Tuesday, February 13, 2007

Thai-Tanic Or Thai-Wok

Well, the new government in bangkok is either headed for a Thai-tanic implosion or if you understand Cantonese its the latter, same thing. It seems the new people at the helm are slow in learning the ropes. The recent debacle over stopping foreign funds speculating in stocks and the baht was so ill-conceived and handled that a dramatic u-turn was necessary, at least they reacted fast and well. Even then, damage has been done, the SET index has failed to breach the 700 level since, making it the "cheapest" and most lagging equity market in Asia on a 6 and 12 month to date ranking.

There are basically 3 things which troubles investors about Thailand:

a) Don't try to fix something which you are ill equipped to. The rules concerning foreign capital inflows and outflows was a good example. Do it via other less intrusive ways. Are the new leaders satisfied after bactracking... apparently not, lose face I guess, so they keep coming up with new rules and regulations which pisses off everyone. The latest is the military-controlled government's plans to expand the definition of a foreign company!!!??? If I was a foreign investor, I'd be pretty pissed off, I won't even wait for more developments, obviously they are on a witch hunt to please someone or hurt someone. This has caused some countries to protest that the moves would violate Bangkok's WTO committments. The EU has sent a letter protesting and Japan and the Us are expected to voice similar discontent.

Enough already, you don't have to show you are freshly in power, hence you have to act like a new broom, sweeping all dirt of the past as fast as you can. You already got the culprit/snake out of power. Tackle changes slowly. Consolidate the government first, have the people elect a proper government first, already people are getting less comfortable the longer the military holds onto power in Bangkok.

b) Stop the witch hunting. In a strategy to kill off Thaksin, even the son and daughter have been questioned, now you even want to drag in the wife. Sure, you may not like what he did, maybe he did siphoned funds, mis-priced assets for personal gains, did not pay taxes ... but too much too soon creates instability. Just freeze all assets and cash related to Mr. T, deal with it slowly, do not release assets till he shows up to defend the charges. Don't create things every other day, you know he won't show up in the present climate. Creates too much gossip, uncertainty and distractions from the real things that needed to be addressed.

The current massive PR ploy to discredit Mr. T only works to irk more people about Thailand's pettiness. The recent silly misunderstanding with Singapore politicians further puts the pettiness of Thai officials to the forefront, grow up already!

c) The southern Thailand problem. You have to involve Malaysia to solve the problems. Independence for southern Thailand is out of the question and not really what they are asking for. I think Malaysian PR status to be issued to all Muslim Thais in southern Thailand could be a start. No conversion to Malaysian citizenship necessary or encouraged, they keep Thai citizenship. They can travel and work freely in Malaysia or remain in Thailand. Although some Malaysians will not agree with that proposal, its a pragmatic solution. It does not serve Malaysia well if the southern Thailand region crisis is not solved.

Create a Southern Thailand Consultative Body with the ringleaders and insurgents as members. At the end of the day, its an economic problem and not really a religious one - give them a decent southern economy with good learning institutions and proper investing strategy to attract good companies to relocate there. No jobs, idle hands, vicious minds.

Conclusion - Failure to address the 3 areas would mean the SET will go to 550 very fast from the current 690 level. Further missing out on the global equity bull run. I'd be a strong buyer though at 550 this year, good chance of getting there. Failing to address the 3 areas of concern will not just lead to Thai-Wok but rather Thai-Lun-Wok!

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