The remnants of the last financial crisis are still arrayed across this sprawling city: half-finished buildings covered with mold and rust stains, reminders of a real estate bubble a decade ago that burst with a loud bang.
The crisis of 1997 was breathtaking for its suddenness and ferocity. Banks collapsed, companies went under and erstwhile millionaires, desperate for cash, sold their belongings at what became known as the market of the formerly rich.
Now, as another global crisis unfolds, the signs of distress in Southeast Asia are more subtle.
Traffic has thinned by 6 percent on Bangkok’s expressways. Indonesian farmers who harvest the red fruit from oil palm trees are having trouble finding buyers. House prices in Vietnam, a relative newcomer to capitalism, have come down 30 percent in recent months, following years of steep rises.
Stock markets in Southeast Asia have slid downward almost in lockstep with those in New York, London and Tokyo. But outside of trading rooms, there is none of the palpable panic of a decade ago when the region was ground zero in what the Thais called the “tom yam kung crisis,” after the famous spicy soup that can burn one’s tongue.
“Last time it was self-inflicted; the crisis originated from within Asia,” said Mark Tan, an economist at Goldman Sachs in Hong Kong.
This time the contagion is radiating out from the US and Europe, the region’s biggest customers.
“While the initial reduction in growth won’t be as bad as in the Asian crisis,” Tan said, “it will also mean the rebound is slower and takes longer, as export demand will be much weaker.”
Lacking the immediacy of the last crisis, the twists and turns of the financial turmoil in the West have been received here like news of a plague valleys away. The villagers are wondering when it will hit their homes and how hard.
The reckoning is likely to come next year. As orders for exports drop off, factories will slow down and the main motor of Southeast Asian economies will sputter, say economists and government planners.
Southeast Asian countries exported themselves out of the last crisis with cheap products made even cheaper by their devalued currencies. The US, which was still enjoying its technology boom in 1999, snapped up the electronics, clothing and toys that the region produces.
This time, debt-laden consumers in the US do not appear to have the means to keep factories here humming. On the contrary, a newfound frugality among Americans is likely to drag Southeast Asia down. Thailand and Vietnam depend heavily on exports to power economic growth. For Malaysia and Singapore, overseas markets are even more crucial to domestic prosperity.
“We have had export-led growth for more than 30 years,” said Pansak Vinyaratn, a former chief economic adviser to the Thai government. “We have not geared ourselves toward investment in domestic-led growth.”
Workers may be laid off or migrant workers sent home, but economists are predicting a slowdown, not a recession. In 1997 the suddenness of the crisis put a bankrupted real estate developer out on the street selling sandwiches. Thailand’s economy shrank by a stunning 10 percent in 1998.
This crisis, when measured by economic growth, is predicted to be far less severe.
Governments, which now have larger cash reserves and relatively small deficits compared with the roaring and profligate 1990s, have already announced plans to increase spending to keep the economies moving.
Indonesia, which went cup in hand to the IMF last time, has much more room to maneuver. The country’s public debt has come down significantly, from more than 100 percent of the size of its economy eight years ago to about 36 percent now.
And in its earliest stages the credit crisis has brought a measure of relief to Southeast Asia.
The plunge in oil prices is good news for Indonesia, where subsidies make up a large part of the government budget.
The poor may also benefit. Along with fuel, the price of rice has fallen sharply.
Taiwan’s semiconductor industry gives it a strategic advantage, but that advantage would be threatened as the US seeks to end Taiwan’s monopoly in the industry and as China grows more assertive, analysts said at a security dialogue last week. While the semiconductor industry is Taiwan’s “silicon shield,” its dominance has been seen by some in the US as “a monopoly,” South Korea’s Sungkyunkwan University academic Kwon Seok-joon said at an event held by the Center for Strategic and International Studies. In addition, Taiwan lacks sufficient energy sources and is vulnerable to natural disasters and geopolitical threats from China, he said.
After reading the article by Hideki Nagayama [English version on same page] published in the Liberty Times (sister newspaper of the Taipei Times) on Wednesday, I decided to write this article in hopes of ever so slightly easing my depression. In August, I visited the National Museum of Ethnology in Osaka, Japan, to attend a seminar. While there, I had the chance to look at the museum’s collections. I felt extreme annoyance at seeing that the museum had classified Taiwanese indigenous peoples as part of China’s ethnic minorities. I kept thinking about how I could make this known, but after returning
What value does the Chinese Nationalist Party (KMT) hold in Taiwan? One might say that it is to defend — or at the very least, maintain — truly “blue” qualities. To be truly “blue” — without impurities, rejecting any “red” influence — is to uphold the ideology consistent with that on which the Republic of China (ROC) was established. The KMT would likely not object to this notion. However, if the current generation of KMT political elites do not understand what it means to be “blue” — or even light blue — their knowledge and bravery are far too lacking
Taipei’s population is estimated to drop below 2.5 million by the end of this month — the only city among the nation’s six special municipalities that has more people moving out than moving in this year. A city that is classified as a special municipality can have three deputy mayors if it has a population of more than 2.5 million people, Article 55 of the Local Government Act (地方制度法) states. To counter the capital’s shrinking population, Taipei Mayor Chiang Wan-an (蔣萬安) held a cross-departmental population policy committee meeting on Wednesday last week to discuss possible solutions. According to Taipei City Government data, Taipei’s