Southeast Asian Economies
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PHIL PONCE: For the past decade the economies of Southeast Asia, Thailand, Malaysia, Singapore, and Indonesia had been booming. But this summer the boom for the so-called Asian tiger economies abruptly stopped, especially in Thailand, where the currency tumbled and banks were overwhelmed by bad loans. Michael Zielenziger, the Asia correspondent for the “San Jose Mercury News,” has been covering the story. He was in Washington last week, and I talked to him then.
You and other reporters have written about the so-called economic miracle in Southeast Asia with Thailand, the Philippines, Malaysia, Indonesia. In Thailand, for example, what was that miracle like for the average person? How did the average person benefit from that?
MICHAEL ZIELENZIGER, San Jose Mercury News: Well, you saw enormous opportunities for economic development for growth, for jobs, high rise buildings, incredible rush of traffic, Mercedes Benzes, and literally you had kids who grew up in rice paddies going to graduate school, coming back, working for high price foreign companies and driving around BMW’s and Mercedes Benz. So the pace of development was sort of unbelievable. And now, in fact, they’re paying some of the consequences of it.
PHIL PONCE: But during the life of the miracle, itself, during those 10 years, what kinds of things would you see on the street that would reflect that miracle?
MICHAEL ZIELENZIGER: Well, you saw, kampongs, little neighborhoods where houses used to be on stilts suddenly torn down to make thirty- and fifty-story hotels or office buildings or condominiums. Bangkok now is littered with thousands of condominiums that look very nice but are completely empty. On the streets of Bangkok now you see dozens and dozens of high-rise offices half finished that are still going to be finished, but everybody around town knows no one will ever at least in the next five or ten years actually go work in them. They will be empty buildings, sort of empty kind of symbols of what’s gone wrong.
PHIL PONCE: And is the miracle, in fact, over?
MICHAEL ZIELENZIGER: Well, why was the miracle? I mean, the period of 15 percent growth is probably over for a while. Will eventually the countries grow faster than say America is growing? Absolutely. But there is a large amount of undigested problems that have to be worked through before we’ll see normal times return. I think if we talked about the miracle as being a period of excessive, huge, impressive growth, I think that period’s probably over for a while, yes.
PHIL PONCE: And what caused that period to end?
MICHAEL ZIELENZIGER: Well, number one, times were too good. People took money and didn’t spend it on factories and didn’t spend it on job training. They spent it on building boutiques for high end clothing and building shopping centers, buying fancy cars, going on fancy vacations. Instead of saving and investing, there was a real rush to consumption. There was too much capacity. There are now too many people building too many cars in Thailand for the Thai people to buy. And so there’s a glut in the market. And there was a lot of corruption. When money is so easy you don’t have to really make sure that every dime is spent appropriately. In all of these Southeast Asian nations there are–to one extent or another–political corruption problems, political succession problems. And that feeds into the financial problem.
PHIL PONCE: And to what extent has this crisis or this new economic bump in the road–however way you want to describe it–to what extent has that had an impact on the national conscience? For example, you wrote about this religious ceremony involving Buddhist monks. What was that?
MICHAEL ZIELENZIGER: Well, first, Thailand was the darling of international investors for years and years and years. It was a democracy, more or less, even though not always stable. It had wonderful growth rates. The Thai people are wonderful. And all of a sudden boom, the bot fell from 25 to 35 almost overnight.
PHIL PONCE: The bot being the unit of currency.
MICHAEL ZIELENZIGER: The Thai currency, meaning that all of a sudden all of these imports became more expensive. Suddenly people were losing their jobs. Suddenly the costs of all the imported goods was going up. So this is a major psychological crisis. There’s also political turmoil in Thailand over a new constitution, over a prime minister who may or may not understand economics. He’s a former general. And it was so psychologically taxing on the people that the supreme patriarch of the Thai Buddhist community, and, of course, Thailand’s heavily Buddhist, said, you know, we need to have a prayer service, a nationally televised service to rid the demons and clear our minds so that we can get on with the job at hand. And thousands of people, some barefoot, some in Mercedes Benzes, came to the main temple in downtown Bangkok, the King’s temple, to pray for sort of national salvation. It was quite a spectacle really because people left the event saying after an hour of Sanscrit prayer thinking, well, we may not have solved the problems but my mind is clearer about what lays ahead and the struggles I have to face, a very Thai kind of answer I think.
PHIL PONCE: You give one example in one of the articles about your experience, your encounter with a storekeeper who is trying to sell computers.
MICHAEL ZIELENZIGER: If the Asian miracle is over, this was sort of the scene from hell. You go into a shopping center in Bangkok that’s strictly devoted to high technology goods. And since my whole newspaper is in the Silicon Valley, where they produce all these computers and printers and things, I was very interested to see what’s going on. And there’s this poor salesman in a massive showroom where the air conditioning has been turned off to save money, so there’s sweat pouring on his brow. He’s standing in front of 35 HP Hewlett Packard laser printers that he’s not going to sell, saying, what have we done, what has gone wrong; I’m not going to get commissions anymore; I have no customers because no one has the money to invest in imported computers; my salary has been cut; my gasoline prices are going up; and I have a new three-year-old kid; what am I going to do, and how could these good times have gone bad so quickly?
Those are the kind of things you hear all over Bangkok. And you hear a sense that the country has been let down by the country’s own managers, as well as its own people, who didn’t make some of the hard choices.
PHIL PONCE: Something you just said as to how quickly things changed. A few months ago you noted in one of your pieces that you would walk into a boutique and see what–and what do you see now?
MICHAEL ZIELENZIGER: There are I think four now Johnny Versace boutiques in Bangkok. I only point this out because I think this average Johnny Versace suit is probably twelve or fifteen hundred dollars. And the GDP of Thailand–I mean, the per capita income is about $3,000. So there’s a big gap there. But there are four of these boutiques. And I interviewed the store manager, and he says, yes, six months ago, three months ago this place was really crowded on the weekends. It’s called a high-so center–high society shopping center, where the swell Wazi would come to buy new clothing.
PHIL PONCE: The swell Wazi?
MICHAEL ZIELENZIGER: You know, the bourgeoisie who–
PHIL PONCE: Oh, I see. Thank you.
MICHAEL ZIELENZIGER: He said, now, it’s like a museum. People come and stand outside my store and stare through the glass panes and point at things, as if to say, I can’t believe people used to pay that much for these clothes. And his store is empty, and no one is buying these things.
PHIL PONCE: So now it’s more like a museum.
MICHAEL ZIELENZIGER: Exactly. He said it’s more like a museum than it is a store because I have–the only customers I have are foreigners on vacation who think they can find this Versace clothing here more cheaply than in London or Hong Kong. So–
PHIL PONCE: There’s a sense of nationalism, perhaps, as reflected by subtitles that one can see on television, Thai television during the soap operas.
MICHAEL ZIELENZIGER: Well, we’ve seen it in Korea, and we’re seeing it in Thailand too. One reaction of a financial crisis is to say let’s pull ourselves up by our own bootstraps; let’s have more self-reliance. So now in the daytime soap operas in Bangkok you see crawls, these little characters that run across the bottom of the screen, kind of like what public television does during fund-raising time, I guess, and it says, you know, “Buy Thai rice. Eat Thai products. Buy Thai clothing,” as if to say, if we don’t buy those Versace clothes, if we buy Thai-produced goods, we can help give our colleagues and our neighbors jobs and help the economy grow and restore our self-pride and self-reliance.
PHIL PONCE: Is there any anger or resentment towards any party in particular that the average person might be feeling now?
MICHAEL ZIELENZIGER: Oh, there’s tremendous anger. There’s a lot of corruption in these Southeast Asian stories. There have been a lot of bank loans that went to the wrong places, and there are a lot of politicians who were able to line their own pockets. That’s a part of the problem. The Thai people know that there was a lot of money that went to waste. They are trying to reform the political infrastructure of the nation even as they try to dig themselves out of the financial turmoil. Those are two very difficult challenges. But, yes, there has been a whole constitutional battle in Thailand about making politics cleaner. Thai elections are won by people who go into the provinces and pay massive amounts of money to the voters, kind of like old Chicago-style politics. There’s a real effort to clean that up because without cleaning that up, you can’t get to the root problems and put the economy on a stronger foundation in the future.
PHIL PONCE: And at this point is there any expectation that things might be going back to where they were anytime soon?
MICHAEL ZIELENZIGER: Well, Japan, which is the largest investor in Thailand, for instance, much larger than the United States, has been a real prime motivator of an IMF, of an International Monetary Fund bailout to the tune of $16 billion. You’re seeing the IMF now coming to the aid of Indonesia. There is a sense that like Mexico, the international community will come to the aid of Thailand, Indonesia, Malaysia, and that over time things will get better, but is it going to be one year, is it going to be three years, is it going to be five years? And, of course, in the interim the little people, people who are, you know, driving the cabs in the streets, or working in stalls, they’re the ones who are going to be suffering in the meantime.
PHIL PONCE: Michael, I thank you for being here.