The third phase (financial crisis impact stage), which
covers the period 1997 to 2002, saw a dramatic decline in
Thai outward FDI due to the impact of the financial crisis,
which significantly affected the ability of Thai enterprises
to invest or maintain their investment abroad.4 Thai outward
FDI to China, Europe, Hong Kong (China) and United
States fell considerably and flows to ASEAN during this
period also fell by 36% in absolute terms, compared with
the period before the financial crisis (1986-1996).
Thai companies that borrowed heavily in foreign
currencies to finance corporate expansion were severely
affected by the crisis when the Baht was floated in 1997
and, subsequently, suffered an unprecedented depreciation
against major foreign currencies. This situation significantly
increased the debt obligation of Thai firms in local currency
terms and some had to restructure their debts with creditors
(e.g. Jasmine International Overseas)5 and/or sell off their
overseas assets.