It's the calm before the storm

Thai Takes
By PHILIP GOLINGAI

THAIS are not jumping out of buildings just yet though Thailand is facing a more severe downturn than the 1997 Asian financial crisis which saw thousands committing suicide.

“It’s yet to come. By the second quarter of this year you should see many suicides,” said the man who counselled businessmen who contemplated committing suicide when they were hit by the Asian financial crisis.

Why the second quarter? Because by then those who have not given up hope yet will have no hope.

“The Asian financial crisis affected some 200,000 Thai entrepreneurs and financial institutions but this global economic crisis will affect 63 million Thais,” warned Sirivat Voravetvuthikun, the most famous face of the 1997 financial meltdown.

Known in Thailand as “Mr Sandwich” because the 1997 crash turned him from a multi-millionaire property developer and stock market guru to a sandwich hawker, Sirivat noted that the Asian economic crisis was made in Thailand and exported to neighbouring countries, whereas the present global economic slowdown was a worldwide phenomenon.

“The Tom Yum Kung crisis (as the 1997 crisis is also known) started because we borrowed too much from overseas.

“And one of the International Monetary Fund’s requirements was for Thailand to devalue the baht,” explained the 60-year-old businessman, who operates five cafes in Bangkok called Coffee Corner.

“By devaluing the baht our foreign debt doubled overnight and many debtors, including me, went broke. And the domino effect forced the closure of Thai financial institutions.”

Mr Sandwich said Thailand’s saving grace then was that it was still able to export.

“Because of the devaluation of the baht (which made Thai exports attractive) and the good economic health of the US, Europe and Japan (which at that time represented about 50% of Thailand’s total exports) we could get out of the crisis,” he explained.

This time it is different.

“We cannot export as the whole world is in recession,” Sirivat cautioned, pointing out that exports and tourism account for 70% of Thailand’s GDP.

Tourist arrivals (which generates 500 billion baht to 600 billion baht, or RM51.3bil to RM61.6bil, a year) is down because of the world economic malaise and as a consequence of the closure of Suvarnabhumi and Don Muang airports in late November.

Thailand is in dire straits, he observed.

“Every day you read about export-based factories closing down and workers being laid off,” he said (estimates place the total so far at between one million and two million).

“I predict Thais will suffer. How long will we suffer? My personal opinion is we will be in trouble for at least five years. Why? Because we can’t export.”

I also asked the businessman, loaded with economic tidbits at his fingers tips, about the finance-related suicides during the Tom Yum Kung crisis.

“Yes, there were many suicides. You are talking about thousands. That’s my wild guess,” Sirivat said.

“Some committed suicide because their three-generation businesses went bankrupt.”

Despite warnings that the Thai economy is currently in dire straits there have been no media reports of Thais committing suicide, I pointed out.

“Yet to come,” Sirivat said. “Does that mean the Thai economy is still good? No, they (down and out Thais) still have hope. But when hope diminishes, you will see suicides.

“And there will be people who will give up because when they go to their relatives and friends to borrow money, they will be turned down. I’ve faced that before, but I did not give up.”

But, I told him, the Thai economy looks robust. Bangkok’s shopping malls such as Siam Paragon are full of shoppers who do not look as if they are going to jump out of a building.

“What you see is an illusion,” he countered. “Yes, you see many shoppers in Siam Paragon, but they are just enjoying the air conditioning. They are not buying.

“The shop owners at Siam Paragon will tell you that their business is down by more than 50%.

Mr Sandwich does not have faith that the unstable Abhisit Vejjajiva-led government will be able to solve Thailand’s economic woes.

“Is the prime minister a good man? Yes,” he replied to his own question. “But does he know how to run the country? Question mark.

“Did he form his government democratically? Fifty-fifty, so I expect House dissolution soon.”

(Published in The Star on March 14, 2009)