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.