10 years past, asian money crisis haunts

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DENIS D. GRAY Associated Press Writer
He was a typical, spoiled child of the so-called Asian economic miracle, a dynamic Thai entrepreneur who dined at fancy restaurants, drove flashy cars and sent his children abroad to summer schools. Sirivat Voravetvuthikun was so deft at picking the right stocks that traders called him "the Phantom."
Then, in 1997, the miracle curdled into the Asian financial crisis. Instead of an expensive silk tie, Sirivat strung a yellow foam box around his neck and trudged into the streets of Bangkok to hawk ham, cheese and tuna sandwiches.
"My wife and I woke up 3 a.m. in the morning to make fresh sandwiches," Sirivat says, recalling his first morning as a high-flyer turned street vendor. "I felt depressed and disheartened. I kept asking myself, 'Why did this have to happen to me?'"
Thousands of blindsided Asians like Thailand's "Sandwich Man" asked themselves the same question 10 years ago as an era of frenetic speculation, property bubbles and hot money inflows ended with plummeting stocks, enfeebled currencies and bankruptcies of both individual risk-takers and once mighty corporations.
The collapse started with a plunge in the Thai baht on July 2, 1997, and spread rapidly across much of the continent. The three hardest-hit nations _ Thailand, Indonesia and South Korea _ ended up requiring multibillion dollar bailouts from the International Monetary Fund.
Ten years later, the region has recovered _ but to varying degrees.
In South Korea, which bounced back quickly, the outlook is optimistic. The crisis brought pain, but also healthy changes that cleared the decks for more prosperous growth and innovation.
In Thailand and Indonesia, which were slower to recover and enact reforms, expectations have been vastly scaled back and a lingering fear hangs over the business climate. Some feel that their economies are losing out to growing competition from China and Vietnam.
"People don't want to innovate or take business risks. Not even 10 years after," said Prachai Leopairatana, founder of what was once Southeast Asia's largest petrochemical enterprise _ until it became Thailand's largest debt defaulter almost overnight.
"A lot of people just want to be employees because of what happened to people like me in 1997. So Thailand is losing its competitiveness."
The following profiles of four businessmen _ two Thai, one Indonesian and one South Korean _ offer a window into how these nations have fared in the ensuing decade since the crisis. They are stories of hope and depression, grit and determination _ and ultimately of survival through tumultuous economic times.
With a loan from his father, Indonesian businessman Jusak Sulaiman started making jeans while still in college, starting out with just 15 sewing machines.
The business flourished, and by 1997 it had 1,600 workers at two factories churning out 1.6 million pairs for domestic sale and export.
Sulaiman's company had just taken out a loan for $750,000 _ when the crisis hit.
The 12 percent interest rate on the adjustable-rate loan jumped to 30 percent as the Indonesian government raised interest rates to stem the rupiah's decline. But fall it did, and the cost of spare parts, many of which were imported, more than doubled in local currency terms. Electricity prices went through the roof, and desperate workers demanded pay raises and threatened walkouts.
Eventually Sulaiman gave up and shuttered the larger of his two factories, laying off most of the workers.
"It made me very sad," said Sulaiman, now 51, in Bandung, 75 miles east Jakarta. "Many of my workers begged me to reopen the other factory, some even cried. But it was too late. There was nothing I could do."
With the same grit, flexibility and sheer hard work that had earlier propelled Asia, Sulaiman has rebuilt his business, but only back to where it stood in 1990.
Today, his jeans factory, PT Triyudia Busanamas, employs about 150 workers _ one-tenth of its peak _ operating 60 sewing machines. Still, he and his two sons want to expand and hope to start exporting their Jimmy & Martin brand to Europe next year.
Sulaiman faces a changed global landscape with fierce competition from China, Vietnam and more recently Bangladesh.
At home, former dictator Suharto is gone, ousted in the turmoil and riots spawned by the crisis, which caused millions to lose their jobs and the economy to contract 13 percent in 1998.
The economy has made modest progress but remains hobbled by corruption and poor infrastructure. Foreign investors have been scared off by legal uncertainties and bureaucratic red tape.
Still, Sulaiman considers himself lucky. "It's been stressful, but I've survived," he said. "God is still with me. Many others had much bigger problems. At least I don't have to run and hide for failing on my debts."
Many did default, including Prachai, the founder of Thai Petrochemical Industry, to the tune of $2.7 billion.
Before the crisis, TPI borrowed heavily from local and foreign creditors to increase its capacity and develop a fully integrated petrochemical and refinery complex. Prachai was the first in Thailand to introduce this technology and invest the vast sums needed to build these modern integrated facilities.
When the crisis hit, his complex was unfinished and its foreign currency-denominated debt ballooned overnight. Prachai had banked on long-term repayment of his gargantuan investment.
"It was the worst time of my life. I had always had the support of people around me so I never knew what it felt like to have everyone turn their backs on me. The creditors treated you like a dog," said Prachai.
Lenders, however, had their own grounds for complaints. When TPI went into rehabilitation under a newly set up bankruptcy court, Prachai was named administrator of the debt restructuring plan. But creditors came to believe that he could not be trusted to meet his obligations to them.
For nine years, Prachai waged a battle against creditors to maintain managerial control over TPI, mixing litigation with delays on debt repayments, labor strikes and nationalistic advertising to try to tip the balance in his favor.
Soon after the crisis, the Thai government updated archaic bankruptcy laws, but it can still take years for creditors to pursue their claims. The government has yet to push through further bankruptcy law reforms, partly due to the sensitivities to powerful families who lost so much during the crisis.
To many debtors, who blamed government incompetence and corruption for the crisis, Prachai became a heroic figure symbolizing victims caught in circumstances beyond their control. His saga came to an end when the bankruptcy court refused to delay any longer the government's plan to rehabilitate the debt-laden conglomerate by handing it to a group of investors.
Prachai's fall turned into a drawn-out saga that set him back irreparably. For his country as a whole, he says, it was a lost decade _ in terms of creativity, competitive edge and education of the work force _ in which Thailand began to fall behind regional competitors like Vietnam and China.
Today, Prachai, 62, has lost some wealth and influence, but he is not poor. He keeps busy as a director of cement maker TPI Polene, a former unit of TPI. Still, he feels the pain acutely.
"The 10 years that I lost were the most valuable time of my life," he said. "It was a lost opportunity that I could have used to innovate more."
Ko Jong-wan, a soft-spoken, self-described "very normal, conservative Korean" was among an army of salaried Asians fired or otherwise edged out of the corporate world. But the crisis turned out to be an opportunity to do something he had always craved: take charge of his own life.
Of the three countries, South Korea has fared the best since 1997. While the shakeup of some of its largest industrial groups, the "chaebol," has been wrenching, the economy appears better off for it. Companies have become leaner and more creative, making them stronger global competitors.
Ko has left the cocoon of the Korean company, which like its Japanese counterparts once took care of employees for life, and, as that cocoon unraveled, embarked on the uncertain path of the entrepreneur.
The son of a farmer, Ko had risen to head the personnel department of Korea Telecom, the country's biggest telephone company, when South Korea suffered what it called the "IMF crisis" for the $58 billion bailout arranged by the International Monetary Fund.
The emergency loans helped shore up the nation's banks and indebted companies, but they came at a price: South Korea was required to raise interest rates, cut public spending and other measures that now appear to have worsened the crisis.
The sudden implosion forced companies, many of which had expanded recklessly on borrowed money, to slash bloated work forces and take other drastic measures.
"I was actually in charge of restructuring the company's employees during the time of the economic crisis, so I faced some complications," Ko said.
Feeling like he was "running in a rat race," Ko saw this as an opportunity to break out of a stultifying corporate career.
His first move was a traumatic failure.
Taking a company buyout package and adding more funds of his own, he invested $500,000 in the stock market but lost everything in less than six months.
"I even thought about committing suicide when I didn't know what to do after losing everything I had," says the 50-year-old Ko, who is married with one daughter.
But as the Korean economy began to recover, Ko's fortunes turned.
Today, Ko owns Realty Expert Members Company, which offers advice on real estate to high-income earners, has authored a book on real estate investment, serves as a government adviser and teaches at Korea University.
He attributes his country's relatively quick recovery to some national characteristics.
"During the IMF, all Koreans united for the same purpose. They wanted to survive the crisis," he said. "I believe Koreans become stronger when they face crisis. We all survived foreign attacks and wars by bonding together."
Sirivat, the sandwich-seller, has left his days of stock and real estate speculation behind.
"I'm now investing in the real sector, which is more sustainable," the 57-year-old businessman said, noting that no matter what happens, people have to eat.
He even uses locally produced materials to avoid reliance on the vagaries of foreign markets.
The once wildly successful, U.S.-educated stockbroker had moved into property just as a glut of space was coming onto the market. His first luxury condominium project flopped, leaving him with a $30.4 million debt at time of crash.
While others like him were jumping off buildings, Sirivat swallowed his pride and started selling sandwiches, becoming a national celebrity for his refusal to succumb to fate.
"A person who had a debt of 15 million baht said to me that he decided not to commit suicide because he saw my example," he said.
As creditors sued, he continued to sell his homemade eats almost every day for five years, building up a business that now employs 14 and includes locally produced soft drinks, two coffee shops and a coffee and sandwich catering service.
"Sirivatsandwich" has become a well-known brand, with its logo of a floating balloon with a dollar sign and "IMF" inscribed, a reminder of the $17 billion loan Thailand got from the international lending agency during the crisis.
The "Sandwich Man" and his family live much more modestly than in the days when the economy sizzled, but Sirivat is happier this way: "I became a free man again," he says.
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