On 2 July 1997, Thailand gave up the dollar peg and devalued the baht. Asia’s economic crisis – also known as the Tom Yam Kung crisis (วิกฤตต้มยำกุ้ง) – had officially begun.
What did the Asian countries learn from this major event that started 25 years ago?
Mark Mobius, co-founder of Mobius Capital Partners: At the end of the day, a lot of countries in Asia did learn a lesson in 1997 in not taking too much debt in foreign currencies. Of course, there are some who haven’t heeded the lesson. Sri Lanka is in a bind now. Generally speaking though, the situation is much better.
Zeti Akhtar Aziz, former Governor of Bank Negara Malaysia: Probably the most important lesson is the need to build resilience. The world is likely to continue to experience crises. Following the Asian financial crisis, most of our region implemented financial reforms. The payoff can be seen during the Great Financial Crisis of 2008-09. While Asia was affected, our financial systems and economies did not experience a crisis.
Shan Weijian, Hong Kong-based Chairman and Chief Executive Officer of PAG: Banks failed in the west during the so-called Global Financial Crisis, but to my knowledge, none of the Asian banks. The systemic reforms of the banking systems across Asia had made them resilient, healthy and strong even in the face of a financial tsunami.
Korn Chatikavanij, founder Jardine Fleming Thanakom Securities and Thai Finance Minister (Dec 2008 – Aug 2011): It’s pretty amazing that the same thing happened in Iceland, New York and elsewhere 10 years later, except that time the IMF realised that pushing up interest rates was not a good idea. Policy tightening like the IMF mandated for the bailouts in Asia wasn’t the way out.
Shan: The changes in the past 25 years to Asian economies and to financial markets have been huge. It isn’t just quantitative, but also qualitative.
Piti Sithi-Amnuai, Chairman of the Board of Directors of Bangkok Bank: The biggest change in the banking industry in the past 25 years is technology. It’s changed almost everything. The other big change has been the rise of China as an economic power. China really wasn’t that important during the Asian crisis, but now it’s everywhere.
Mobius: There’s more use of Internet to reach out to people, particularly in the lower-income group. Per-capita income has risen. Countries like South Korea should probably be considered a developed country rather than an emerging market. In 1997, Vietnam wasn’t even mentioned, but now it’s one of the Tigers in Asia.
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