Malaysia takes advantage of tougher times in Thailand

Abstract

In the wake of a severe 22% drop in the value of Thailand's currency unit, the baht, since early July, and an impending International Monetary Fund (IMF) economic rescue package, all Southeast Asian currencies have found themselves under attack from speculators. As a result, Thailand is postponing plans for petrochemical plants, while Malaysia is speeding up development. Closely following the July 2 decision by Thailand to let its currency float freely, Bangkok-headquartered Thai Petrochemical Industry and National Petrochemical Corp. both announced they were indefinitely postponing multi-billion-dollar planned investments in petrochemical complexes. problem is that a lot of Thai companies have taken out U.S.-dollar loans, which have not been hedged. So, almost overnight, their loan burden in terms of the baht has increased about 25%, explains David Stotter, a consultant at Chem Systems in Bangkok. The Thai baht and the U.S. dollar had been closely tied for many years, and companies did not foresee ...