Transcript Presentation

Thai capital after the Asian crisis
Pasuk Phongpaichit and Chris Baker
A Decade After, Bangkok, 12-14 July 2007
Thailand: postwar to crisis
stable macro management
US tutelage
natural and human resources
immigrant entrepreneurs
competitive clientelism
high savings and investment
export orientation
domestic family conglomerates
60
'000 baht at 1988 prices
50
40
30
20
real per capita GDP
10
0
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
Crisis macro
IMF deflationary package (1 year)
consumer stimulus
baht at 1998 prices
8,000
7,000
6,000
private consumption
5,000
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Finance
Collapse of credit culture
Surgery on financial institutions
Selective rescue
Lift bar on foreign investment
Regulation, prudence
Big four survive
Medium and small closed, sold, merged
End of relationship banking
5-year shrinkage
Fig I.5 Distribution of commercial bank lending, 1990-2006
8000
other
overseas
government
consumer
other commercial
industry
billion baht
6000
4000
2000
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: Bank of Thailand
real sector
No policy to rescue
fire-sale of distressed assets
hands-off debt restructuring
lift equity restrictions in manufacturing
selective protection of services
Fig 1.1 Foreign direct investment, 1970-2006
10
5
9
8
4
% of GDP,
right scale
6
3
% of gdp
US$ billion
7
5
4
2
3
2
1
1
0
0
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
Source: Bank of Thailand
FDI
crisis decade vs boom decade:
x 3 in US$
x5 in baht
x2 as % of GDP
export manufacturing
finance
construction-related (cement, steel)
big retail
property
1988: 122 of top 450 MNCs, 214 projects
2000: 248 of top 500 MNCs, 630 projects
services
Automotive industry
pre-crisis
post-crisis
assemblers
c. 12, mostly Thaimajority joint
ventures
main assemblers c. 100%
MNC-owned
first-tier
(oem parts)
c. 400 firms, mix of
domestic, JV, and
MNC firms
20 domestic groups, rest
are MNCs and their
international partners
second-tier
(components)
c. 500 firms, mostly
domestic
fdi by MNC international
partners
suppliers
mostly domestic
fdi by specialists from
Japan, US, Europe
150
Fig 3.1 Number of hypermarket outlets, 1995-2006
24
23
125
20
100
49
19
44
Carrefour
17
40
Big C
75
36
15
Tesco
33
11
50
29
6
25
19
7
20
9
23
20
52
5
1995
1996
60
33
11
6
2
75
43
2
0
70
12
14
17
1997
1998
1999
24
2000
2001
2002
2003
2004
2005
2006
Source: Nipon et al., 2002 and corporate websites.
Companies
Quarter of companies de-listed from exchange
Quarter of top 50 corporate groups slid to bottom ranks
Quarter of top 220 corporate groups disappeared
Win or lose? Sector and structure
Sector
manufacturing partner
secondary finance
Structure
“authoritarian conglomerate”
(unreformed kongsi, absolute patriarch, little/no outside
professional management, bank-dependent, non-transparent)
Impacts
Concentration
Export dependence
Capital market
Social development
Concentration
By MNC buyout/expansion
three mega-retail chains
two mobile phone suppliers
etc.
‘Few winners, many losers’ effect
merger of steel firms
top five banks
liquor/beer
etc
Fig 1.5 Top 150 business groups by assets, 2000
1,250
750
500
250
150
125
100
75
50
0
25
billion baht
1,000
Source: Suehiro database
export dependence
Recovery through exports
currency depreciated
companies reorient to export to replace home market
Almost all growth attributable to exports
Large and growing share by MNCs
Trade:GDP up from 90 to 150%
growth accounting
1999
2000
2001
2002
2003
exports
5.0
10.1
-2.6
7.3
4.2
consumption
2.3
2.7
2.1
2.7
3.5
-0.7
1.1
0.2
1.3
2.3
GDP
4.4
4.8
2.1
5.4
6.7
export %
113
210
*
135
63
investment
Source: Peter Warr, 2005: 30
100%
Fig I. 11 Export shares by sector, 1985-2006
tech-based industry
75%
process
industry
50%
labour-intensive industry
resource-based industry
25%
other
agriculture
0%
2006
2005
2004
2003
2001
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
Fig I.10 Trade as percent of GDP, 1995-2006
80
Exports
% of GDP
70
60
50
40
Imports
30
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
capital market
Decline in savings and investment
credit promotion to boost consumption
rising household debt, lower household savings
Banks shrink lending to business
reorient to consumer
Stockmarket no substitute
small, radically affected by speculative i/n flows
political manipulation
values do not reflect company performance
Fig I.8 Gross national savings, 1994-2005
40
30
% of GDP
Business
20
Government
10
Households
0
1994
Source : NESDB
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Fig I.9 Gross domestic investment, 1994-2005
40
% of GDP
30
public
20
private
10
0
1994
Source: NESDB
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Fig I.5 Distribution of commercial bank lending, 1990-2006
8000
other
overseas
government
consumer
other commercial
industry
billion baht
6000
4000
2000
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: Bank of Thailand
social pattern
26%
urban informal
15%
41%
white collar
agriculture
8%
formal industrial
10%
other
Thank you