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Sell-off of Asian Stocks and Currency Spurs Talk of Fiscal Meltdown

Author: Joshua Kurlantzick, Senior Fellow for Southeast Asia
October 10, 2013
The National

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The village of Mae On, a 20-minute drive from the northern Thailand city of Chiang Mai, looks like it could be an advertisement for tourism to the kingdom. Mist-covered hills, cousins of a larger mountain chain that extends north into Myanmar and eventually China and the foothills of the Himalayas, are dotted with small, emerald-green farms of vegetables, rice and coffee, an increasingly popular crop in the north. Winding and narrow roads meander up the mountains, passing an occasional waterfall, limestone cliff and group of western tourists breathlessly pumping their bikes up the steep tarmac. In the village itself, a central market is surrounded by stalls selling thick pork curries, wide sen yai noodles, and slices of pineapple and papaya kept cold on chunks of ice.

But though Mae On looks, on first glance, like it might have 50 years ago, in reality the area has gone through massive property development in just the past decade. More than a decade of Thai government policies, first launched by longtime prime minister Thaksin Shinawatra, who is now in exile, and designed to lower banks' interest rates and push them to make property, auto and infrastructure loans, have ploughed money into places like Mae On.

Signs along the main road to Mae On advertise new condos in half-built housing estates, though local brokers say few of the new developments are full. Massive new malls on the side of the mountain road sell the latest American and Chinese DVDs and the newest updates for an iPhone, and their parking lots are full of the latest model Toyota 4Runners and VW sedans.


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