Threat From S-E Asian Nations Ruled Out

K V Kamath, chief executive officer, Industrial Credit and Investment Corporation of India (ICICI), feels that the south-east Asian economies have been so badly hit, they will not be able to compete with Indian exports despite the massive depreciation in their currencies.

On the contrary, he feels that India should conquer the markets to which the south-east Asian markets are exporting. With the currency crisis in their economies and the understated inflation, they will not be able to export at competitive rates, it is pointed out.

Speaking at a seminar organised by the Federation of Indian Chambers of Commerce and Industry on South-east Asian meltdown: The Indian response yesterday, Kamath said, I have visited Thailand and Indonesia and their real sector suffers from lack of capital. Interest rates are high and plants are closing down. In such a situation they are in no position to compete with Indian exports.

 

In the case of Indonesia, the countrys currency depreciated to 10,000 per dollar from 2,000 per dollar. But the domestic banks are bust and no foreign banks will put money to help the real sector. In such a scenario there is no way they can compete. That apart, banks themselves are on a consolidating excercise due to high capital requirement imposed by the government. This is expected to lead to a merger of many banks. In Thailand, too, banks suffer from very high non-per forming assets (NPA) up to 50 per cent.

However, Kamath stated that two countries to watch are Korea, which is coming out of the crisis due to external backing, and China. Unlike other south-east Asian companies which went on an expansion spree, Korea had always kept an eye on costs.