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S.E. Asia's Fiscal 'Tigers' Reluctantly Roar for Help

By Cameron W. BarrStaff writer of The Christian Science Monitor / August 4, 1997



BANGKOK, THAILAND

Just 35 years ago, the tallest buildings in Thailand's capital were modest apartment blocks of a half-dozen stories.

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Bangkok's palm trees have since been elbowed aside by huge skyscrapers - concrete evidence of the booming economic growth that has generated profits for everyone from Thai entrepreneurs to Japanese corporations to American mutual-fund investors.

But now almost everyone agrees there are far too many high-priced towers. They have come to symbolize the problems facing the economies of Southeast Asia: overinvestment and overcapacity. This summer's sudden drop in the value of some of the region's currencies, especially the Thai baht and the Philippine peso, has dampened visions of endless growth.

Now Thailand, whose economy has been the fastest-growing in Southeast Asia, is turning to the International Monetary Fund for assistance. "The IMF should bring confidence back to the country on the financial side, but we have real problems to take care of," says an economist at a prominent research institute in Bangkok.

The IMF is also providing emergency loans to the Philippines.

But observers note that the crisis ultimately should have a strengthening effect on the "tiger" economies of this dynamic region.

Still, turning to outsiders for help does not come easy to Southeast Asians, who take pride in the economic success that has led several of them to become known as economic "tigers" in recent decades. Indeed, one tendency so far has been to blame foreigners for their troubles.

Thai officials raided two foreign securities firms on July 15, searching for the source of faxed rumors about the insolvency of some Thai banks, creating an atmosphere in which even economists want to go off the record.

Some Filipino critics have likened the IMF's help to a return to colonial-era reliance on the United States. And Malaysia's Prime Minister, Mahathir Mohammed, blames the currency instability on "rogue speculators," naming in particular the US financier George Soros.

Both Mr. Soros and the US government say Mr. Mahathir's allegations are groundless.

Learning the global game

But it is not as if this dynamic region is about to go under. Instead, a transformation is under way, one that should make Southeast Asia's economies more prepared to participate in the global economy.

The currency crisis, says Peter Brimble, an economist and consultant with the Bangkok-based Booker Group, "is just a real good lesson" for officials and businesspeople throughout Southeast Asia.

They are learning that it is increasingly difficult to protect currencies and industries from international market forces and that a more sophisticated economy can be tricky to manage.

The economies of Thailand, Malaysia, Indonesia, and, to a lesser extent, the Philippines, have prospered in recent decades by cheaply producing goods for export.

Technology and investment have often come from foreign companies and investors interested in exploiting the region's relatively low cost of labor.

Sharp-eyed government economic planners, often inspired by the way Japanese officials have guided their own industries, have tried to keep this process smooth and steady.