist famously predicted it would have the world’s eighth largest economy by 2020.
WATCHPOINT: Look beneath the international media’s negativity about Thai reforms.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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