Bangkok Post, Thailand, Guest Column.

Byline: Mark Heine

Dec. 3--The economic environment is very challenging indeed, both domestically and globally. Many sectors have been hit hard by the global economic downturn.

Even the sectors which were performing well and boosting Thailand's export revenue growth and foreign currency earnings until early this year are now facing a significant downturn, such as electronics and tourism.

It is difficult to identify sectors which are going to perform well in the current environment. In the short term, I would imagine that the agricultural and commodities companies will hold up best against the downturn.

In the longer term, the companies which will be best positioned to benefit from the eventual recovery will be those which have undergone restructuring. The process is not likely to be easy and will require concessions to be made by debtors, shareholders and creditors.

In operational restructuring, many companies need to reorganise their operations to focus on their core competencies and to divest of non-core assets and business lines. Companies should strive to increase their efficiency so that their future growth can be driven by increased productivity as opposed to being driven by debt-financed capital investment, as was the case during the 1990s prior to the devaluation of the baht.

In financial restructuring, debtors need to align their balance sheet structures with their ability to generate sustainable operating cashflows to avoid future defaults. Corporate governance and accounting standards need to be improved to ensure transparency and boost investor confidence.