It’s Thailand’s turn to lose a billion dollars

I remember back in the 80s, economist Bernie Villegas once related a story to our Business Economics class at the then CRC, about a question posed to the Thais by a trade mission of Pinoys. Remember that this was the height of Thailand’s attractiveness to foreign investors so it was but natural for a Pinoy to ask the Thai trade official, what is the secret of Thailand’s success in attracting foreign investments?

The answer was so unexpected, it floored the Pinoy delegation. The Thai official said they sent a mission to the Philippines to study our investment incentives laws and regulations. And the secret of their success is that they drafted their own laws inspired by ours and implemented them with a passion.

That was so like a story I also heard when a Pinoy agriculture official asked his Thai counterpart what is the secret of Thailand in getting such big yields in their rice production? The secret, he was told, was simply sending Thai students to Los Baños, and then, making full use of the knowledge learned at UP and IRRI in Thai rice farms.

Now it seems, the Thais have reached the point of diminishing returns in their once successful strategy of learning from the Philippines. According to an article at the Singapore Straits Times last week, Thailand is about to lose a billion dollar investor too – Ford Motor, because of the uncertain business landscape caused by current fluidity in Thai investment laws and business climate.

Alas! Thailand is now also suffering a problem we are so familiar with – lack of investor confidence. Like us, they have learned the fine art of shooting themselves in the foot, crippling what is already a successful run as one of Southeast Asia’s tiger economies.

Citing new capital controls and restrictions on foreign ownership, Ford’s Washington-based vice-president for international government affairs Steve Biegun told journalists that there was a ‘sense of turmoil’ in Thailand… making it extremely difficult to do business in a globally competitive environment. What we need in our business, he said, is predictability.

A day before, according to the Straits Times, the influential Japan External Trade Organisation (Jetro) pegged Thailand last in positive business sentiment for Japanese firms among the five major Asean nations for the third consecutive month. Jetro’s president in Thailand, Mr Yoichi Kato, said political instability, the appreciation of the baht, rising oil prices, inflation and interest rates had combined to produce the pessimism.

The deepening skepticism among investors, the Straits Times reports, comes despite repeated assurances from top Thai officials that the country remains open to business as usual and is not flirting with protectionism. But policy changes since December have thoroughly spooked the market, as well as investors.

One expert I talked to observed that despite official assurances, there is a growing negative grassroots sentiment in Thailand towards foreign investors, which explains the controversy over the purchase of majority ownership of Thaksin’s phone company by the Singapore government’s investment arm. There is supposed to be a sense among ordinary Thais that too much of their economy is now in the hands of foreigners. Apparently, the move to limit foreign ownership in some corporations has popular support.

One more thing makes the Thais look like us. The Thais also have an airport problem that negatively affects investor sentiment. The new Suvarnabhumi International Airport outside Bangkok was dogged by corruption allegations throughout its planning and building. Politicians forced it to open before it was ready.

This $4-billion project was also embroiled in politics, taxiways are cracked so that planes are unable to use 11 out of 51 air bridges for boarding aircraft, the terminal has leaks, missed three deadlines to open, and some airlines even wonder whether it’s safe to fly into. All told, there are 61 glitches, problems and design flaws that need to be repaired at an estimated cost of 1.5 billion baht (US$45 million). Sounds like NAIA 3.

It didn’t help Thailand’s investment climate when bomb blasts on New Year’s Eve in Bangkok killed two people, hurt 42 and remain unexplained. Two grenades fired at a newspaper office and hotel early last week, the Straits Times reports, have added to an image of latent instability. Wow! They seem to be following our failed "business model" a little too closely.

Anyway, Ford would make a decision in the first half of the year, whether to keep their billion dollar investment in Thailand or move elsewhere. In the face of all these, Thai officials have also taken lessons from Toting Bunye. According to the Straits Times, "even as the warning signs pile up, top officials have been trying to talk up the economy, and the government still expects four-to five-percent growth in gross domestic product this year."

Sounds too eerily familiar! It’s too Pinoy for comfort.

Pinoys abroad

I got this email from an old friend who used to be the manager of a bank branch here where I had my account.

I was reading your column "We can’t depend on OFW’s forever" and was fascinated by the facts that you enumerated.  FYI, I am now an OFW, having been assigned by my bank to the USA to manage our remittance business.

Day to day I deal with OFWs since our business is to accept remittances for credit to their beneficiaries in the Philippines. The remittances are either for their families and relatives for sustenance/education, for themselves as savings and for their debts which they incurred either as placement fee or to pay for their plane fare, etc. The remittances for now are good for the economy but you are right… this is not a healthy permanent solution.

I tell you the amounts are substantial and run to hundreds of thousands. It is sad that people are raring to get out of the country because of the poor conditions and yes because of politics and lack of hope that the economy will improve under the present and future leaders. Pinoys tell me they do not want to leave the Philippines but are forced to because of the present economic conditions.

 I myself was shocked to know the prices of commodities when I was there last December. Those prices do not match the salaries of the average workers. You cannot eat at Jollibee with just P50. Here in the US you can buy a $.99 meal from Carls Jr. and Burger King. Yes if you convert it is the same but it is not the right formula.

Most Pinoys I talk to here still want to retire in the Philippines.  After so many years of hardships they still say there is no place like home. Those who have been here a while and have saved enough, buy Philippine properties to reward themselves. The younger Pinoys work like dogs with three jobs just to save and be able to go home. 

This is a cycle and I don’t know when it will stop. It is good and bad for the Philippines… more dollars but no brains to lead and push the economy. Maybe if I have a magic wand, I will fly all the OFWs back home and pull the economy back together, enjoy the sun and the beach at Boracay and Palawan.

Thank you for your time Boo. It’s been wonderful to get in touch with you again.  Best regards. 

Pinoy joke

Here’s a Pinoy joke from Marilyn Mana-ay Robles.

Pinay1: Halata na ang tiyan mo. Bakit hindi pa kayo papakasal ng BF mo?

Pinay2: Ayaw ng pamilya niya eh.

Pinay1: Sino may ayaw, tatay o nanay?

Pinay2: Yung misis niya.

Boo Chanco’s e-mail address is [email protected]