Introduction

The Association of Southeast Asian Nations (ASEAN) has been through rough times in the last couple of years. A vicious currency crisis in Thailand during mid-1997 mutated into a financial crisis, which then spread to the other currencies and financial markets of Southeast Asia, before mutating again into a more virulent regional economic downturn across much of East Asia. Depicted by one observer as the “bonfire of the certainties”, the Asian economic crisis knocked (formerly ebullient) subjective business confidence across the region, which further exacerbated the damage already being done to more objective business activity. Previously bold commercial banks took fright, as over-leveraged corporates in several countries began to default on loans, en masse. Banks’ loan books were frozen, credit became scarce, interest rates climbed precipitously, and the business environment became extremely hazardous. In those countries worst affected, good and bad firms alike found themselves in life-threatening situations. Some countries even saw the economic fallout from the crisis making an impact in their political arenas. The value of ASEAN's various local currencies came under downward pressure, as did the prices of most asset classes, from shares to property. Many forms of business endeavour were adversely impacted, including trade and investment. For almost anyone involved in business in ASEAN during 1997–99, the experience was decidedly unpleasant. Perhaps the only net winners so far have been corporate lawyers and accounting firms.

For most of those with operational investments in ASEAN, the period since mid-1997 has been extremely disappointing, as both the value of these investments, and the earnings to be derived from them, have shrunk fairly substantially. Conversely, for those seeking to enact new investments in Southeast Asia, the period since mid- 1997 has been quite exciting. Not only can some operational businesses now be bought at levels commensurate with their distressed condition, but post-crisis liberalization reforms are allowing foreign investors to acquire assets that were previously offlimits (in formerly protected sectors). This state of affairs has also dovetailed with new trends apparent in the field of international business, particularly with regard to a burgeoning of mergers and acquisition (M&A) activity, and strategic alliances.