Taking the middle path out of economic despair

July 21, 2000

THE other day Amaret Sila-on lamented that while he was chairing the Financial Sector Restructuring Authority, he was held responsible for selling Thai assets to foreigners on the cheap. Now as chairman of the Stock Exchange of Thailand, he is being accused of not doing enough to attract foreign investors to buy Thai stocks. What's exactly going on with the Thai psyche?

There is an inconsistency in the Thai view on how the country might climb out of the pit of the crisis. Thais want the stock market to perform, which means that it needs buying support from foreign investors. But they do not want to sell other assets such as banks or state enterprises to foreigners. Earlier Korn Chatikavanij, the president of JF Thanakom Securities Ltd, correctly identified this problem as largely cultural. You can't have your cake and eat it too.

There are three ways that Thailand could solve its economic crisis. First, it can overcome the crisis all by itself. Second, it can roll over and rely on foreigners to get it out of trouble. Third, it can strike the mean by trying to stand on its own feet while simultaneously working with foreigners to tackle its problems.

The first route, that Thais rely only on themselves, has been ruled out. Thailand sought an emergency rescue programme from the International Monetary Fund in 1997 to help it overcome the crisis of confidence. For three years, the country's economic sovereignty came under the sway of the IMF, which dictated most of the key economic and financial policies. Other countries in the region, including other international organisations, also came to Thailand's rescue. In this regard, it is clear that the crisis of 1997-98 would not have been resolved had foreign governments or institutions not staged a concerted effort to bail out the country. Imagine the scale of the social and political upheaval if the baht had broken loose and fallen to Bt100 to the US dollar.

The second route of completely depending on foreigners to survive a crisis is rather insane. (But Mexico did rely very heavily on the US to get over its 1993 peso crisis.) No Thai with any national pride would be crazy enough to believe that our problems would disappear with the arrival of more foreigners. It is true that anti-foreign campaigns have popped up from time to time during the crisis. But it had more to do with the temperament of the society at a particular juncture: When you're down, it's frustrating to have to look into the eyes of your opponent.

This brings us to the third choice, which has always been the Thai practice of walking the middle path. We are trying to stand on our feet, but we also need foreign capital, foreign technology and management skills to rebuild the Thai economy. The fact that foreign markets have been open to Thailand has helped our exports to thrive. Without foreign buyers, the Thai economy would have been dead in the water by now.

Thailand's problem has very little to do with xenophobia. At times during its long history, Thailand has managed to work with foreigners quite successfully, from the integration of different races in the region to the build-up of commercial, political and military partnerships. In the old days, the Portuguese helped Ayutthaya to wage war against its enemies. There was a Japanese village in Ayutthaya. In the early Rattanakosin period, Siam had a prosperous trade with China. But it was not until King Mongkut, or Rama IV, that Siam began to feel the pressure from Western colonialism. It took the statesmanship of King Chulalongkorn, or Rama V, to guide Siam through the turbulent period of colonialism and help the country to remain independent.

At this point, there is a lot of pointing of fingers going on. Let's go through some of them: We're in bad shape because we are selling off the country to foreigners; the crisis is not over yet because we don't have a good government; the banks are selfish and they are holding the country hostage; the corporations are full of conmen; the bureaucrats are not worth their salaries. If Thais stop blaming each other and just do their duties with a sense of accountability, the time will come when the crisis will unravel itself.

BY THANONG KHANTHONG