Thais must prepare for 'downturn like 1997' crisis !

Economists see hard times ahead

Thais must prepare for 'downturn like 1997'

By Anucha Charoenpo
Leading economists warned yesterday that Thailand could face a new round of economic problems in light of world economic uncertainty. Speaking at the Thai Strategies in the Global Trend seminar, organised by Triam Udom Suksa School yesterday, the economists said Thais should prepare in advance to cope with the possibility of another economic downturn similar to the 1997 crisis.


Supachai: Be careful in entering FTA deals

Virabongsa Ramangura, former finance minister and deputy prime minister, said the economy was on the decline because of world economic uncertainty, particularly in the financial sector.

The world's economic strucuture was changing significantly under the influence of the continuing economic growth of China, India and Russia. Capital flows into and out of the country have increased in volume and become more unpredictable.

''We are worried that if Thailand can't cope with this economic situation in time, the country could run into a new round of economic crisis,'' he said.

He called on the government to come up with austerity programmes to encourage Thais to economise and stop spending lavishly.

He said apart from the uncertainty of the world economy, the rise in energy costs and terrorism threats would also affect domestic growth.

Varakorn Samkoset, rector of Dhurakijbandit University, said the country urgently needed to pay more attention to human development to enable people to cope better with international uncertainty.

The government, he said, will need to find a way to measure the national economic condition more accurately.

The use of GDP figures did not always accurately reflect the economic success people were enjoying, Mr Varakorn said.

Paiboon Wattanasiritham, chairman of the Centre for the Promotion of National Strength on Moral Ethics and Values, said His Majesty the King's self-sufficiency economic policy was an answer as Thailand faced a looming economic crunch.

He vehemently disagreed with a government idea that economic success could bring more happiness to society.

Instead of focusing on gross domestic product, the government should devise a tool to measure the happiness of the people. This method has been used by Bhutan, he said.

Somkid Jatusripitak, caretaker deputy prime minister and commerce minister, conceded that the government would need to place more emphasis on human development to enable the country to compete with other countries.

The government's ability to develop its people to enable them to attain equality, socially and economically, would be the key to long-term national economic development, he said.

The government will need to promote domestic consumption to enable the economy to be less dependent on exports, he said.

Supachai Panitchpakdi, secretary-general of the UN Conference on Trade and Development (Unctad), warned the government to be more careful in entering free trade agreements with developed countries to prevent undesired impact on the economy.

Mr Supachai said he was very concerned that the government's FTA policy could put the country at a disadvantage if the agreements were not carefully studied beforehand.

He said he was not saying FTAs were good or bad, but he believed agreements should be limited to countries in the same region because their economies were more or less the same size as Thailand's and the agreements were more likely to be mutually beneficial.

How much more capacity for tourism do the expats here think Thailand has? I can certainly see other asian countries becoming cheaper for manufacturing etc.

... now that "they" are aware, they will do their utmost to ensure it doesn't happen - the 1997 crisis was basically an "overnight" type of thing, that no-one really expected to happen - but now they are aware, the most that will happen is a bit of turmoil. However, having said that world economics is a bit dodgy at the moment and if the US starts having problems then that tends to send ripples through the whole world. And in time, when China starts having economic problems then so will "the world" - wonder when and if that will happen, ie the world relies on economic activities from China

What was the highest exchange rate u guys can remember..........?

When i first went it was just 59 to 1 pound - now its around 71

The worst (best?) it ever got was just over 90 baht to the pound (56-57 baht to the dollar) in January 1998. Ah, those were the days!

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Originally Posted by Oogleman

How much more capacity for tourism do the expats here think Thailand has? I can certainly see other asian countries becoming cheaper for manufacturing etc.

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You need not just cheaper manufacturing. You need trade deals, an educated workforce, establish export markets,developed legal system, infrastructure. You need leaders with vision who understand the information age. That would be the like of place where software startups,manufacturers, outsourcers would want to go. And none of that sounds like Thailand. Try Vietnam:


(first article, 1 of 2)


Mon, Jun. 05, 2006

U.S.-Vietnam trade deal benefits both countries
ECONOMIC INTEGRATION WILL FURTHER FREEDOMS WHILE HELPING WORKERS, FIRMS IN BOTH NATIONS
Mercury News Editorial

The reconciliation between the United States and Vietnam has been a long, painstaking process. It began with the end of an economic embargo in 1996, and continued with the establishment of diplomatic relations in 1995, the exchange of ambassadors in 1997 and a major bilateral trade agreement in 2001.

A new trade deal between the two countries signed last week in Ho Chi Minh City paves the way for America's former enemy to join the World Trade Organization and complete its integration into the world economy. It's a step that will benefit the people of Vietnam and the United States. Congress must move quickly to ratify the agreement and grant Vietnam so-called ``permanent normal trading relations'' so it can gain full membership in the WTO.

Since the 2001 accord, trade between the two countries has soared from under $1 billion a year to $7.8 billion in 2005, helping to heal old wounds and bringing the two countries closer together. That first trade agreement allowed U.S. businesses large and small to tap Vietnam's talented pool of workers. Tech companies were among the trailblazers. This year, Intel announced plans to build a $300 million chip assembly plant in Vietnam, and Microsoft chief Bill Gates visited the country for the first time.

Vietnamese-American entrepreneurs from Silicon Valley have further bridged the gap, leveraging their language skills and cultural know-how to establish tech businesses that span the two countries. In Ho Chi Minh City alone there are an estimated 100 software companies with at least 50 employees, and Vietnam's middle class is growing rapidly.

The latest agreement will accelerate this process, by eliminating remaining trade barriers and ending both U.S. quotas on Vietnamese textiles and Vietnam's subsidies to its garment and textile industries. The agreement also would give U.S. companies greater access to Vietnam's market in key sectors such as telecommunications, financial services and energy.

But Vietnam's accession to the WTO would put it on the fast track to the kind of modernization that has transformed China since its entry into the global trade body in 2001.

Like the relationship with Beijing, Washington's rapport with Hanoi will not always be all handshakes and smiles. Issues such as official corruption and especially human rights will remain an irritant -- and rightly so -- until Vietnam embraces greater political freedoms.

But people-to-people contacts and the exchange of goods between the two nations is the best way to cement Vietnam's budding liberalization, while benefiting workers and businesses on both sides of the Pacific Rim.

On the tech map: Vietnam
HIGH-TECH PLAYERS FROM SILICON VALLEY PIONEER COUNTRY'S EFFORTS TO CATCH UP WITH INDIA, CHINA, TAIWAN
By John Boudreau
Mercury News

HO CHI MINH CITY - The cubicle culture has arrived. Desks in Vietnam are decorated with stuffed animals, goldfish and even a bust of former President Bill Clinton. Management offers rank-and-file software engineers beer-bash Fridays and team-building trips to resort towns.

It's just like Silicon Valley. Well, except for the occasional communist hammer-and-sickle banner posted outside on city streets.

``We want to have the culture of Silicon Valley in Vietnam,'' said valley veteran Kevin Nguyen, co-founder and chief technical officer at Global CyberSoft, which employs more than 300 tech workers in the Saigon Software Park.

After years of playing catch-up to Asian powerhouses such as India, China and Taiwan, Vietnam is finally earning a (small) place on the world's tech map. A young and smart workforce is poised to follow the lead of early pioneers, many of whom left comfortable careers in Silicon Valley to invest in the fledgling tech sector of the Southeast Asian country.

There are about 100 software companies with at least 50 employees in Ho Chi Minh City, and 200 software companies throughout the country. The young software industry employs some 32,000 workers in the country's busy capital of commerce, up from about 7,000 in 2002, according to the Ho Chi Minh City Computer Association. Intel recently announced plans to build a $300 million chip assembly and testing factory in Vietnam, whose economy grew 8.5 percent last year. Microsoft Chairman Bill Gates is scheduled to visit this week.

``Vietnam, the Philippines, Bangladesh -- these emerging countries have a ton of young and talented people,'' said Albert Pang, a software analyst for IDC. ``Give them time. You'll see tremendous results.''

The growth of countries like Vietnam could certainly drain some more work from Silicon Valley. But their emergence will allow Bay Area tech companies to better expand worldwide, Pang said. In order to capitalize on these growing markets, companies must have a presence in Asia, he added.

``It's the price you have to pay to live in a global village,'' Pang said. ``You have to share the rewards.''

Some are returning

Vietnam, like Taiwan, India and China, is benefiting from people returning to their homeland from Silicon Valley to start or run companies.

The Corporation for Financing and Promoting Technology, or FPT, partly owned by the Vietnamese government, is the country's largest software company and controls much of the domestic market. Much of Vietnam's private software industry, though, is tied to risk-taking Vietnamese from overseas, called Viet Kieu. These folks have had to overcome anger from some in the U.S. Vietnamese community about assisting the country they fled after the fall of Saigon in 1975, and even suspicions of the communist government.

They now act as a bridge between two cultures -- Vietnam and tech.

``These guys have put everything on the line,'' said Alex Pasikowski, director of Dragon Capitol, an investment fund in Ho Chi Minh City, formerly Saigon, that invests in Global CyberSoft and other companies. ``They put in their own cash, delayed salaries in tough times. They never gave up.''

Now the sacrifices are starting to pay off.

``I believe in the potential of this country,'' said Thinh Nguyen, founder of Pyramid Software Development, which is headquartered in Milpitas but employs nearly all of its 70 engineers in Vietnam. He expects his 5-year-old company to double its revenue this year to more than $1 million, become profitable for the first time and expand to as many as 200 employees. ``Look at the vibrancy of this city -- everyone is so entrepreneurial. The culture is similar to Taiwan, China.''

Nguyen, who invested $500,000 of his own money to start the company,, said software companies like his are benefiting from an improving global tech economy, a growing confidence in the work of Vietnamese software engineers and an ability to carve out their own niche.

``In India, if you have a small contract, no one will talk with you,'' he said. ``Here, if you have a contract for 20, 40 people, you get the royal treatment.''

Cheaper than India

Costs are also lower. A Vietnamese software engineer earns between $3,500 and $13,000. In India, the pay range is $7,000 to $30,000, while valley engineers pull in between $79,000 and $125,000.

There is also a desire among outsourcing companies to spread their overseas operations across several regions to hedge against political or other uncertainties, said Kevin Nguyen of Global CyberSoft, which is headquartered in Santa Clara.

``Vietnam is safe,'' he said. ``There are no terrorists.''

Still, some U.S. companies are reluctant to publicly say they are working in Vietnam because of lingering feelings about the war, said analyst Pang. An American chief executive who grew up in the 1960s may have mixed feelings about doing business with ``the former enemy,'' he said.

Furthermore, expat executives say operating in Vietnam has its challenges, including infrastructure problems -- broadband is expensive and often slow -- an undeveloped legal framework, a lumbering bureaucracy and an educational system that does not completely prepare graduates for work at a tech company.

Software executives say it can be tough finding enough qualified engineers. But they have unwritten rules about how far someone can go in recruiting people to their company.

``I know all the major company CEOs,'' Thinh Nguyen said. ``You see these guys every week around Saigon. We have a gentleman's agreement. There are some things you can do, and there are some things you can't do.''

It also means companies work hard to create happy offices with perks, such as the ability to travel abroad and valley-like flexible work hours.

``We are focused on work, not on the clock,'' said Global CyberSoft engineer Nguyen Thanh Bao Tran, who likes the more flexible work hours. She also said advancement is based on abilities, not gender or other considerations. ``The ladies here are equal with the men. I like that. We feel comfortable here.''

For its part, the Vietnam government has worked to build a software sector by setting up tech parks and granting tax incentives to companies. It recently launched a high-profile campaign to root out corruption in the government. The government might conclude negotiations for World Trade Organization membership this year, which could further enhance the country's tech and business opportunities.

Intellectual property

Software companies also must work to battle the perception that intellectual property is at risk in Vietnam.

New employees at Global CyberSoft are immediately taught the importance of intellectual property, said Kevin Nguyen, who expects his company to post revenues of at least $7 million this year, up from $4.5 million in 2005. Security badges are needed to enter each of the company's departments and workers are prevented from burning CDs from their work computers, or even hooking up USB drives. Employees are also prevented from sending large e-mail files.

The concept of intellectual property is quickly grasped among workers whose families sacrificed hard-earned savings for them to obtain a high-level education and professional life, said Thinh Nguyen, who employs similar security measures. ``It's a big thing for them to get caught doing something illegal. You shame the whole family.''

Serge Fantino, co-founder of Squid Solutions, a French start-up that helps telecommunications companies better analyze customer data, said he was surprised to discover Vietnam's tech sector; before, he only associated the country with past wars and great food.

``If you come and visit one of our labs, as soon as you walk into the door, it's just like any other R&D lab you find in Silicon Valley,'' said Nguyen Huu Le, a former Nortel executive who is chairman of TMA Solutions, Vietnam's largest software outsourcing company. The company had about $10 million in revenue last year and projects a 30 percent jump for 2006.

The Silicon Valley expats have brought their brand of networking to Ho Chi Minh City, as well.



Dboy

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Originally Posted by WhiteDesire

the 1997 crisis was basically an "overnight" type of thing, that no-one really expected to happen

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That is complete tosh, WhiteDesire. Go and Google on "Austrian School Economics". A number of contrarian economists predicted precisely what would happen months ahead of the event. Even some of us old sceptics believed that the number of cranes on construction sites was a good sign of an over-blown economy. As I recall I said to the Deputy Editor of Asiaweek in 1993 "This is unsustainable" - and got told I knew nothing. More schadenfreude in 1997, I'm pleased to say. It will happen again because Thailand in particular at best addressed the symptoms, not the causes (typical Asian approach - form over substance), and one day in the not too distant future it's going to happen all over again