exchange rate guarantee by the Bank of Thailand in the wake of the baht float, fewer people will be willing to or have enough courage to invest,"(Limsamarnphun, 1997, July 28, 21).
Both the financial success of Thailand (and the roots of its 1997 decline) are found in the same economic philosophy" the desire to exploit its low-wage/low-skilled labor forces, to lure foreign direct investment (FDI) to build plants to build "screwdriver plants" (Ciminero, 1997, Nov. 24, Online) that would assemble and ship consumer electronics products and other labor-intensive goods. Ciminero, and other analysts (Crampton, 1997, A2) point out that as long as the baht was pegged to the dollar, Thailand was viewed as even more attractive for FDI and foreign portfolio investment in its securities market (Limsamarnphun, 1997, 4).
Ciminero points out "In recent years. . .the trade surplus has evaporated, as stimulated domestic demand has been pulling in more merchandise imports than the country exports. This has rendered a current . . .(BOP) account deficit of dangerous proportions: 8.3% in 1995, 7.9% last year and estimated at 7.5% this year even before the devaluation"(Ciminero, 1997, Nov. 24, Online).
Na Thalang added more to this financial picture. "The currency peg system opened the floodgates to foreign capital. Thai borrowers were spoiled by the belief that the ever-lasting fixed currency regime would protect them from foreign exchange risks. Instead of using the foreign savings to finance export-oriented industries, the borrowers recklessly spent the money to speculate in the property and stock markets. They forgot that eventually the external debts must be repaid by net export earnings (Na Thalang, 1997, 16).
Economic Aspects of Doing Business in Thailand
Exports, tourism, investment and domestic consumption have expanded rapidly. Coupled with a favorable climate, ample arable land and rich natural resources, Thailand is a good place...