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Dr Peter A. Jackson
The present mood in Thailand is one of shock, shame and gloom as the population comes to terms with drastically dampened expectations, wage deflation and widespread unemployment. In addition to a 50 per cent devaluation of the baht since July 1997, vast numbers of workers in the private and public sectors have suffered absolute cuts of between 10 and 20 per cent in their baht-denominated salaries. Many in Thailand now feel shame and anger that their country - which they had thought was rapidly becoming a 'developed nation' - has been labelled by the international media as the 'epicentre' of the current Asian financial crises. Despite the economic destabilisation, several factors have ensured a high degress of political and social stability in Thailand to date. A new, popularly drafted, pro-democratic Constitution aimed at countering vote-buying and political corruption was passed by the Thai Parliament within a month of the baht devaluation, with the support of the monarchy and the military. Social stability has also been ensured by harmony between the ethnic Chinese minority (10 per cent of the population) and the ethnic Thai majority. The boom years of the past decade have seen further integration of ethnic Chinese into the mainstream of Thai society, facilitated by cultural similarities - both the Thais and the Chinese are Buddhists - and the participation of ethnic Thais in most Chinese-owned businesses. But a number of conflicts at urban factory sites and in rural areas in late 1997 and early 1988 portend increased instability amongst those who benefited least from the boom years and who now feel that they are being asked to pay for the excesses of an already well-off urban minority. Also notable has been the growth of an increasingly virulent anti-IMF and anti-US sentiment since late 1997. Increasingly, the IMF is seen to be imposing borrowing conditions that will deepen rather than resolve the financial crisis. These xenophobic critiques are linked with calls to return to a 'grass roots, traditional Thai economy', less exposed to the vicissitudes of a globalised economy'. A dichotomy has emerged between the pro-US, pro-IMF public stance of the government and the main opposition parties, and public discourse in the press. In January the quality Thai language weeklies carried front page headlines such as 'Shake off the yoke of the IMF', the 'Thumbs down to the US - It will take 100 lifetimes before our anger at the US abates'. This dichotomy in discourse does not yet reflect serious social divisions that could emerge should the current downturn be extended.
WATCHPOINT: If moderate growth is re-established in the medium term, Thailand's social cohesion and relative political stability are unlikely to be seriously threatened.
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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