INTRODUCTION Recovery may have been slow, but the banks have bounced back in better shape and the stock market is considered to have significant growth potential
Stronger, fitter market bids for investors

An emphasis on corporate restructuring and debt management has paid off in the financial sector, and Bangkok is now promoting a healthier economy

hailand, like other Asean states, is hoping that the worst is over. The fallout from the 1997 meltdown touched virtually every corner of its economy, especially the financial sector and real estate development. The result was a sharp recession and a number of insolvencies among the overstretched companies, including household name banks and big corporations. Half the value of the Thai stock market was wiped out and foreign investors understandably ran for cover.

Those who remember the good times – the unsustainable bubble economy of the mid-1990s – now argue that the country is probably stronger and fitter as a result. Tough lessons have been learned.
The survivors argue that the economy is in better shape, even undervalued, and they are ready to rebuild Thailand’s tiger economy. But it has been a slow and painful recovery process. The Thai government has perhaps been more successful than others in managing the high level of non-performing loans (NPLs), which sank many companies, through the Thai Asset Management Corporation.

The problem is still there, but efforts to clear NPLs off the balance sheet have made those banks still left in operation a lot stronger as a result. The financial sector is certainly on firmer ground following a period of consolidation and contraction. Many weaker banks have long since disappeared. There is also renewed emphasis on corporate restructuring as well as debt management. The difficulty now is to try and persuade foreign investors to take another look at Thailand.

Wisit Wongpaisan, company president of KGI Securities, one of Bangkok’s leading investment houses, says he is keen to build up his securities business in order to attract the attention of the big foreign players. He says the ultimate objective is to try and position the group – majority owned by Taiwan’s Koos Group – as a regional financial services provider in the hope that global players will again see its potential.
“In Thailand, we try to see whether we can embark on mergers and acquisitions to try and expand the company to its critical mass,” he says. “We are trying to become one of the top three players in all the areas we do business in.”

The trouble, he says, is that the international community, gazing at the mouth-watering prospect of the vast Chinese market, has been a little distracted from the prizes at hand.
“Somehow Thailand is not being highlighted. I need to come up with a game-plan to promote it – not only to my shareholders but also to the international community,” says Mr Wongpaisan.
“Among all the other convincing I need to do is to persuade them to put Thailand at the top of the priority list because right now everybody is looking at China.”
The Stock Exchange of Thailand (SET) took a hammering five years ago, which resulted in it losing half of its market capitalisation, but it is now regarded as offering significant upside potential. The number of brokers has also been slashed from 80 just a few years ago to around 30 today.
The launch of major initial public offerings (IPOs) of state enterprises such as PTT and Internet Thailand, as well as raising the size of the market, have also generated a measure of investor confidence, both within Thailand and outside.

But SET president Kittiratt Na-Ranong remains realistic about the prospects of attracting new foreign capital flows from investors in the US and Europe in the face of stiff competition from Hong Kong and Singapore.
“Our goal is to help restructure the firms in such a way that investors have got confidence,” he says. “We cannot expect to have a strong capital market without having good-quality listed companies.”
Despite the great strides made in recent years by the government to reform the business sector, of the 380 listed companies on the SET nearly half are still undergoing a process of debt-restructuring.
“I believe we need to help these companies to improve their financial situation,” says Mr Na-Ranong.
Indeed, the ambitions of many of the country’s new batch of corporate leaders are perhaps more modest than they were at the end of the last decade.

The management at BankThai – a company moulded in 1998 from 14 defunct financial institutions – is now looking at restructuring, downsizing, improving its IT systems and other practical affairs. The state-owned bank, which has a focus on middle and upper market corporate clients, is expected to offer a majority equity stake to private shareholders in the near future.
BankThai president Phirasilp Subhapholsiri certainly has his feet firmly on the ground. “What I was eager to do when I was asked to take this position was to introduce the new banking, or business, culture in Thailand. In other words, good governance.” he says.
“I see Thailand as a country that has a lot of potential, but we need to work hard in order to reach that goal.”
Such honest, straightforward thinking is likely to be a telling factor when it comes to pulling Thailand’s economy back up ahead of the pack.