Ten years ago, Thailand triggered an Asian economic crisis. A decade later, the five countries hardest-hit by the crisis are back on their feet.
In 1997, Thailand was forced to float its baht currency and appeal to the International Monetary Fund (IMF) for a bailout.
This triggered an economic crisis that spread tsunami-like to the economies of Indonesia, Malaysia, the Philippines and South Korea.
A decade later, things are looking far better, thanks to prudent fiscal policy, strong exports and a healthy influx of foreign direct investment (FDI).
Of the five, South Korea has made the most impressive recovery.
The crisis forced South Korea to open up its economy to an unprecedented degree with the reward being an inflow of FDI amounting to 102 billion dollars from 1998 to 2006, or 80 per cent of the country's inbound investments since 1962. Even so, FDI accounts for a small percentage of South Korea's gross domestic product (GDP) at 8.1 per cent in 2005.
For the four crisis-struck Southeast Asian nations, FDI has historically played a much more important role in their economies.
The so-called Little Dragons of Southeast Asia essentially owe their claws to a massive influx of FDI from Japan, and to a lesser extent South Korea and Taiwan, in the aftermath of the appreciation of the Japanese yen in the mid-1980s.
The East Asian investment influx was topped up by similar inflows from the United States and Europe, keen to reap the benefits of the "Asian miracle."
After 1997, when the miracle turned nightmare, the FDI tidal wave flowed elsewhere. Much of it has headed to China, which was largely unaffected by the Asian crisis, and to a lesser extent, India.
According to the United Nations Commission on Trade and Development, China and Hong Kong drew 111.4 billion dollars in FDI last year, or 14 per cent of the world total.
During their economic heyday from 1992 to 1997, the economies of Southeast Asia attracted 7.7 per cent of the world's FDI. Their share of the total fell to 2.9 per cent from 1999 to 2005, according to the UN commission's data.
Even so, FDI has played an important role in Southeast Asia's recovery and continues to act as a weathervane for when countries get their economic and political mix right.
Singapore, for instance, the Southeast Asian nation least affected by the regional crisis, reaped FDI inflows amounting to 66.8 billion dollars from 2004 to 2006, according to the UN commission.
Relatively stable Malaysia has attracted an average of 4 billion dollars in FDI each year from 2004 to 2006 and last year approved 13.5 billion dollars in new investment projects.
Indonesia - which suffered net outflows of FDI during its multiple crisis years of political upheaval, ethnic clashes and threats from homegrown terrorists from 1998 to 2003 - has started to see a turnaround.
Although much of the investments have been in coal, Indonesia has seen a net inflow of 1.9 billion dollars in 2004, followed by 5.3 billion in 2005 and 2 billion last year.
"Perversely, now we're the politically stable country in the region, and Thailand and the Philippines are the unstable ones from an investor's point of view," said James Castle, an investment consultant in Jakarta with more than three decades of experience in Indonesia.
The World Bank estimated FDI has gone from accounting for 17 per cent of Indonesia's GDP four years ago to 24 per cent in 2006.
The Philippines might also be turning a corner. In 2006, FDI inflows rose 27 per cent to reach 2.4 billion dollars, and during the first quarter of this year had already hit 710 million, up 19 per cent from the same period in 2006.
Joachim von Amsberg, World Bank country director for the Philippines, said recent fiscal and policy reforms had created "the best opportunity" for the Philippines to attract investment since the 1997 crash.
Even Thailand, which has suffered its fair share of political instability over the past two years, has proven an attractive FDI destination.
Last year, FDI inflows to Thailand amounted to 7.9 billion dollars, and although inflows are likely to fall in 2007, investment interest is picking up.
Thailand's Board of Investment granted privileges to 181 foreign investments worth 2 billion dollars between January to May this year, up 65 per cent in terms of value compared with the same period in 2006.
Most of the foreign investments in Thailand over the past decade have been in infrastructure and its key export industries - electronics, electrical appliances and the automotive industry - which account for a whopping 70 per cent of the kingdom's exports.
"The reason investors are in Thailand now is because we still have some advantages over China and Vietnam in terms of producing things that require more skills, but the government should be aware of the fact that if it is more profitable for them to go elsewhere, they will," warned the World Bank's country economist for Thailand, Kirida Bhaopichitr.
Like many others, the World Bank is urging Thailand to spend more on education, skills and research to create an innovation-led economy rather than depending on FDI, manufacturing other nation's brands and exporting them.
That indeed is the post-crisis challenge for all of Southeast Asia, as it was even before the crisis hit.
"South Korea, Taiwan and China are making tremendous efforts in science and technology, but in Southeast Asia, only Singapore has a very strong policy towards R&D," said Guy Faure, director of the Bangkok-based Research Institute on Contemporary Southeast Asia. "That's the problem with Southeast Asia."
Bangkok Post, August 21, 2007