Thanong Khanthong and Jiwamol Kanoksilp believe the impact from Indonesia's debt moratorium on Thailand will not be great, but the outlook remains very cloudy.

Prime Minister Chuan Leekpai was on target with his comment Tuesday that Indonesia's declaration of a voluntary debt moratorium for more than 200 companies would not have an immediate impact on Thailand because the financial crises in the two countries had been decoupled.

''It is evident that the problems in Indonesia have been decoupled from Thailand, although we need to monitor the situation a little bit more,'' Chuan said. ''At least, in the near-term, I don't think it will have any significant impact on Thailand since we have reaffirmed our commitment to follow the International Monetary Fund programme. Although Thailand was the first country to face the crisis, which was serious, conditions have ever since been unravelling.''

Indeed, most analysts shared the prime minister's view that the impact of Indonesia's debt moratorium on Thailand would not be significant in the short term since Thailand appears to be going in the right direction in tackling its macroeconomic problems and addressing the financial system crisis. ''Global investors and the financial markets have decoupled Thailand from Indonesia. It was clear from last week that while the rupiah fell sharply, the baht was more stable,'' said Scott Christensen, head of research at Jardine Fleming Thanakom Co Ltd.

Prasarn Trairatvorakul, the deputy secretary of the Securities and Exchange Commission added: ''Thailand's problems are not on the scale of Indonesia's. The rupiah has lost five to six times its original value, while ours has lost only twice.''

Thailand is far ahead of Indonesia in tackling its banking system deficiencies and addressing its external trade imbalances. It has won praise from the IMF in its financial and economic restructuring programme, and Finance Minister Tarrin Nimmanahaeminda's recent trip to the US has bolstered confidence that Thailand is on the right track in resolving its economic problems.

Yet a cloud of uncertainty still hangs heavily over Thailand and this region plagued by the contagion effect of competitive devaluations. Thailand's devaluation of the baht on July 2 last year sparked off the first round of the regional contagion effect. Several analysts have indicated that Hong Kong and China will trigger a second round if they are forced to devalue their currencies to the same plane as other regional currencies.

So Indonesia's move, on the eve of the lunar new year, to announce a moratorium on its corporate debt repayments has apparently headed off the Hong Kong and China factor and become the genesis of the second round of the contagion effect. Since most of the regional foreign exchange markets closed for a half day or full day to observe the lunar new year, the central bank of Indonesia had an easy time to intervene in the market to prop up the rupiah, which surged to 11,000 in early afternoon. But after the currency markets resume trading in full swing later this week, the rupiah is expected to come under fierce selling pressure yet again.

Technically, Indonesia had stopped repaying its foreign debts for quite some time, so it comes as a surprise that it has elected to announce, while traders are away on holiday, the moratorium. In fact, Indonesia, which is saddled with a staggering US$130 billion in foreign debts, should have looked at the Korean model in handling its debt crisis. The Korean government has gone so far as to guarantee part of the private debts in dollar terms. It has also raised $10 billion by issuing bonds. The private debts have been rolled over to three or five years.

''Korea was lucky in that it had the United States at its side while it was negotiating to restructure its foreign debts,'' said Kiatchai Sophasathienphong, chief treasurer at Siam City Bank. ''The US called upon the G-7 and the central banks of the creditor nations to help Korea out by rolling over the debts.''

Indonesia has promised to guarantee the deposits and debts of its troubled banks in an attempt to restore confidence in the banking sector. But it will leave the corporates to sort out their own debts with creditors. Corporate debts have been estimated at $66 billion, against $16 billion for private bank debts. Standard Chartered Bank, Union Bank of Switzerland, Development Bank of Singapore and Union Overseas Bank of Singapore have been appointed as representatives of the foreign creditors to negotiate with the Indonesian firms.

Since Indonesia will not guarantee parts of the private debts, it is expected that negotiations with the foreign creditors will be tough. If the talks fall through, the rupiah is likely to be subjected to another big sell-off. ''It might be necessary that Indonesia talks it over with the IMF so that the government is allowed to guarantee part of the private debts and that the creditors can be persuaded into rolling over the debts to four or five years. This will give some breathing room for the corporates. In addition, the Indonesian government must borrow more from overseas,'' Kiatchai added.

Kiatchai suggested further that Thailand might also need to follow this model in dealing with its external debts by guaranteeing parts of the dollar loans of the financial institutions. Another foreign analyst agreed with Kiatchai's line of argument, saying that a loss-sharing scheme would have to be established between the Thai government and the foreign creditors if the latter are to be persuaded into rolling over parts of the debts.

Of Thailand's $75 billion in private debts, corporate debts account for $35 billion and private banks $40 billion. Most Thai corporates are defaulting on their foreign debts anyway. But the private bank debts hold a more important dimension due to the importance of the financial system. Japanese banks are the creditors of about half of Thailand's private bank debts and have agreed to roll over most of them.

''The other foreign creditors will have to take the hit by writing off half of their exposure to Thailand, with the remaining half to be socialised by the Thai government, which must take up the bad loans and make them more attractive for the foreigners to buy,'' the foreign analyst suggested.

Thailand's ability to win back confidence will be tested over the next couple of months when the big banks are scheduled to undergo a massive recapitalisation. About Bt350-Bt400 billion in fresh money will be needed to put the banks back on their feet, yet so far they have only announced a combined recapitalisation plan of only Bt100 billion.