Thailand: Beyond The Crisis


Cavan Hogue

Two years after Thailand's economy began the slide that set off the avalanche of Asian economic collapses, a distinguished group of mainly Thai speakers met in Canberra to discuss "Thailand Beyond the Crisis". The National Thai Studies Centre Thai Update Conference held at ANU on 21 April 1999 concentrated on the economic aspects of the crisis but also considered its political and social effects. Most thought that Thailand's crisis had bottomed out, but that the climb back would be a gradual one. The economic crisis had created social problems and led to a loss of credibility in previously respected institutions like the Central Bank and the economic ministries. The political system was also changing, albeit slowly. The restructuring of the financial structure still had a way to go but the long term future was bright.

It was generally agreed that the financial crisis was caused by excessive private borrowing, exacerbated by poor private and public governance. The depreciation of the baht led to more favourable export conditions but these were promptly negated by similar falls in the value of competitors' currencies. As a result, Thailand's traditional exports which were on the wane have done much better than the previously growing manufacturing export sector, although some export oriented manufacturing industries have done well, Ford for one. Food prices have risen and rural unemployment increased as people left city construction sites to return to eke out a living on the family farm. Many city folk have dropped out of the middle classes they so recently entered.

Thailand's big firms were mainly family-run businesses which made little use of modern financial planning or serious market research. Many of them have had to take in foreign partners to survive and will therefore be forced to adopt different methods and cultures. The failure of the bureaucracy to handle the crisis is leading to a restructuring aimed at greater transparency, honesty and efficiency. Attempts are also being made to weaken the power of dominant ministries like Interior and Treasury and to create a new culture of the civil servant as a servant of the public rather than a high-status official.

The crisis has speeded up political changes that were already evident. The armed forces are downsizing and rapidly losing their political influence. The days of coups and military dominated governments are gone. We are also seeing greater mass political awareness and participation in politics. The old patronage networks are a long way from disappearing but the new constitution contains a number of measures aimed at their elimination and the dismal failure of the Chavalit Government to handle the crisis has discredited old style politics. The current government, based on the relatively modern Democratic Party, replaced Chavalit's coalition through constitutional processes; Prime Minister Chuan has performed impressively.

Finally, education reform remains vital. Pre-crisis governments were spending a very high percentage of the budget on education but Thailand suffered from a relatively undereducated workforce. The crisis may be encouraging some young people to get more education simply because there are no jobs for them. However, employment-oriented education for the poor, and especially the rural poor, needs thorough reform and expansion.

WATCHPOINT: Policy platforms are likely to displace patronage networks and politicians will need to show much greater responsiveness to the expressed wishes of the electorate.


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