[OPE-L:6906] [OPE-L:396] Re: Bankruptcies and the Asian Crisis

Alejandro Valle (valle@servidor.unam.mx)
Wed, 16 Dec 1998 14:50:04 -0600

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I am sending two post from Financial Times related with Asian crisis and
Bankrupcies. It is quite interesting the Thai affair.

Alejandro Valle
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= HONG KONG: Uphill task to boost work skills


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HONG KONG: Uphill ta= sk to boost work skills

Louise Lucas on a widel= y held belief that there has to be a radical reform in education

Resplendent in government-issue blue shirts and black rubber gloves,= the women crowd around the sink and emit loud "wa-ah"s of disg= ust as a grubby U-bend is removed.

Clearly, their future career paths are going to involve some dirty wor= k but this does little to quell the spirits of the group, mostly in their= 40s and with a firm belief that the end justifies the means. "I jus= t want a job," smiles Wong Wai-ying, mother of two grown-up sons and= trainee home helper.

Hong Kong's government has a similar aim: with unemployment at a 17-ye= ar high of 5.3 per cent, the pressure to find jobs is intensifying. Retra= ining women to be home helps is one solution; another proposal is to turn= the old airport into a weekend flea market.

Joseph Wong, secretary for education and manpower, is also looking to = the future. Acutely aware that Hong Kong's workforce has not evolved at a= similarly rapid clip to the economy, he wants to have a closer grip on f= uture labour requirements. And he wants education that delivers, which me= ans a potentially radical overhaul of the system.

It is a big task. Academics warn that any balking at full reform of ed= ucation - which could mean cutting the curriculum by a third to engender = more creativity - would leave festering problems for the next generation.=

"Official talk all leans the right way, but breaking the existing= system and breaking the mindset will take real commitment," says Ch= ristine Loh, who leads the Citizen's party.

Joseph Cheng, professor of social studies at City University of Hong K= ong, adds that the chief drivers for Hong Kong's competitiveness in the c= oming decades will be creativity and innovation. "Singapore's educat= ion system has been responding to this challenge in recent years, and we = had better catch up," he said.

For those for whom schooling is too late, there are charges against th= e short-term measures. Demand outstrips supply on some courses and the ho= me help training, says Lee Cheuk-yan, unionist and legislator, ignores th= e fact that women looking for a few hours' work may live in the remote Ne= w Territories and have to travel for an hour or more to Hong Kong island,= where the bulk of potential employers reside.

"This is not really going to solve the unemployment problem,"= ; he says. "We would rather press the government to do more childcar= e service or elderly service; they need people and that would be more pos= itive."

Mr Lee reckons the government balks at these options because they woul= d incur continuing spending, unlike the infrastructure projects under way= =2E He has a point: government spending is around 20 per cent of gross do= mestic product and the biggest portion of recurrent expenditure - or arou= nd one-fifth goes on education.

Unfortunately, financial commitment to education has not translated in= to quality. Tsang Yok-sing, head of the pro-Beijing Democratic Alliance f= or the Betterment of Hong Kong, and a former headmaster, echoes a common = sentiment when he questions "whether our education actually produces= the kind of manpower required by our fast changing economy. I believe th= ere's a wide gap there."

Part of this is because of Hong Kong's rapid change from manufacturing= base to service economy. The 1980s migration of manufacturing across the= border, where land and wages are cheaper, displaced Hong Kong's legions = of factory workers. Ten years ago, around 1m workers were employed in man= ufacturing; now the figure is 300,000.

In the booming late 1980s and early 1990s, there was plenty the famous= ly flexible workforce could turn to, but as the economy veered into reces= sion this year the alternatives diminished.

For some - particularly women - the options are even fewer. Under the = then-colonial government's rule of "benign neglect" or laiss= ez faire, free education (for a mandatory nine years) was only introd= uced in 1978, completely by-passing a slice of the population now in thei= r 40s and 50s.

Mr Wong's department is now treading the fine line between taking a gr= eater lead and avoiding intervention. It hopes to achieve this end by set= ting higher targets and professionalism for teachers, and then turning di= rection over to the schools themselves.

It is also looking for greater private sector involvement, both to fun= d and operate schools. The private sector is being courted to help out on= chronic over-crowding. Some 80 per cent of primary schools pupils attend= half-day shifts, because of insufficient schools.

The government has pledged to bring this down to 40 per cent by 2002-0= 3, but its plans have already been derailed by the swelling number of mai= nland immigrant children arriving in the territory.

For Hong Kong, the new education paradigm reflects a coming of age - a= nd a passing of an era. The old system, with its authoritarian style, que= stionable professionalism and highly academic-oriented syllabus, worked b= ecause education was not a pre-requisite for commercial success.

Entrepreneurs, such as Li Ka-shing, who heads two of Hong Kong's bigge= st blue-chip companies, or Jimmy Lai, who washed up in a boat from China = with minimal schooling and is now a media magnate, mushroomed - a factor = often attributed to the strong work ethic, a driving force behind many im= migrant cultures.

But these days are over, says Peter Falvey, head of the English sectio= n in the Department of Curriculum Studies at the University of Hong Kong.= "I'm afraid it's no good any more. You have got to have a skills ba= se now in order to be a success," he says.

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= THAILAND: Alphatec future in doubt


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THAILAND: Alphatec future in doubt

= By Ted Bardacke in Bangkok

3D"Logo"Alp= hatec Electronics, the ailing Thai semiconductor company, was dealt a pot= entially fatal blow yesterday when a large Thai creditor blocked a debt r= estructuring agreement that would have saved the company from liquidation= =2E

The plan was the first to test the country's new bankruptcy laws, intr= oduced to help ease the effects of the Asian crisis on Thailand's industr= y.

A new restructuring plan must be approved within 45 days or Alphatec i= s likely to be the first listed Thai company to be liquidated since the A= sian economic crisis began in July of last year.

The creditors' action, led by state-owned Krung Thai Bank, is a big se= tback to debt restructuring efforts in Thailand at the beginning of a cru= cial week. On Thursday, 148 creditors vote on a plan to restructure $3.2b= n of debt at Thai Petrochemical Industry.

"We are very disappointed with the result," Alphatec said, a= dding that it was committed to saving the jobs of its 1,750 employees.

Pricewaterhousecoopers, which designed the restructuring plan, said th= at Alphatec would run out of cash to fund its operations at the end of th= is month. But company officials said liquidation could be staved off for = another month or so through "inventive" measures such as not ma= king year-end double salary payments.

The rejected PwC plan called for Alphatec's $373m in unpaid debt to be= restructured into $35m of new debt, 20 per cent of the equity in a new c= ompany that would take over Alphatec's business, and a performance obliga= tion potentially worth up to $55m.

American International Group and Investor AB of Sweden were to take an= 80 per cent stake in the restructured company through a $40m injection o= f new capital.

Big foreign creditors include ING Bank, Credit Agricole Indosuez, Sumi= tomo Bank and holders of a $45m eurobond. They all supported the PwC plan= =2E

Krung Thai said it rejected the plan because new capital would be inje= cted into a new entity rather than Alphatec itself. Executives fear that = stripping Alphatec of its assets would hurt their ability to pursue claim= s against Charn Uswachoke, former chief executive officer and shareholder= who is alleged to have taken Bt10bn ($279m) from the company in "im= proper transactions".

Although the new investors had not yet walked away from the deal, the = only feasible option for them was to put money into a new company and not= Alphatec, said John Perrins, PwC partner in charge of Alphatec. He added= that the plan kept Alphatec intact legally, allowing creditors to pursue= claims against Mr Charn.

Krung Thai also said it was disappointed with the low level of recover= y - between 15 and 25 per cent of debt outstanding - proposed in the plan= =2E

Despite a policy by the Thai government to have state-owned banks supp= ort debt restructuring efforts, "Thai bankers have yet to understand= that they are going to have to take a big hit" in order to make deb= t restructuring work, said one investment banker.

A new reorganisation planner to replace PwC will be appointed on Frida= y. That planner will "try to keep the deal alive in some way. Maybe = there can be some tinkering around the edges", said Mr Perrins.


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