Thailand scores high on restructuring

November 20, 1999 -- GOLDMAN Sachs, the US investment bank, gave Thailand high marks for its restructuring efforts, saying it has impressive momentum compared with other countries in the region.

In its Asia Restructuring Scorecard, Goldman Sachs says Thailand has made strong or good progress in capital market regulation, legal framework, banking systems, disclosure/auditing, deregulation, market opening, corporate governance and operational restructuring.

The only area of slow progress for Thailand is financial restructuring in which poor market sentiment has caused several deals of the cash-strapped banks to be postponed, it said.

Goldman Sach's Asia Restructuring Scorecard also covers Japan, China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore and Taiwan.

Richard J Gnodde, the president and managing director of Goldman Sachs (Asia) LLC based in Hong Kong, said Thailand has been moving in the right track in restructuring its economy, particularly the corporates and banks, which are now undergoing financial and operational restructuring under a more liberalised regime.

He said the next phase for Thai and Asian corporates is capital raising to finance the momentum of the recovery. ''Each company, each country will be competing for capital, no matter whether they are Japan, China, Korea or Thailand,'' Gnodde said.

Capital will go to countries that have the best prospects of recovery or return, and this in turn will help fund the long-term growth of their economies, he said.

Gnodde views restructuring as an ongoing effort that must be implemented successfully if companies hope to get new capital. ''You've got to be competitive in your business,'' he said adding, ''Every day we have to move forward. If we stop, we'll lose momentum. Thailand has every opportunity in front of it.''

Asia is going to go through an equity-raising exercise in an emerging trend in which Gnodde said Goldman expects to be a key player to help institutions in the region get the capital they need to finance their growth.

So far, Goldman Sachs has outstanding investment of about US$2 billion in Thailand, holding a sizeable stake in Dusit Thani Hotel Group and the Rajadamri Hotel Group, which operates the Regent Bangkok Hotel. It also is a key bidder for the distressed assets of the Financial Sector Restructuring Authority.

It advised Thai Farmers Bank in a successful global issue in 1998. It is now joining with GE Capital to help Thai Farmers Bank to set up an asset management company to deal with its problem loans. The US$700-million equity issue for Siam Cement that Goldman Sachs advised on was cancelled because of pricing, however.

Gnodde said Goldman Sachs is looking for further opportunities to invest in Thailand but declined to be specific. The company is keeping its options open, he said.