Thailand to ask Japan to roll over private sector debts

Thailand to ask Japan to roll over private sector debts

BANGKOK (AFP): Thailand will ask Japan to roll over huge debts
owed by the Thai private sector when Premier Chavalit
Yongchaiyudh makes an official visit to Tokyo next week, reports
said yesterday.

Thailand wants Japanese creditors -- who have lent about half
of the nearly US$80 billion borrowed abroad by Thai firms -- to
extend repayment terms as Thailand faces a crippling liquidity
crunch, the Bangkok Post said.

Thailand is facing its worst economic crisis in decades, with
companies' steepling foreign debts exacerbated by a 30 percent
drop in the Thai currency against the dollar since the shock
flotation of the baht on July 2.

Chavalit is scheduled to visit Japan between Oct. 8-10,
accompanied by top economic officials, as well as representative
of the Thai Board of Trade, the Federation of Thai Industries and
the Thai Bankers Association.

The delegation will also press for help in allowing Thai
companies eventually to buy back controlling shares in companies
bought by Japanese firms, and for support in boosting Thai auto
exports, the report said.

The Thai pleas follow a request by Japan's finance minister
during a high-profile Asia-Europe ministerial meeting in Bangkok
last month, for Japanese creditors to roll over debts to the
struggling Thai firms.

Thai Board of Investment (BoI) deputy-secretary general,
Chakramon Phasukvanich said 80 percent of Thailand's $97 billion
foreign debt was held by the private sector, of which 50 percent
is owed to Japanese creditors, the report said.

Chakramon said it was in Japanese interests to roll over the
debts, as much of the borrowing was to joint ventures between
Thai and Japanese companies. A refusal to roll over the debts
would hurt Japanese firms.

According to the BoI, of the 264 auto parts manufacturing
projects given promotional privileges in Thailand, 252 are Thai-
Japanese joint ventures. Of these, Thai firms are majority
shareholders in 179.

Chakramon thought it beneficial to Japan that most of its
loans had been made to the 'productive' automobile and electronic
sectors -- rather than the 'non-productive' finance sector, which
has crumbled under the weight of borrowings to Thai property
developers hit by a slump in real estate.

Discussions on next week's visit would also focus on how Thai
companies facing a liquidity crunch might be able to buy back a
majority stake in a venture once the struggling Thai economy has
recovered, the report said.

Thai investors unable to raise paid-up capital risk losing
outright control to their Japanese partners and want the
opportunity to become majority shareholders again when able,
according to Chakramon.

The BoI would help in negotiations between Thai and Japanese
partners, amid concern that foreign buy-outs are likely to
increase next year, the report said.

The Thai delegation headed by Chavalit is also expected to
seek expanded cooperation of Japan to export auto parts made in
Thailand to third countries, in a bid to boost the largely
export-drive economy.

Chakramon said that Thai auto part manufacturers are operating
at only half capacity and there are fears of mass lay-offs of
thousands of workers if the country's economic downturn lurches
into next year.

If the slump continued, exports would be the only way to keep
factories open, he was quoted as saying.

The auto industry is a keystone of Thai hopes to develop its
industrial base and revive the economy, by becoming a regional
manufacturing base in Southeast Asia for fully-assembled vehicles
and parts.

According a report by the Federation of Thai Industries'
Automotive Club, domestic car sales in Thailand fell a massive
76.6 percent last month year-on-year, while sales for the first
nine months were down 26.4 percent.