economy
Eastern Europe
8 What'sNewS
Issue 10'October 1998
which reforms are slowly taking shape.
One prerequisite for a healthy and solid
economy is well-regulated banking. 'The
Bank of Thailand has imposed stringent
regulations meaning financial institutions
are forced to work differently. I doubt
the interrelations between government,
politics and industry will disappear
overnight, or even in the medium-term.
But the reality is that banks today in
Thailand must operate according to
internationally accepted standards. We've
also seen a radical shake-out in the
financial industry here. One year ago,
there were 15 commercial banks. Today,
only six or seven remain in Thai hands.
There used to be around 90 finance
companies - now there are only 26,
Bangkok
many are already inactive and in the end,
it is expected none will be left. This is
making a huge difference.' The Bangkok
team are working on making their own
difference. Far from keeping a low
profile, they are out there in the market,
offering consultancy, advisory in both
F&A and health care. 'It's ironie,' says
Winkelmolen reflectively. 'What we have
here is an environment tailor-made for
customer focus. There is no way we can
do traditional business, so we've been
forced to change our mindset and how
we work. As I said, it's ironie.'
Maarten Pronk, Russia:
When we talked to Maarten Pronk, the
first snow had just fallen on the Russian
capital, it's new whiteness apparently
hiding some of the cracks that recently
have appeared and deepened in the
whole fabric of society. Protest marches,
food shortages - the media is full of just
how terrible the situation is in the
former Soviet powerhouse. The pinch of
salt that Pronk scatters over the
sensationalist images we've all seen on
television, could melt an iceberg. 'Can I
advise you to be extra critical when you
watch television,' he suggests gently.
Maarten Pronk
'Some of the images they are using are
five years old.' Yes, it is bad. But Pronk
refuses to be drawn into the type of
doom-and-gloom hype that is filling the
media. 'Only a few
months ago
everyone was
optimistic about
Russia,' he says.
'Now, almost
overnight, this
country has been
written. A few
months ago, we
said: this optimism
seems a little
exaggerated. Now, we're saying basically
the same. And because of that, our
position is not too bad. We've always
been cautious about what we do here. In
recent months, we've been even more
cautious. We have been advising
negatively on larger transactions, our
acceptance policy has been very
restrictive.'
So what about the plans Moscow
announced not too long ago when a
number of local administrative
authorities approved a finance company?
Are they on the back burner? 'Basically,'
says Pronk, 'our plans have changed.
Some will go ahead, and we'11 have to be
a lot more creative - although I should
add there is less competition because a
lot of the domestic banks have gone
under and a lot of the foreign hanks
have gone home. We will not be
Moscow
reducing headcount - again, I should add
we're not a huge team here. Our brief
now is to find ways of providing service
to customers in ways other than straight
credit. We have no problem with bad
debts, so we're in a very good place to
position as service provider. We also need
to prepare for a high inflationary
environment. If I look at the whole
situation here, then I think the bottom
line has to be that there are
opportunities, if you have local know
how. And we're planning to use both the
opportunities and our knowledge.'
Rodolphe Evangelisti and Ferdinand Tuinstra,
Ukraine:
The former soviet republic has been
struggling to break with past economie
structures and to introducé market
economy, with limited success. Russia
remains Ukraine's higgest trading partner
and the current crisis there has hit the
emerging economy hard. 'About 40% of
total exports go to Russia,' Evangelisti
explains, 'now that the rouhle has
devalued drastically, Ukraine imports are
becoming too expensive. Add to that the
fact that investors are generally very
bearish on emerging markets these days,
and especially those with a link to Russia.
So you'11 understand the general situation
here is anything but positive.'
Crisis in Russia has
already put
significant pressure
on Ukraine. The local
currency, the hryvna,
has been devalued by
over 50% - and our
people in Kiev believe
it must devalue
further if Ukraine is
to remain
competitive. Inflation
is picking up. The government had lived
beyond its means and has effectively
defaulted on its debt. The state is
bankrupt, central bank reserves are
running out. Tax revenues are low,
privatizations have been limited and the
economy is largely unofficial. 'Hardly
surprisingly,' says Tuinstra, 'investor
confidence has been shattered.'
On the streets people appear stoical. They
have seen crisis before. There is no panic
or runs on banks. 'We're taking things
pretty calmly,' confirms Evangelisti, 'The
general sentiment is that the crisis will not
last for ever and things will get back to
"normal" at some point. Dollars are in
great demand, but supply is restricted.
There are no shortages in the shops and
people are hurt because of inflation and
price rises, but again, there is a certain
calmness. People get by.' Getting by for RI
as an organization is about all we can do
in Ukraine at present. 'We suffered, as did
all the foreign banks, due to devaluation,'
he continues. 'Apart from that, the
compulsory conversion of part of the
bank's capital to hryvna earlier this year
Rodolphe
Evangelisti
