The remnants of the last financial crisis are still arrayed across this sprawling city: half-finished buildings covered with mold and rust stains, reminders of a real estate bubble a decade ago that burst with a loud bang.
The crisis of 1997 was breathtaking for its suddenness and ferocity. Banks collapsed, companies went under and erstwhile millionaires, desperate for cash, sold their belongings at what became known as the market of the formerly rich.
Now, as another global crisis unfolds, the signs of distress in Southeast Asia are more subtle.
Traffic has thinned by 6 percent on Bangkok’s expressways. Indonesian farmers who harvest the red fruit from oil palm trees are having trouble finding buyers. House prices in Vietnam, a relative newcomer to capitalism, have come down 30 percent in recent months, following years of steep rises.
Stock markets in Southeast Asia have slid downward almost in lockstep with those in New York, London and Tokyo. But outside of trading rooms, there is none of the palpable panic of a decade ago when the region was ground zero in what the Thais called the “tom yam kung crisis,” after the famous spicy soup that can burn one’s tongue.
“Last time it was self-inflicted; the crisis originated from within Asia,” said Mark Tan, an economist at Goldman Sachs in Hong Kong.
This time the contagion is radiating out from the US and Europe, the region’s biggest customers.
“While the initial reduction in growth won’t be as bad as in the Asian crisis,” Tan said, “it will also mean the rebound is slower and takes longer, as export demand will be much weaker.”
Lacking the immediacy of the last crisis, the twists and turns of the financial turmoil in the West have been received here like news of a plague valleys away. The villagers are wondering when it will hit their homes and how hard.
The reckoning is likely to come next year. As orders for exports drop off, factories will slow down and the main motor of Southeast Asian economies will sputter, say economists and government planners.
Southeast Asian countries exported themselves out of the last crisis with cheap products made even cheaper by their devalued currencies. The US, which was still enjoying its technology boom in 1999, snapped up the electronics, clothing and toys that the region produces.
This time, debt-laden consumers in the US do not appear to have the means to keep factories here humming. On the contrary, a newfound frugality among Americans is likely to drag Southeast Asia down. Thailand and Vietnam depend heavily on exports to power economic growth. For Malaysia and Singapore, overseas markets are even more crucial to domestic prosperity.
“We have had export-led growth for more than 30 years,” said Pansak Vinyaratn, a former chief economic adviser to the Thai government. “We have not geared ourselves toward investment in domestic-led growth.”
Workers may be laid off or migrant workers sent home, but economists are predicting a slowdown, not a recession. In 1997 the suddenness of the crisis put a bankrupted real estate developer out on the street selling sandwiches. Thailand’s economy shrank by a stunning 10 percent in 1998.
This crisis, when measured by economic growth, is predicted to be far less severe.
Governments, which now have larger cash reserves and relatively small deficits compared with the roaring and profligate 1990s, have already announced plans to increase spending to keep the economies moving.
Indonesia, which went cup in hand to the IMF last time, has much more room to maneuver. The country’s public debt has come down significantly, from more than 100 percent of the size of its economy eight years ago to about 36 percent now.
And in its earliest stages the credit crisis has brought a measure of relief to Southeast Asia.
The plunge in oil prices is good news for Indonesia, where subsidies make up a large part of the government budget.
The poor may also benefit. Along with fuel, the price of rice has fallen sharply.
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under