RISING FROM THE ASHES

Prachai

"Not for a second in the 10 years of fighting with creditors did I consider suicide," Prachai Leopairatana said in his characteristic harsh tone. As the founder of the country's biggest debtor, Thai Petrochemical Industry, Prachai must often have thought of giving up as he underwent a long and painful battle against creditors for almost a decade.

"I've never lost faith. I believe that TPI will be mine again. That's why I will continue fighting," said the 63-year-old, who eventually lost his battle when he was ousted as TPI's chairman.

Prachai said the financial crisis in 1997 had destroyed entrepreneurs in the real business sector and aspiring entrepreneurs had lost the spirit to build their own businesses.

"The financial crisis in 1997 was a result of the government's fiscal and monetary mismanagement rather than the mistake of the private sector. Yet the private sector had to face the debt burden and became the scapegoat in the crisis," Prachai said when asked how his business debt had come about.

He added that 10 years before the economic crisis in 1997, Thailand's gross domestic product had enjoyed strong growth between 8 and 10 per cent a year. More local investors than foreigners expanded their investment, especially in industrial sectors. Thai entrepreneurs were active because they believed Thailand would be the fifth tiger in Asia.

"In my opinion, the petrochemicals industry would have been the sunrise sector in the new economic era under a capitalist system. Before the crisis, my family was preparing to transform the business from agricultural trading to petrochemicals. My younger brother, Dr Pramol, was sent to study petrochemical science, and he became the first Thai to receive a doctorate in that subject from the Massachusetts Institute of Technology in the United States. I also graduated with a master's degree in electrical engineering. We were ready to expand my family business, established in 1978 with registered capital Bt300 million, into the petrochemicals industry," he said.

Sixteen-years after being founded, TPI succeeded in becoming Thailand's largest petrochemicals firm. The company also tried to become the largest integrated petrochemicals company in Southeast Asia by applying to be listed on the Stock Exchange of Thailand in March, 1995, raising funds from the capital market to expand its business.

The company also borrowed from banks to support the expansion. "At that time money was not a problem, because both local and foreign banks were willing to support my projects. I decided to reduce my interest-rate costs by borrowing in terms of dollars, because those interest rates were up to 6 per cent lower than baht loans. That's why I didn't borrow in baht," Prachai said. He said the financial policy at that time had not limited capital inflow and outflow, which would have restricted the private sector's borrowing from outside, while the central bank had imposed a high-interest-rate policy to limit inflation.

"I didn't mind foreign-exchange losses, because the government had signalled it would continue pegging the baht to the dollar. The exchange rate was changing between Bt0.15 and Bt0.20 per dollar a day. That meant the rate was between Bt25 and Bt25.20 per dollar each day, and that would not have had much of an impact on my business when I borrowed in dollars," he said.

According to the government policy to manage the semi-floating exchange regime since 1984, the baht was pegged to a basket of currencies. Many companies who believed in the economy and the government's policy decided to expand their investment.

Prachai said the electronics, petrochemicals, steel, auto and many other industries had started to expand in the 1990s.

When the government decided to change the country's foreign-exchange policy again in 1997, almost every private company, including TPI, which had expanded their investments during that decade, suddenly faced a debt burden. TPI's total debt rose from Bt80 billion to Bt135 billion overnight.

"That was not my fault; it was a mistake in the government's policy management, but I became a scapegoat in the crisis," Prachai said.

Today TPI's debt has been restructured, and it has graduated from the rehabilitation plan. The company has been renamed IRPC. Its shareholders, however, have changed from being the Leopairatana family to PTT Plc and its allies the Government Pension Fund, the Government Savings Bank and the Vayupak Fund I.

Ten years after the crisis, Prachai continues to fight with his creditors and new strategic partners in IRPC. Almost all his creditors and both domestic and foreign newspapers call him "the recalcitrant debtor".

"I am not a recalcitrant debtor; I'm a principled debtor. I know what I did to save my business. I consider myself as fluid as water, but water cannot be compressed. Too much pressure may burst the floodgates, and the influx can destroy everything," he said.

Prachai's empire is now reduced in value from Bt200 billion in the year before the economic crisis in 1997 to nearly Bt100 billion, coming from its cement business TPI Polene, which has total assets of Bt68.4 billion, and its existing agriculture trading firm and textiles and insurance businesses.

"I still believe that TPI will be mine again. I have never lost confidence, and I have the energy to fight for it," he said.

 Somluck Srimalee

The Nation