"The Thai market is fundamentally more sound today than two years ago," says Eugene Davis, managing director of Finansa Thai which manages regional funds.

"But the scary thing is, it has also become insignificant. No serious fund manager is adding Thai equities to his portfolio."More scarily, all eyes are now focussed on what path Thailand will take in the forthcoming elections. Thai Rak Thai Party leader Thaksin Shinawatra, who is riding high on a populist platform that supports a "debt moratorium" programme, has added on jitters that economic instability is very close at hand.

Moratoriums, which suspend foreign debt repayment, were endorsed in Indonesia while Malaysia ironically profited from imposing capital controls in 1998 to stem the crisis.

Can Thailand, which was recently ranked along with Indonesia as the "sick men of Asean", afford to reverse fiscal policies at this point without pushing the economy into an abyss?  Populist politicians are willing to take the risks. On the surface, they want to be seen as saving Thai firms, even the least deserving, from bankruptcy at the expense of international creditors who have been waiting for settlement since 1997.

But a secret few campaigners have bothered to share with their electorate is that in the end, it will be Thai taxpayers themselves who actually foot the bill.

Finance Minister Tarrin Nimmanahaeminda has at least frankly said that one or two generations or more of Thailand's populace will be footing the bill for the state bailout of commercial banks that went under during the fallout. More bailouts today will probably increase that to four generations depending on how reckless the new policymakers choose to be.

The opposition parties are feeding off the shift in sentiment amid the waning popularity of the Democrat-led government of Chuan Leekpai who is facing heavy criticism for policies that seem to merely appease foreign creditors.

Mounting unemployment, falling retail sales, high fuel prices and a weakening baht (now below 42 baht per US dollar) are all undermining the strength of the country's free-market system. Though exports and tourism revenues are rising, the bulk of it has gone to service debt.

WHAT'S FAIR GOT TO DO WITH IT?

Bangkok Bank Executive Chairman Kosit Panpiemras, who served briefly as the last Finance Minister under the Chavalit administration in the months following the baht's crash, explains the Thai dilemma: "Whenever the US talks about a free market, there's another word that's always attached to it called fair. What is fair to us, however, is not as important as what is fair to them."Such is the reality of the global free-market rules that developing countries face.

Kosit warned that the rosy picture painted by the Chuan Government about the recovery is flawed because the gains are largely superficial. Avoid the mistake of copying banana republic economies, he said, as those in South America and Africa. Do not measure the strength of an economy by the number of mobile phones or car sales - which have little relation to the underlying weakness of an economy that is largely rural, agricultural and low tech.

In truth, he asserts, Thailand remains a poor and undeveloped country that lacks key pillars of industrial economies. We are short on education, skilled labour and technology. Though the country's literacy rate is quite high, he warns there is a big difference between simply "copy-cat" knowing (which Thais excel in) and understanding (possessing the technology to transfer).

But how many people would readily admit that the bulk of the country's state and private sector leaders have difficulty in properly thinking through actions other than when it is motivated by greed or avarice?However, Central Bank Director (Financial Institutions Policy Dept) Kiatchai Sophahstienphong last year commented: "Thailand's NPLs stood out in the region for being the highest both in absolute terms and in percentage terms partly because of an archaic Revenue Department ruling which prescribed that no loans could be charged off until creditors have resorted to all legal means of recovery, even though full loan loss reserves have been provided."It was not until last June, he said, that the Bank of Thailand succeeded in persuading the Revenue Department to do away with this rule.

While the country's central bankers are plodding to move outdated laws into the 21st Century, investors have opted to skip town. Kosit says Thailand's NPLs amounting to around US$8 billion remains a worrying factor indeed. Like those which have kept Japan in recession for the last 10 years, it could easily derail the recovery and reactivate the crash.

Meanwhile, short-term boosters such as tourism, which has given a buffer to soften the recession, also comes with a heavy price. Of the 9 million tourists, a big portion now comes from Africa and the Indian sub-continent. Not all visitors contribute to the local economy. A great many form dangerous criminal elements that prey on and exploit the host country. Few locals can match the finesse of hardcore Third World con men and drug runners.

DELIST-IF THEY COULD, THEY REALLY WOULD

In 1997, very few Thai leaders in business or politics had a clue of the extent of the financial meltdown that came with the baht devaluation. Sadly, they remain ignorant about what is taking place in the global marketplace today.

Foreign investors who have been burnt still treat the Thai market with skepticism, says Davis, who was among the few Bangkok-based bankers who said at the time "every company in Thailand is up for sale", a position very few local businessmen would admit.

"Electronic and tech stocks listed on the Thai market remain highly undervalued," he said. "I would bet these stocks would delist here tomorrow if they could afford it so they might list on another market such as Hong Kong or Singapore."His observations come after profitable companies such as American Standard, Carpets International, Siam Pulp, Foremost Friesland and Kian Gwan moved to delist from the Bangkok bourse. A month ago Saha Pathanapibul with more than a dozen listed firms denied a rumour it was planning to delist sending a small tremor through punters.

Meanwhile the Morgan Stanley Composite Index for Thailand last month revised its Thai portfolios by dropping eight Thai companies-Advance Agro, International Cosmetics, Sermsuk, TPI, Tuntex, Bangkok Land, Tanayong and Thai Reinsurance-while adding only one new firm, Siam Makro, to its list.

A Bangkok-based French researcher also re-affirmed the trend. "The outlook for Thailand is not bright," he said. "Global funds are more keen to invest in South America and Africa than in the Pacific."Amazingly, it was only a few years ago that the very same investment banks and economists were hailing the new millennium as belonging to the region, dubbing it the "Asia-Pacific Century".

Much of the reason for the death knell, said Davis, can be traced to the vast number of casualties following the baht devaluation which triggered the Asian contagion spreading to Indonesia, Korea and other countries.

At the same time, Davis added, there's a pile of money waiting to buy into Thailand the minute key reforms are in place.

"We are not even halfway through the recession," he offered. The risk of buying Thai investments today is low, but the prices may go nowhere for many more years to come.

"The last recession after the Raja Finance Crash in Thailand lasted eight years from 1979 to 1987," said a longtime Swiss investor Max Hurt. "The current crash is much worse than that of 1979. We can expect another five years or more of pain."As for Thailand's biggest direct investor Japan, the second biggest economy in the world has been quietly cutting back. Robert Liu, a longtime staffer at Japanese corporations here, said at least 30% of Japanese expatriates have been recalled from Bangkok and more are expected to be shipped back.

GLOBALISATION BECOMES A DIRTY WORD

As if pouring petrol on fire, both the Democrats and Thaksin's policies for globalisation as a panacea for Thailand's woes seem to be backfiring. Globalisation campaigns, once so fashionable among ivory tower economists and voodoo doctors for getting Thailand out of its economic quagmire, are now facing a backlash. The tide in e-magic has gone sour.

One of the leading advocates for promoting electronic forms of business and corporate upgrades into technology has been Stock Exchange President Vicharat Vichit-Vadakarn. Although much admired for his foresight and forceful deregulation of the exchange, including the introduction of online trading, he too has come under fire by vested interest groups who have failed to convince Vicharat that a bailout is better than reforming the markets.

Old-fashion solutions of stock bailouts including the setting up of rescue funds to prop up share prices, have thankfully been deemed counter-productive to Vicharat's vision that in order for the local economy to survive, it must learn to truly compete and re-structure.

But to a large degree, some pipe-dreams such as E-commerce are finally waking up to the realities of the marketplace.

While 50% of American homes have access to personal computers, the numbers are much less in Europe (10% in Spain) while in Thailand, that number is well below 5%.

If the country is to enjoy a sustainable economic recovery, it won't be coming from these parts soon, even though it is true that for the past few years tech sales have averaged 70% growth per annum. Nonetheless, that does not excuse companies from catching up with the new technologies, improving their services and training their workforces to become computer literate.

With the economic slump, it is not conceivable that many more households can afford to get connected. For the electronic age to arrive in Thailand, levies on computers need to be scrapped (as in Singapore) in order to make computers more accessible, at least to the middle class.

There's no doubt the growing disenchantment seen in Seattle last year and more recently at Melbourne, is manifesting itself also in Thailand where globalisation has become a dirty word that means high unemployment, lay-offs, cutbacks and pushing the dispossessed and disenfranchised lower down the food chain.

Together, these forces form a nasty threat to the country's young democracy, highly dependent on foreign investment that will evaporate the minute the business environment turns slack.

Historically, foreign investment has been known to plummet down to zero following periods when political forces turn unfriendly toward business or "capitalism".

Such periods include those between 1973-1976 when left-wing elements charged in on the back of a student revolt.

In short, history may be on the verge of repeating itself as local politicians continue to excel in the one area they can least afford to, that is in botching up Thailand's economic recovery plan, as if they understood what that meant.

One of the few more altruistic Thai leaders in government, Foreign Minister Surin Pitsuwan, once described Thailand's ability to resurface from the Asian Crisis as paramount to the growth of democracy and the free market system for the region's future. Of all the Asean countries, Thailand's democratic and free market programme is the boldest, if not the most liberal. "All eyes are on Thailand," said Surin, who reminded all that democracy remains in an experimental stage for both Thais and other Asians.

In short, if the experiment fails, the losses may be much, much greater for Thailand's political and trade partners than for the kingdom itself.