'Thai Capital After the 1997 Crisis' looks at the former greats and their empires after the rules of the game changed for ever
It took Thailand only a couple of years to recover from the 1997 economic crisis, but its leading Sino-Thai capitalist families took a body blow from which they still have not recovered. Awash with dollar-denominated debt, they were forced to sell off huge chunks of their family holdings, mostly to foreign corporations and also to a new breed of self-made Thai tycoons, such as Charoen Sirivadhanabhakdi.
Their story is told in "Thai Capital After the 1997 Crisis", a collection of 10 essays by Thai academics, edited by Pasuk Phongpaichai and Chris Baker.
"The 1997 crisis caused the decapitation of Thailand's capitalist class," esteemed economist Ammar Siamwalla writes in his forward. "Certainly, the crisis caused great suffering among the poor. But it devastated the rich, too. In retrospect, the crisis seems to have left a mark on Thai entrepreneurship, [which] threatens to become permanent."
Of course, it was their own damned fault to begin with: "They rushed off like a pack of lemmings to borrow too much overseas." But, over the past decade, the pendulum has swung in the opposite direction, with the old families left so spooked that they have turned risk adverse.
"Look at the younger generation of our prominent old business families," Ammar writes. "They seem to prefer ventures in entertainment, media or other service sectors, [such as] fashion and restaurants. They do not seem interested in the industrial backbone of the economy."
In their introduction, Pasuk and Baker note that after the crisis, foreign capital has moved from a subsidiary role in the Thai economy to the centre. "Over the crisis and aftermath, domestic capital had become of peripheral importance in the key activity driving growth in the national economy," they write. "Domestic capital had been moved from the centre to the sidelines. How that happened, and what it may mean, is the subject of this book."
The first, and longest, chapter is "Companies in Crisis" by Natenapha Wailerdsak. In 40 pages, replete with charts, she traces the rise and fall of great Chinese immigrant families. Twenty years ago, 100 families owned 1,337 companies with combined revenue equal to 30 per cent of the gross domestic product (GDP).
"Even within this list, business concentration was marked. The top-thirty [companies] accounted for 81 per cent of the total revenue, equivalent to over a quarter of GDP, and 90 per cent of total assets," she writes.
Their approach to the stock market was cautious. Stockholding was structured according to the kongsi system in which the family patriarch maintained control. The 1997 crisis forced a great shake-up. The weaker players were killed off, especially in manufacturing and finance. "Yet, three-quarters of the business groups survived. The family firm was still the dominant form," Natehapha observes, adding that they were forced to shift from kongsi to more professional management.
In the next chapter, Sakkarin Niyomsilpa shows how international corporations took control of the automotive sector after the 1997 crisis. Similarly, in "Services, Servility and Survival", Veerayooth Kanchoochat traces the history of megastores in Thailand and how they slipped from Thai control.
The irony is that these retail giants were introduced by companies such as Central and CP, who should bear the brunt of small shopkeepers' ire.
Ukrist Pathmanand and Chris Baker examine the mobile-phone sector and how Thai companies simply gave up the ghost when faced with global competitors.
There is the shameless matter of former prime minister Thaksin Shinawatra lowering foreign ownership to 25 per cent when rivals to his Shin Corp wanted to take on foreign partners and then yanking the bar up to 49 per cent the day before he sold out to Singapore's Temasek Holdings.
One tycoon came out of all this misery smelling like a rose: Charoen Sirivadhanabhakdi. With a fourth-grade education, he was suddenly the richest man in Thailand. The reason was simple: he dealt in cash. He had begun the successful bidding with a government liquor monopoly.
"Most important of all was to manage competition over the bidding so [that] the auction did not raise the price too high," Nualnoi Treerat writes. "This required skills to share the rents with rivals who were too powerful to ignore, the ability to intimidate rivals who were not too powerful, and the judgement to distinguish between the two."
He parlayed his liquor empire into a major chunk of the beer market too and vast property holdings.
You might not think that economic history can be hugely entertaining, but Chaiyon Praditsil and Olarn Thinbangtieo tell a rip-roaring tale of epic skulduggery in Rayong where three semi-mafia families fought tooth and nail for political supremacy after 1997. Murder, bribery, backstabbing - this is Thai family entertainment at its very best.