Thailand’s former finance minister and Kla Party Leader Korn Chatikavanij has strongly advised the Thai government to take precautionary steps to protect against any fallout from China’s Evergrande crisis.
In his Facebook post today, he said that, for the past several weeks, the government has been busy dealing with the floods, while foreign media and economists have been closely monitoring Evergrande.
The Chinese property giant is the most indebted developer in the world at present, reportedly in the hole by as much as US$305 billion due to its heavy investment in real estate projects in China and a wide range of other industries, including electric cars, health care services, consumer products and even a theme park.
Its share price has plunged nearly 80% this year and trading of its bonds have been repeatedly halted by Chinese stock exchanges. It has defaulted on payments to several creditors and is on the brink of collapse.
Korn recalled that, during the subprime mortgage crisis in the US, which contributed to the global financial crisis from 2007 to 2010, when he was the finance minister, he and his economic team had closely monitored the situation and had taken precautionary steps to cushion the impacts on the Thai economy, resulting in the country having recovered from the crisis faster than many others.
“My question is, is Thailand prepared to cope with the Evergrande crisis?” he asked.
The Kla party leader said the Chinese property development giant’s insatiable appetite for debt has led the company to the brink, with its inevitable impacts on the Chinese banking system and the political establishment.
Although the Chinese government has defined three “redline” benchmarks for Evergrande, to cushion the impacts on the real estate business in China, Korn said that the company has failed to meet all the three, adding that he does not think that the Chinese government will help the company’s shareholders.
Although the company’s financial crisis is yet to affect Thailand, Korn warned that, because of Thailand’s partial economic dependency on the Chinese market, more so than on the US, “when we were struck by the crisis, we must have a plan in place to cushion the impacts and must not be complacent because it is far away.”
Source: Thai Public Broadcasting Service