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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

Week of August 1, 1997

Some 20,000-30,000 people fled fighting and massed on the Thai-Cambodia border. At midweek there were reports of battles near the northern town of Samrong between royalist FUNCINPEC fighters and troops loyal to Second Prime Minister Hun Sen.


Week of July 25, 1997

Locked fire exits, sprinkler systems that didn't work. The safety violations explain why 90 guests and staff died when a blaze gutted the Royal Jomtien hotel in Pattaya, Thailand. They prompted the Cabinet to back a plan requiring local officials to enforce building standards. Hotel boss Thaworn Ujjin has been charged.


Week of July 18, 1997

DRUG TRAFFIC The U.N. Drug Control Program and six East Asia countries which produce the bulk of the world's heroin began talks in Bangkok on July 8. It was the second ministerial-level meeting for the Mekong River Six - Cambodia, China, Laos, Myanmar, Thailand and Vietnam - since they signed a memorandum of understanding with the U.N. in 1993 to attempt to deal with the problem.


Week of July 11, 1997

The Baht - No Longer a Basket Case?

Newspaper reports in Bangkok blamed it on George Soros. Finance ministers and central bank managers across Asia raced to cover their currencies and then opened fire on the Thai government. Economics professors nodded sagely, glad to see that, once again, market forces were proven to be the only real arbiter of value. Bangkok had bowed to the inevitable: it had, in effect, devalued Thailand's national currency, the baht.

Not everyone in Thailand applauded the July 2 decision to allow the baht to trade under a managed float, though the Bangkok stock exchange certainly did: in the first 10 minutes of trading, its index rose 26 points, and 7.9% for the day. Foreign investors jumped in to buy blue chips, mostly in the banking sector. Conventional wisdom says the de facto devaluation will spark economic growth by lowering the prices of exports.

But the president of Siam Commercial Bank, Olarn Chaipravat, says that the government erred. Instead of depreciating the baht's value, the opposite should happen; the baht's value should be increased by 1%-2%. He fears the impact of devaluation on foreign debt structure will be too great. Manufacturers who borrow heavily offshore or rely on the import of raw materials - and that includes a lot of Thai companies - will be hit hardest. Olarn points out that about 42% of the content of goods exported from Thailand is first imported. Rather than rejuvenation, some analysts predict a period of stagflation - a period of slower economic growth coupled with inflation.

As for George Soros, in June the Bangkok daily The Nation reported that the government all but accused him of causing the country's financial troubles. According to the paper, around the middle of May the billionaire financier took a $4 billion forward position on the baht. When he forced a one-day swing from 26.30 after jacking it up to 26.70, the Bank of Thailand called on the central banks of Hong Kong, Singapore and Malaysia (it has a mutual currency support agreement with them) for assistance. Soros pulled off a similar move with the British pound in 1992. It looks like he has won again. And traders expect more currency turmoil in Thailand and elsewhere in the region in coming months.

The same southeast Asian central banks which helped out the Thais in May were forced to rush into markets to protect their own currencies. They had been left with baht they bought when it was in the 26.00 range. Overnight, it became worth something closer to 28.60 or worse - not an ideal investment for a nation's bank to be holding. And not a situation that engenders trust for one's partners.

Former Thai deputy prime minister Supachai Panitchpakdi, speaking in Hong Kong on the weekend before the Bangkok government made its announcement, predicted that some form of adjustment would be necessary, and soon. He pointed to a more profound problem, too: "In three years, three governments with six finance ministers in two years - there has been no consistency of policy. Two years ago overheating was detected in the Thai economy, but the problem wasn't addressed. It has been perpetuated."


Week of June 13, 1997

In Thailand, Defying Gravity

It is not just an oversupply of office space. Thailand has too many homes, too. Thailand's Finance Minister Amnuay Viravan tells Asiaweek his solution: "We want to stimulate demand." He is trying to unload the country's 850,000 unsold housing units, about 450,000 of which are in Bangkok. In the best of times, annual demand runs somewhat less than 175,000 per year. Demand for 1997 was projected at 120,000, for all of Thailand. At the current rate, all those unowned, empty homes will be sold by 2005.

Amnuay is promoting a 20-billion baht ($780 million) scheme to encourage people to buy new houses by offering subsidies that in effect lower interest rates to 9% or 10% from the prevailing 12%. He is also enabling loans to be extended for up to 30 years -- commercial banks have only a 20-year limit. The offer was sold out within two days. But at best, Amnuay's cheaper rates will boost demand by only an extra 10,000 to 20,000 a year - a projection that has not stopped builders, some of which are racing to build houses before the year-end deadline.

The scheme looks like another attempt to defy the economic law of gravity. Market forces, not the government's good intentions or showcase programs, will win in the end. The question is, how long before prices crash, and with them some over-extended property companies?


Week of June 6, 1997

The government denied involvement in the computer glitch that halted stock trading on May 26 for almost eight hours. The foul-up came after the merger between Finance One Plc and Thai Danu Bank fell through - news that might have sent prices falling.


Week of May 16, 1997

Bangkok Gridlock

Who will rid Bangkok of its hopeless traffic problems? Former deputy PM Thaksin Shinawatra - Mr. Traffic Buster - could not. The lumbering metropolitan administration has not. Now the government feels the foreign experts it has been hiring cannot. "Why take the chance?" seems to be the attitude of Yongyuth Sarasombat, boss of the office of the Commission for the Management of Road Traffic. Spending billions of baht on outside help does not strike him as a viable answer to the mega-problems facing the gridlocked city.

But as drivers prepare for traffic problems to go ballistic - on May 12, hordes of children will return to school - it is undeniably obvious that there are just too many vehicles on Bangkok's streets, and more heavy-handed controls are in order.


Week of May 2, 1997

Thaicom 3 was launched on April 17, adding another bird to Thaksin Shinawatra's satellite flock. Thaicom 1, 2 and 3 are protected from domestic competition under government concessions until 1999. Thaicom 3 increased Shinawatra's capacity by 158%.


Week of April 25, 1997

As expected, Moody's Investors Services dropped the country's overall credit rating and the long-term rating for some major banks down a notch from A2 to A3. The stockmarket was prepared for the news, which had little impact on share prices.


Week of April 11, 1997

How bad is the Thai economy? It is so bad that 20 of the 56 contestants in the Miss Thailand beauty contest did not wear the promotional sashes companies use to place to advertise their brands. Reportedly, those that did wear the sashes were paid only half the fee contestants got in past years.


Week of April 4, 1997

Nightmare Dream Machine

The reality of owning a Mercedes Benz in Thailand is difficult for some to grasp. Or, at least, to hold on to. When the economy dipped in the last year, the number of repossessed Benzes shot up, but getting rid of the slightly used models is costly. Buyers prefer their cars new, so a top-of-the-line E230 easily loses 25% of its value in a year. And it's not just the German makes that are in trouble: Swedish Motors reportedly has over six months worth of new Volvos in stock. Even if you can keep up with the payments on your pride and joy in Bangkok, the odds are rising that it will be swiped and wind up in Phnom Penh. Cambodian buyers do not seem to mind their cut-rate luxury cars slightly soiled. According to police sources, car theft rings are desperately trying to fill a back order for 50 hot Mercedes Benzes before April's Songkran festival.

MYANMAR-THAILAND The National Environment Board in Bangkok approved an environmental impact study on the controversial natural-gas pipeline originating in Myanmar. The decision allows construction to begin in Thailand, despite the opposition of environmentalists.

S&P RATINGS A cautious "thumbs- up" from credit rating company Standard and Poor's for Thailand's banks rules out, for now, a Mexico-style financial crisis. But S&P warned that the ratings could drop if problems in the financial sector prove greater than expected.


Week of March 28, 1997

THAILAND-VIETNAM Tomorrow Never Dies - the 20th or so James Bond movie - killed its plans to film in Vietnam, moving production to Thailand. Hanoi said its film industry was unable to handle so many filmmakers, and rejected the producers' request at the last minute.


Week of March 21, 1997

U.S. drug enforcement officials are questioning why Li Yung-chung (alias Phongsak Rajanassakul), a suspect in a case involving a shipment of 486 kg of heroin, was given bail in Bangkok. Li might have fled to Myanmar. The U.S. had applied for his extradition.

Chetta Thanajaro, Thailand's army chief, crossed into Myanmar to meet with his Burmese counterpart, Maung Aye. They discussed the fate of some 100,000 refugees, mostly ethnic Karens. Yangon seems to have gained control of much of the area held by Karen National Union fighters along the border, although clashes continue in the region.


Week of March 14, 1997

Troubled finance firms resented central bank measures to shore up the banking and finance sectors. A one-day ban on trading in their shares pushed their prices down. Others praised the bank for demanding the companies build their reserves and capital.


Week of February 28, 1997

Ruling out devaluation as "not a policy option," the Bank of Thailand tried to stave off speculative attacks on the baht. It will continue to be tied to a basket of currencies, which has allowed it to hover around 25 to the dollar for more than 10 years.


Week of February 21, 1997

Public health authorities scrambled to assure Bangkok residents of their safety after an outbreak of anthrax killed at least one person and infected 11 others. Cattle, probably from Myanmar, spread the disease, which causes nausea, skin pustules and swelling.


Week of February 14, 1997

Ethnic Karen fighters, defending refugee camps in Thailand, claim to have driven Yangon-backed Karen guerillas out of the country. Thai army officials in Tak province confirm that battles took place on both sides of the border on at least two occasions.


Week of February 7, 1997

A New Destinatio n for Thai Bettors?

Gambling may be outlawed in Thailand, but that hasn't prevented Thais from joining the ranks of the region's high rollers. Many travel abroad to indulge in their passion; Macau has been a traditional haunt, while closer to home is Phnom Penh's floating casino. In Myanmar, one establishment masquerades as a holiday resort in Victoria Point, just across the border from Thailand's Ranong.

Happily for those who like to test the laws of probability, yet another casino is in the works. The complex is situated on a large sandbank in the Mekong at almost the exact point where Thailand, Myanmar and Laos meet (but is technically in Myanmar). Its construction began shortly after the State Law and Order Restoration Council came to power in 1988. But the project has proceeded at a painfully slow rate, with long stoppages punctuating the construction work. When Banharn Silapa-archa, who had a major power base in the vicinity, was elected Thai PM in 1995, there was a sudden, if brief, frenzy of renewed activity. Another spurt of construction work followed the recent election of Chavalit Yongchaiyudh, with military figures from both Thailand and Myanmar rolling up in convoys to inspect the project. The area was even visited by a Thai cabinet minister, who stayed at a nearby luxury hotel.

But for all this, few are taking bets on when the casino will echo to the clatter of spinning roulette wheels - Chavalit has indicated that he is anxious to curb excessive spending abroad by his nationals. Any wagers on the PM changing his mind?

Thousands of destitute Thais descended on Bangkok and camped outside the Government House to publicize their plight. They demanded justice for the poor and action on such issues as land rights, government development projects and slum conditions. Meetings between the protesters and government officials have been continuing, but little progress has been reported.


Week of January 24, 1996

Opposition MPs got the green light for a probe into the controversial November killings of six alleged drug dealers, which were sanctioned by deputy police chief, Gen. Salang Bunnag. Days later, two more suspected traffickers were shot dead in a gunfight with police.


Week of January 17, 1997

Malaysia-Thai border: Kuala Lumpur and Bangkok plan to cooperate to stop illegal Bangladesh immigrant workers from crossing into Malaysia from Thailand. The job seekers, who can easily enter Thailand with tourist visas, use the heavily forested border to slip into Malaysia to find work. The two are also working out ways to expedite the return of illegal Thai workers in Malaysia.


Week of January 10, 1997

Thailand's Industrial Reality

The biggest casualty in the worker-initiated $4 million fire at the Sanyo warehouse in Bangkok might be Thailand's attractiveness to investors. PM Chavalit Yongchaiyudh rushed a team to Tokyo to offer reassurances. It was a well-received gesture, but a day after the Sanyo fire, workers at the state-controlled Krung Thai Bank walked out over a dispute similar to that at Sanyo - year-end bonus es. A few days later, workers shut down four factories owned by Taiwanese Delta Electronics for the same reason. Thailand prides itself on its amiable labor relations, a prime attraction for investors flocking there. But as the reality of low wages amid companies' declining profits hits workers, cacophony is replacing euphony: 1996 saw about 350 labor disputes, up from some 300 in 1995. More are predicted for 1997.

The parliamentary vote to select 99 former MPs and legal experts to draft the country's new constitution was carried live on TV. Thai newspapers called for an honest vote and the rejection of "politics as usual." A surprise loser: former deputy PM Thaksin Shinawatra.


News from Thailand in 1996


News from Thailand in 1995


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