FT.com / Comment & analysis / Editorial comment Friday Oct 10 2003. All times are London time. Roger Bove Edit Profile Take a tour Log out Home World Business Markets Markets data & tools Industries Lex Comment & analysis Editorial comment Columnists Discussion & polls Letters Analysis Comment Features People in the news Technology zone Your money Arts & Weekend Sport Jobs & education In today's FT Site services FT Reports Creative Business FTfm FT-IT World reports Business reports News in depth Aftermath of war Summer school WMD guide Science briefing China Terror Columnists Martin Wolf Lucy Kellaway Quentin Peel Amity Shlaes Gerard Baker Discussions Iraq's WMD: Was war justified? EU referendum UK house prices China's economic growth Partner sites Business.com CBS MarketWatch Chinese.FT.com Les Echos FT Deutschland The New York Times Recoletos Vedomosti Investors Chronicle Comment & analysis / Editorial commentPrint article | Email The Thaksin way Published: October 9 2003 5:00 | Last Updated: October 9 2003 5:00 Thailand under Thaksin Shinawatra - prime minister, tycoon and ex-police officer - is the envy of its neighbours. Thanks to "Thaksinomics", his nationalistic brand of economic management, the country that triggered the Asian financial crisis in 1997 is now growing at a rate second only to China's. Gross domestic product is forecast to rise 8 per cent next year. Malaysia has been urged by Mr Thaksin's investment banker fans to follow the Thai way in order to reduce its dependence on foreign investment. Gloria Macapagal-Arroyo, the embattled president of the Philippines, has declared herself an "unabashed disciple" of Thaksinomics. There was more good news yesterday when Standard & Poor's raised its Thai debt ratings, along with those of Malaysia and Indonesia, by one notch to reflect the country's improving budget and its strong external position. The Thai stock market has risen nearly 60 per cent this year and the baht is at a three-year high. Rapid recovery in Thailand is welcome after the Asian crisis, but enthusiasts should realise that Thaksinomics is no more disaster-proof than the export-led expansion once known as the Asian miracle. Parts of the Thaksin policy, especially its focus on reducing excessive savings to boost domestic consumer spending and rural development, are long overdue. Others, such as the "one tambon, one product" initiative to have each rural district create its own globally competitive goods, are eccentric. Thai cynics dismiss the whole strategy as the latest version of Thailand's crony capitalism, in which contractors benefit from state largesse but use some of the funds to secure the rural vote for their political patrons. Mr Thaksin, who was elected two years ago at the start of Thailand's upturn, should not be begrudged his luck in taking office at the right point in the economic cycle. But there are legitimate concerns about his choice of weapons for implementing policy. Krung Thai Bank, the favoured state-controlled group in which the government is in the process of selling a substantial stake, has been lending so aggressively to promote local businesses that it has alarmed its private rivals and is responsible for 70 per cent of new lending so far this year. In the delicate phrasing of a World Bank official in Thailand, Krung Thai's executives are clearly operating "within a political envelope". In spite of all the good news from Thailand in the last two years, the country's non-performing loans in fact rose slightly in the first half of this year to 17 per cent of the total - and stood at double that figure if bad loans farmed out to asset management companies are included. Thaksinomics is certainly popular but has not yet proved itself to be sustainable. Mr Thaksin should not need reminding that the Asian crisis began with the rash lending policies of Thai financial institutions. EMAIL THIS PRINT THIS MOST POPULAR = requires subscription to FT.com Search & quotes NewsQuotes Power search My portfolio Email & tools News by email Personal office Download news ticker Currency converter Research tools Analyst reports FT Research Centre Free annual reports Market research Growth companies D&B business reports HomeWorld | Business | Markets news | Markets data & tools | Industries | Lex | Your money | Comment & analysis | Reports | Arts & Weekend | Sport | Jobs & education | In today's FT | Media inquiriesContact us | Help © Copyright The Financial Times Ltd 2003. "FT" and "Financial Times" are trademarks of the Financial Times. Privacy policy | Terms | Advertising | Corporate