Business leaders not so sure Thailand is where they want to invest

The international business community is having second thoughts about Thailand's stability as a base for foreign investment. Ironically, the nervous discussion has been sparked not so much by the abortive "April Fool's Day coup," but rather a report released that same day, half a world away, by a New York consuting firm.

The firm, Frost and Sullivan Inc., ranked Thailand number eight among countries subject to political turmoil potentially harming people or property. This ranking puts Thailand hard on the heels of El Salvador, Iran, Zaire, Bolivia, Turkey, Panama and Pakistan. The report predicted Thailand's climate might worsen in the next 18 months.

Ironically, also, the study's conclusions were not based on the likelihood of a major coup producing radical policies. Rather they speculated the rising oil and other energy costs would tempt governments to win popular support by adopting nationalistic policies toward foreign investments.

Suppression of the coup "probably didn't allay those condition much," Prof. William D. Coplin, a contributor to the study, is quoted as saying in the Asian edition of the Wall Street Journal.

The authors of the study, like many businessmen involved with Thailand, is not worried about a Vietnamese attack. But they do suggest that Thailand's efforts to build up its defenses could bring budget squeezes, balance-of-paymnt problems, and a slower rate of development in some areas.

It sees a 70 percent change of major fuel price increases in the 35 to 50 percent range, leading to social and political problems tempting politicians into policies of nationalization.

The report has worried Thai leaders enough for Prime Minister Prem Tinsulanonda himself to have spoken out, rejecting it as unrealistic.

Boonchu Rojanasathien, perhaps Thailand's leading economist and former leader of General Prem's economic team, has put forward a more sophisticated rebuttal.

In an article in the april 17 Bangkok Post, he suggested the study exaggerates the likelihood of a major energy price hike, the minimizes the Thai public's understanding of the need for constructive responses to such hikes, and thus exaggerates the danger of nationalistic economic policies.

Mr. Boonchu challenged the Frost and Sullivan study's discussion of the Thai Defense Ministry's termination of an oil refinery lease. The termination of the lease, which covered a refinery run by the Summit Industial Corporation (Panama) Ltd. and which was to have lasted until 1990, was cited by some as an illustration of the hazards of doing business in Thailand.

But Mr. Boonchu said Summit's lease was a special case and had been canceled because of the firm's mismanagement. He noted that a number of other international oil companies had offered to help the government with the facility.

Mr. Boonchu said other researchers had come to other conclusions on Thailand. Citing Institutional Investor magazine's semi-annual ranking of confidence, he said the United States was No. 1. Thailand was placed 49th with its "neighbors" in the Frost and Sullivan study far lower (Pakistan 81, Turkey 93, Iran 94, and Zaire, 99.)

"Don't underestimate the Thais. When the going get really rough, they rally to gether." is how one longtime foreign resident puts it.