Rethinking Southeast Asian Economic Diplomacy


September 18,2017

Rethinking Southeast Asian Economic Diplomacy

by Henry Wai-chung Yeung, NUS

http://www.eastasiaforum.org
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In today’s global economy of cross-border production networks, the need to understand the changing ways in which the state and firms work together has become even more pressing. While the state plays an important role in supporting these production networks, it is firms and other private organisations — industry associations and standards organisations, for example — which coordinate and organise these networks.

UNCTAD’s World Investment Report 2013 estimated that some 80 per cent of today’s world trade is conducted through firms in these production networks — they are the backbone and central nervous system of the global economy.

 

In Southeast Asia, many economies are heavily involved in production networks, some of which are highly regional in nature. The ASEAN Investment Report 2016 suggests that regional production networks will be critical in realising the ASEAN Economic Community’s goals, which include building a single market of over US$2.5 trillion and a single production base of over 620 million people. As Escaith et al argue in East Asia Forum Quarterly ‘Strategic Diplomacy in Asia‘, ‘understanding the nature and dynamics of these production networks will be more important to securing stable and fair growth throughout the region’.

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Donald Trump has abandoned TPP and opened the door to China in favour of America First. Now ASEAN must get on with RCEP. Towards a more calibrated approach to strategic economic diplomacy

We need to rethink the strategic diplomacy of economic development — it can no longer be entirely state-driven in an era of global production networks. I use the concept ‘strategic coupling’ to describe the mechanism of strategic economic diplomacy through which domestic firms couple their specific initiatives and advantages with those of global lead firms. Through this process, firms coordinate diverse production networks spanning across national and regional territories.

The Apple–Foxconn case is one example of strategic coupling at work. Taiwan’s Foxconn is instrumental not only in ‘manufacturing’ Apple’s iPhone success but also in integrating Taiwan and mainland China into the iPhone’s global production networks.

But this well told story has a critical and often missed dimension — the even more crucial role played by South Korea’s Samsung. Apple’s major competitor in the global mobile handsets market, Samsung has also supplied critical components to successive generations of iPhones assembled by Foxconn.

While serving as the iPhone’s largest supplier by value of components, Samsung has kept busy building its own production networks throughout East and Southeast Asia, including a giant industrial park in the Bac Ninh province of North Vietnam. Opened in 2009, Samsung’s smartphone production there has transformed a province of rice fields into Vietnam’s second-largest export centre after Ho Chi Minh City.

While the state and its policy initiatives in Taiwan, mainland China, South Korea and Vietnam facilitated this Foxconn–Apple–Samsung strategic coupling, they are not the only domain through which this new mechanism of economic development can be effective and successful.

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My recent work Strategic Coupling shows that equally if not more important than state policies are the organisational and technological innovations developed by national firms, such as Samsung and Hon Hai (Foxconn’s parent). These firms seize opportunities embedded in the cross-border production networks spearheaded by global lead firms from advanced industrial economies in North America, Western Europe and Japan.

The state’s capacity to steer national economic development and ‘govern the market’ has become more constrained since the 1990s. The transformation of state roles has led to the weakening of the state’s embedded autonomy in countries like South Korea and Taiwan. State institutions began to facilitate the redistribution of state power towards more horizontal and functional policy in support of domestic firms and industries that take advantage of growing global opportunities.

As Southeast Asian states move from active economic intervention to facilitating strategic coupling between firms and global production networks, developmental partnerships start to broaden from top-down state–firm relations to include inter-firm networks. This new mechanism of strategic economic diplomacy recommends a dynamic conception of state-firm relations that goes beyond the debilitating market–state dichotomy.

The integration of Vietnam into Samsung’s global production network is a good example of this rethinking of strategic economic diplomacy. Samsung’s US$15 billion investment in Vietnam represents a strategic imperative to diversify away from mainland China, where Foxconn is dominant. It allows Samsung to tap into strong existing industrial clusters in Singapore, Malaysia and Thailand.

What does the strategic coupling story suggest in terms of public policy? While it is now much harder for almost any Southeast Asian economy to develop internationally competitive vertically integrated industries, there remains significant room for a new kind of strategic economic diplomacy — one that encourages domestic firms to tap into the developmental opportunities inherent in most global industries.

The call for a more calibrated approach to strategic economic diplomacy brings with it the possibility of focusing on more niche policies that nudge strategic coupling. As industrial production becomes ever more fragmented and globalised, state planners in Southeast Asian economies will find it harder to identify which products and technologies should be developed in their domestic industries.

Today’s obstacles to economic development are less about large capital outlays and scale of investment, and more about developing specialised niches within different global industries. In most global industries characterised by vertical specialisation and modularisation (transport equipment, ICT, agro-food and so on), a niche approach to industrial policy is likely to yield stronger coupling networks than a ‘big spurt’ approach to state-led industrialisation.

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The politics of industrial and sectoral choice is confounded by the growing uncertainties of today’s global economy. Value creation and capture tends to be much greater in new innovation-based industries in the manufacturing and service sectors, such as nanotechnology, biomedicine, green tech and digital media. Here, catching up is not just a matter of capital investment led by state-controlled financial institutions and elite industrial development agencies. The sheer complexity and wide range of actors and interests with specialised knowledge in these industries makes it rather unruly for bureaucratic targeting, even for a state with well-coordinated industrial policy.

Looking forward, the post-developmental state should focus on creating broad-based capabilities in new technologies, product and process innovations, and market development, rather than choosing specific winning firms, industries or sectors.

Henry Wai-chung Yeung is Provost’s Chair and Professor of Economic Geography at the Department of Geography and Co-Director of the Global Production Networks Centre, National University of Singapore.

This article appeared in the East Asia Forum Quarterly, ‘Strategic diplomacy in Asia’.

Trade Strategy: RCEP offers ASEAN and Asia a critical line of defence


September 14, 2017

Trade Strategy: RCEP offers ASEAN and Asia a critical line of defence with the Trump Induced Collapse of TPP

by Dr Peter Drysdale, ANU

http://www.eastasiaforum.org

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It might seem strange in this time of global crisis to turn to ASEAN, dogged as it is by perceptions of weakness and vulnerability and distracted by the political and security problems in the South China Sea. But ASEAN, with Indonesia at its core, is a regional enterprise with a distinctly global outlook and objectives, an experiment in open regionalism that has succeeded. ASEAN’s economic cooperation strategy has persisted despite its perceived weaknesses and slow pace. It is still the crucible for action on regional cooperation within Asia and across the Pacific.–Dr. Peter Drysdale

Some may think that the Trump shock is a passing moment and US leadership in international trade and economic policy can be quickly restored. But there is little doubt that the postwar trade regime and the primacy the multilateral order delivered are now vastly less certain. That was clear for all to see at the Hamburg G20 summit.

The question is how Asia — that has benefited so much from the certainties of economic openness that the WTO and other global institutions have provided — can protect its strategic economic and political interests in the face of the retreat of leadership by the world’s largest economy. Even if Trump and his White House advisers do not embrace all of the policies that they’ve foreshadowed in trade policy, policy uncertainty will undermine global economic and political security as well as damage US standing in the world.

Trump’s withdrawal from the Trans-Pacific Partnership forewent the potential lift to US incomes which that deal would have delivered mainly through the opening of the Japanese markets to US farm and services trade. The threats to impose trade barriers against US trading partners will actually reduce US incomes. The costs of imposing punitive tariffs on China and Mexico, or slapping tariffs on US imports such as steel are calculable. Now he threatens to tear up the US–Korea free trade agreement. All these actions would damage trade and incomes in US trading partners, but they’ll also reduce American incomes substantially. On one scenario US income will be cut by 1 per cent for every year putative higher US tariffs stay in place — paring close to half a year’s growth from US incomes annually.

US protectionism empowers protectionists globally. But other countries would only aggravate the costs to themselves and others if they retaliated in kind. A better strategy is to maintain open trade in the face of the United States’ self-inflicted harm and, a better strategy still, in coalition with other countries, is to protect the open global trade regime by maintaining the momentum of global liberalisation and economic reform.

The rest of the world has a continuing and strategic interest in new commitments to openness however Trump’s United States might choose to damage itself.

No one country — even China which is the second biggest economy and largest trader in the world —can make the difference alone in holding the line as the United States turns inwards. But there is a powerful interest in pushing collective leadership on trade openness from Asia.

Asia has its problems but it remains the most dynamic part of the global economy. There is intense focus on Asia’s response in the unfolding uncertainty about global trade policy because of its size and importance to future global growth and because of what it can deliver to the world through further opening up.

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Asia’s economic dynamism depends, in turn, upon success with its own programs of economic reform, programs that will be made more difficult in a hostile international policy environment. Confidence in the global trading system is important to Asia. It has underpinned the growth of Asian interdependence, economic prosperity as well as its political security.

In guarding these strategic global interests ASEAN has a critical role to play, through the ASEAN-led Regional Comprehensive Economic Partnership (RCEP). RCEP includes not only the ten ASEAN economies but also Japan, South Korea, China, India, Australia and New Zealand. It is a coalition of countries with considerable economic weight, able to deliver a powerful message to the world. But without movement in ASEAN, RCEP is likely to go nowhere.

RCEP trade ministers and officials are now meeting in Manila to meet their deadline to deliver East Asian trade reform this year or wimp it.

 

It might seem strange in this time of global crisis to turn to ASEAN, dogged as it is by perceptions of weakness and vulnerability and distracted by the political and security problems in the South China Sea. But ASEAN, with Indonesia at its core, is a regional enterprise with a distinctly global outlook and objectives, an experiment in open regionalism that has succeeded. ASEAN’s economic cooperation strategy has persisted despite its perceived weaknesses and slow pace. It is still the crucible for action on regional cooperation within Asia and across the Pacific.

RCEP was designed by ASEAN policy strategists to buttress regional trade reform and lift Asia’s growth potential in the global economy. It is now the only active, credible multilateral endeavour anywhere in the world positioned to deliver significant push-back on the retreat from globalisation, soon.

RCEP is not simply another free trade and investment arrangement. It is structured to be open to easy sign-on by other partners. Importantly it incorporates a cooperation agenda, an essential element in building capacity for economic reform and mutually reinforcing regional development over time. That agenda has an important political and security dimension. That will assist in ameliorating regional tensions and managing relations with the bigger powers, like China, Japan and India (on geo-economic issues such the Belt and Road Initiative for investment in connectivity and geo-strategic territorial issues), and those outside it, like the United States and Europe (in staking out Asia’s interest and claims to ownership in the global public good of an open economy).

RCEP offers ASEAN and the Asian region a critical line of defence against fragility in the global political economy. There is too much at stake strategically at this turning point in global economic history for Asia’s leaders to fail to step up and deploy it.

Dr. Peter Drysdale is Emeritus Professor in the Crawford School of Public Policy at The Australian National University and Head of the East Asian Bureau on Economic Research.

 

KayJay on ASEAN beyond 50


August 17, 2017

KayJay on ASEAN beyond 50

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As ASEAN celebrates its Golden Jubilee, it is opportune for us to take a step back and ask our people what they want of the regional bloc in the next 50 years before striving forward together as one community.

THERE has never been a better time to examine ASEAN as a regional bloc, how far we have come and where we are heading next. It has been exactly 50 years since ASEAN was formed and since then, this regional bloc has never been stronger and more prominent in the global stage.

Malaysia will always be a pro-active member of ASEAN and other multilateral organisations. Our success story as a nation has been predicated upon the stability provided by a multilateral framework. Malaysia as a country is one that reaches beyond its potential and one that has always set its sight on the distant future. For that reason, we must be integrated into a region that is greater than the sum of its parts.

The past is prologue while the future is ours to shape. While taking lessons from the past, we must continue the work of building the future.

Immediately after the 1969 riots, Malaysia embarked on the New Economic Policy, which was to be a new deal for Malaysia in eradicating poverty and rebalancing the economic distribution in the country. Thirty years later, that was followed by Vision 2020, which would leapfrog Malaysia to a country that is modern and developed.

As we are nearing 2020, it became imperative for us to ask ourselves “what’s next?”. The world in 2050 will be much different from the world today – what will guide us to face this future?

This is I have been tasked to reach as many youths as possible to get their aspirations of what they want to see the nation be in the future, to be recorded in a massive plan called the National Transformation 2050 (TN50).

TN50 is an initiative to plan for the future of Malaysia in the period between 2020 and 2050. From the vision of becoming a developed nation, we should strive to be among the top countries in economic development, citizen well-being and innovation.

For this, I’ve spent the first six months of 2017 traveling through all corners of Malaysia, reaching out to more than one million youths and what they aspire for. Most of them coalesce around wanting a future that is fair, sustainable, competitive, united and happy.

What that means is we want a future that goes beyond the old measurement of GDP growth as an indicator of success to one that looks at well-being more comprehensively. One that looks into wealth and income inequality, healthcare, access to quality education, environmental protection, a good standard of living, integrated public transport, sporting achievement, civic consciousness and greater investments into scientific research, among many others.

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With shared dreams come shared responsibility – and nothing binds a society better than having a common weight on their shoulders. Similarly, as ASEAN heads towards 2050, it is opportune for us to take a step back, ask our people what they want of ASEAN in 2050 and then strive forward together as one community.

The challenge of automation and robots, the need for a differently-skilled and adaptive workforce, the breakdown of societal fabric into smaller family units, the shifting powerhouses in global trade and many other challenges await us in the near horizon.

Though individual countries are looking at these in their own way, there are many areas we can embrace together, leveraging on individual strength to compensate for individual weaknesses, so ASEAN can future proof the region and truly become a global powerhouse in the next 33 years.

What would we like ASEAN to be in the next decade, or five decades? The current generation entrusted with the responsibility to shape the future of ASEAN would like to see an ASEAN that will be able to realise all of its potential. An association consisting of 10 sovereign high-income nations fully developed with prosperity for all. It is indeed a tall objective, but not an impossible one, for ASEAN is a work perpetually in progress passing from one generation to the next, a sacred trust to be upheld.

I am an optimist on the future of ASEAN and I am a firm believer in its role as the catalyst for peace and prosperity in this region. Our fate in ASEAN has been pre-determined by our geography. As the saying goes, we can choose our friends but we cannot choose our neighbours.

The success of one nation in the region will have a positive bearing on all, while the failure of any will have a calamitous effect on all. ASEAN’s future is in its togetherness. We can either leverage on our collective strengths to soar together towards greater heights or go separately to face a more dangerous and challenging world.

Economically, we must continue to build upon the ASEAN Economic Community. More integration is needed, not less. By all means draw lessons from Brexit but the right ones not the wrong ones. We must be serious to further bring down barriers to trade both tariff and non-tariff.

We must work to better integrate our economy and welcome investments, ease the process of doing business, and protect intellectual property while better leveraging our various competitive advantages. Healthy competition coupled with pragmatic cooperation must be the way forward.

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ASEAN leaders must focus on good governance, fight corruption, end crony capitalism and work for peace, stability and development with equity. Make ASEAN relevant to the lives of Southeast Asians. That means more action and less talk.–Din Merican

We must work to make ASEAN more relevant to the needs of members and the challenges that they are facing, be it political, security or economic. ASEAN will continue to thrive, despite its many challenges, if every member perseveres to make it a national priority; for the national interest of each member could only be advanced effectively through ASEAN collectively.

The first 50 years is coming to an end, so let us now turn the work at hand to the next 50 years dedicating it to the future generation. Let us continue to build on the dreams of the founding fathers of ASEAN who started a journey so improbable that they themselves in their wildest imaginations never could have thought how successful it would eventually be.

That 50 years later, we are marveling at their collective wisdom in every capital of a united ASEAN is the most fitting tribute of all to this greatest and most enduring of endeavours.–by Khairy Jamaluddin

Khairy Jamaluddin is the Youth and Sports Minister. The views expressed here are entirely the writer’s own.

ASEAN– New Challenges Ahead after 50 years


August 12, 2017

ASEAN– New Challenges Ahead after credible 50 years

by Dr. Munir Majid

http://www.thestar.com.my

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FIRST, let us give credit where it is due: 50 years of continued existence in half a century of challenge and change is a feat of achievement. ASEAN can consider that the cup is half full.

The problem with ASEAN is that not enough is known about it. And what is known is usually about where it has failed, like its failure to take a common stand or to propose creative cooperation in the South China Sea disputes.

Or its pusillanimity in removing non-tariff barriers (NTBs) which are seriously hindering ASEAN economic integration and establishment of a single market and production base.

The fact that so many things – the half-full cup – are happening on the ground, is lost. Taking just the ASEAN Economic Community (AEC), how many Malaysians, for instance, appreciate there are over 1,000 of our companies all over ASEAN, taking advantage of regional growth against the frustrations of investment laws and domestic bureaucracies?

How many are aware of huge Thai companies like Charoen Pokphand (one of the largest private conglomerates in the world, employing 500,000 people across the globe) with big plans to make Malaysia its halal food hub?

Just imagine, Buddhist Thailand working in Muslim Malaysia to propel a fast-growing industry forward – despite whatever halal certification problems it might face in Indonesia, for instance – for its food products. Charoen Pokphand will find a way, as it has all over the world, since its establishment in 1921.

The point is, what is heard are the complaints. Inevitably, as these are louder than what is quietly achieved, with whatever difficulty, by the likes of Sime Darby or Gamuda Land or auto-parts company Ingress Corp Bhd.

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AirAsia Bhd, however loud and incessant its complaints, is now the largest low-cost airline in Asia, truly well-established in ASEAN.

The other side of the story, of course, is – the glass is half empty. The loud, big, private sector push is for ASEAN to strive for optimality.

This is where the great divide begins. Old ASEAN hand Bilahari Kausikan of Singapore once famously said ASEAN is a cow which some people expect to be a horse. The suggestion is, it cannot.

However, why not? Even if it cannot, is the cow fully-milked? Perhaps there should be a convergence between those who say the glass is half full and those who say it is half empty.

With respect to the AEC, there is great effort by the official ASEAN side to engage the private sector to forge cooperation, if not quite convergence. The AEC 2025 Blueprint clearly recognises the role of the private sector in the economic integration process.

In 2015, ASEAN Economic Ministers acknowledged there has to be concentrated effort to get NTBs reduced, and agreed with the ASEAN Business Advisory Council (ASEAN-BAC) that the way forward is by concentrating on a few people-centric sectors – agri-food, healthcare, retail and e-commerce, and logistics.

In the middle of 2016, the ASEAN Trade Facilitation Joint Consultative Committee (ATF-JCC) was revived, with part of its remit being to form working groups with expert private sector entities to address NTBs in those four sectors with, additionally, the tourism sector.

In January this year, the ATF-JCC met in Bangkok and ASEAN-BAC was called to discuss the way forward. Some progress in terms of customs procedures was made just recently on how intra-ASEAN trade could be facilitated. But work on the specific, prioritised sectors has yet to begin.

This is part of the reason why, while there is cooperation between the official and private sectors, there is not quite convergence. Rate of progress: the process is not just slow. It is long, grinding and exhausting.

Beyond the AEC, more generally, there is great need to raise the profile of ASEAN among the people at large, especially the young, whose knowledge of what it does is lacking. It is like a close-kept secret. The top-down approach among those of a certain age has to change.

ASEAN’s young population have to be brought into the whole process, to energise it and to form the future that will be theirs. If ASEAN wants to bring them along into that future, it is absolutely essential to form an ASEAN Youth Consultative body to hear from the young what they want of and for ASEAN.

If ASEAN does not do this, it will be wasting one of its most valuable assets – its demographic vitality. They can take on the digital world.

After we recognise credit should be given to ASEAN for what it has achieved, it is a totally pro-ASEAN thing to do to highlight the formidable challenges it faces going forward. The biggest is happening now: digitisation.

ASEAN has not quite addressed what is now popularly dubbed Economy 4.0. ASEAN talks about the opportunities of e-commerce and, correctly, intones that the trading platforms, payments settlement and connectivity have to be in place to drive it. But even as this being talked about – and inadequate progress is made – the sweep of the digital economy might have uncomfortable consequences for ASEAN if it does not prepare itself.

The fourth industrial revolution is more comprehensive than just e-commerce. There are vast opportunities for new industries and services, as well as for greater productivity. But there are also grave challenges to employment and skills development.

ASEAN needs to fashion clear policies on education and training – with emphasis on cognitive skills – and retraining, and on employment displacement. Yet the ASEAN mantra to attract investment remains low-cost of production. But will the manufacturing industries come to low-labour cost Indonesia or Myanmar in the new digital economy?

Unemployment and unemployability could seriously affect these countries, particularly their micro, small and medium enterprises sector. Serious socio-economic problems could scupper ASEAN economic integration, indeed threaten regional cohesion.

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The time to act is now. ASEAN really has not that much time to celebrate its creditable 50 years.

Malay Backwardness goes beyond Public Administration


August 7, 2017

Malay Backwardness goes beyond Public Administration

by Dr. M. Bakri Musa, Morgan-Hill, California

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If Malay immaturity and underdevelopment (backwardness) are so blatant in areas where we dominate (politics and public administration), imagine the situation elsewhere. Again, we do not need expensive consultants’ reports or the academics’ graph-laden presentations to expose that sorry reality.

Consider our marginal role in the economy. Stroll down any street in any town, and that fact would be jarring and obvious. Even if we were to mandate that those business signs be “Malaynized” or in Malay, that would not alter the sorry reality. It would only make the situation worse by camouflaging the problem, as is happening in Thailand and Indonesia. Guess who owns Malaysia’s most successful conglomerate Berjaya (Malay word meaning success)?

If those Malay leaders and civil servants were to have a leak in their home faucets or their cars break down, the plumber or auto mechanic who respond would more likely be a non-Malay, or even non-Malaysian, just as it was half a century ago. At another level, every year thousands of houses expropriated from non-Malay developers and then offered to Malays at substantial discounts remain unsold.

Then consider our young. The overwhelming majority of unemployed graduates are Malays. They are not so much unemployed as unemployable, reflecting the quality of local public institutions, again under Malay leadership, by statutes. We Malays are also overrepresented in the dysfunctional categories, from drug abuse and HIV infections to abandoned babies and broken families.

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The Malay Financial Genius

Those glaring and embarrassing realities would preclude any self-respecting Malay leader from jetting around in luxurious private jets at public expense, or have their children own plush penthouse suites in London and palatial mansions in Beverly Hills. These Malay leaders should be embarrassed. Instead they, from Najib on down, flaunt their flamboyant lifestyles. They lack maruah; they know no shame.

Malays are proud of such “glorious” government-linked companies (GLCs) as Khazanah (a holding company), Petronas (the giant oil company), and Sime Darby (a conglomerate). Those companies are Malays only in terms of their senior leadership and employees, not ownership. Being GLCs, they could easily change their character with a change in the government, as with the state GLCs in Penang. This Malay pride is misplaced for another reason. These GLCs have failed in their mission to spearhead Malay entry into the business world, its reason for being. Instead these GLCs have been debased into a cesspool of continuing corruption. 1MDB is only the latest, as well as most expensive and egregious.

These GLCs suck up scarce public funds. Few are profitable. Again, like the money pocketed by corrupt officials, the lost opportunity for those precious funds is enormous. Think of the good had those billions diverted to UMNO kleptocrats were instead used to better libraries and laboratories in rural schools!

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The picture is equally ugly with education. Again, we do not need highfalutin reports to tell us that we are far behind. When Ungku Aziz led the University of Malaya many decades ago, it would consistently rank high; today, well, it is still ahead of the University of Timbuktu, but only slightly.

The sorry decline of our universities is but one example. Another is more simple and direct. In the 1980s I could still find some Malay students at Stanford and other elite American campuses. Today there are as rare as dew in a mid-Malaysian morning. Further back, when I was at Malay College in the early 1960s, it was still preparing students for entry into universities. Today those students have to go elsewhere for their matriculation.

Malay College started its first IB matriculating class in 2011, a full decade in the planning and nearly three decades after the college discontinued its Sixth Form. The college has an impressive governing board, with Raja Nazrin as its chairman. Despite having such luminaries, the pace of change was glacial. Imagine at lesser institutions! While IB everywhere is the top choice for students, not so at Malay College. Its students prefer going elsewhere.

Yet when we peruse the statistics in such publications as the Malaysian Quality of Life 2004 Report, we are assured that we have made great progress. Worse, we believe such reports! Consider the one sector where Malays pride ourselves in having a heavy presence–public transportation. During my youth, nearly all public bus companies were controlled by non-Malays, except for the occasional ones like the one plying in the northeastern states and the old Sri Jaya Company (now defunct) in Kuala Lumpur.

Then there was the Malay Transport Company serving my village at Sri Menanti, Negri Sembilan. Granted, its service was erratic but at least there was a service. Today that company is long gone and the village is now without any bus service, erratic or otherwise.

In the 1980s matters seemingly improved, with many more “Malay” bus companies. That however, was achieved not through the initiatives of Malay entrepreneurs but through fiat. The government forced existing non-Malay companies to “re-structure” and include Malay partners.

The few savvy Chinese businessmen who saw that as an opportunity to cash out their investments by jacking up the values of their companies came out like bandits, quite apart from earning the enduring gratitude of Malay elite. That in turn smoothed the way for these Chinese businessmen to do even more lucrative businesses with their new masters.

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End of a Legacy–A Victim of Bumiputrarisation

 

The few arrogant holdouts came to regret their decisions. The owners of the Foh Hup Bus Company that plied the busy and highly lucrative Seremban-Kuala Lumpur route did not wish to share their pot of honey. They also smugly believed that Malays were not suitable business partners. With the completion of the new highway between the two cities and the license for that route awarded to a Malay enterprise (by then Prime Minister Dr.Mahathir Mohamad), Foh Hup’s market collapsed. The company got to keep its jar of honey alright, but the bees were taken away.

Despite that jump start, today Malays are back to square one. Bus companies throughout the peninsula may be in Malay hands, but the system is broken down, mechanically and financially.

A Malay Bullshit Artiste–Mirroring the Malay Mindset

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Malay underdevelopment is not just relative (as compared to other groups and nations) but also absolute. Meaning, as compared to a generation ago, we are today making even slower progress if not actually regressing. The examples cited here may not mean much in the greater scheme of things but they are emblematic of our overall inadequacies and underdevelopment. Our backwardness is worse when compared to the First World, and widening. That is hidden as our leaders continually compare us to the likes of Zimbabwe and Papua New Guinea. It is also hidden because of the vibrant contributions from non-Malays. Malays are deluded into thinking that those achievements were ours too.

I am not revealing anything new much less profound here. The only difference is that I offer a different approach in analyzing and solving these problems.

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Our leaders are heavy into sloganeering, with such strident calls as revolusi mental, glokal Melayu, and Ketuanan Melayu, that is, when they are not busy blaming our culture and our innate nature, as well as our lack of unity and our ‘straying” from our faith. My approach would first require us to have an open mind so we could view our problems from different perspectives and not be trapped by our current preconceptions. The solutions would then be much easier to find.

South-East Asia’s future looks prosperous but illiberal


July 24, 2017

More money, less freedom

South-East Asia’s future looks prosperous but illiberal

Democracy is losing ground even as the region grows richer

Print edition | Asia

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ASEAN–Peace, Stability and Economic Development First

THE young woman with the microphone cajoles, hectors and wheedles customers with the breathless enthusiasm of a livestock auctioneer at a county fair. She is standing behind a table stacked high with blue jeans; most of the milling crowd is dressed in lungyis, Myanmar’s skirt-like national dress. The fancy mall around them is anchored by a huge department store, dotted with banks and mobile-phone stalls and topped by a cinema and video arcade.

Myanmar has been growing so fast—by an average of 7.5% a year for the past five years—that the boom is reverberating in Mae Sot, just across the border in Thailand. Two years ago, says a longtime resident, the site of the mall was a swamp, and Mae Sot was a poky little border town with two small grocery stores. Today huge supermarkets, car dealers, electronics outlets and farm-equipment showrooms line the wide new road from the border into town, patronised by a steady stream of Burmese shoppers. Skeletons of future apartment blocks loom; the Thai government is building a new international airport. The Asian Development Bank (ADB) forecasts that Myanmar’s growth will hit 8% next year.

The region is full of such stories. Cambodia, Laos, the Philippines and Vietnam have been growing only slightly more slowly. Overall, the ten countries of the Association of South-East Asian Nations (ASEAN) grew at an annual rate of 5% over the past five years: not quite as fast as China or India, but much faster than Europe, Japan or America. The region’s 625m-odd people are growing richer and better educated; they will live longer, healthier and more prosperous lives than their parents. Of course, plenty of poverty remains—most people in Myanmar are still subsistence farmers—but the region’s economic trends are promising.

Back from the red

It was not always obvious that the South-East Asian economies would do so well. Only a generation ago Myanmar was cut off from the world by despotic generals; Cambodia’s 25-year-old civil war was still sputtering; and Vietnam was only just beginning to experiment with some timid market reforms. The wealthier countries in the region, meanwhile, had seen their economies, and the underlying models of growth, shattered by the Asian financial crisis of 1997.

The crisis proved salutary. Indonesia, the Philippines and Thailand all adopted sounder macroeconomic policies and made some effort to curb the cronyism that had accompanied earlier growth. Nominally communist Laos and Vietnam and autarkic Myanmar all embraced free markets, up to a point. The days of nationalisation and central planning seem to be over. In much of the region inefficient and coddled state-owned businesses endure, and rent-seeking, corruption and protectionism are all more common than they should be. But across South-East Asia, liberal economics has won the argument.

Politically, however, the region is moving in the opposite direction. The Asian crisis may have brought huge economic hardship, but it did at least unseat Suharto, Indonesia’s strongman of 32 years, and instigate political reforms elsewhere. In the years that followed, imperfect democracies in Malaysia, the Philippines and Thailand appeared to be gaining strength. And Myanmar, after years of isolation and repression, embarked on an unexpected transition to democracy.

But hoped-for openings never came in Laos and Vietnam, where the Communist Party has always been nakedly repressive. Singapore remains an illiberal, albeit effective, technocracy. The leaders of Malaysia and Cambodia, Najib Razak and Hun Sen, have proved depressingly adept at locking up critics and persecuting opponents. Cambodia’s most prominent opposition politician, Sam Rainsy, lives in exile to avoid imprisonment for a spurious conviction for defamation. Opposition figures in Malaysia find themselves in court on charges as varied as corruption and sodomy.

The junta that seized power in Thailand three years ago promises an election next year. Even in the unlikely event that it is free and fair, the constitution—which the army wrote and the new king signed in May—creates a junta-led Senate, imposes the generals’ 20-year plan on the country and provides ample grounds to remove any elected leader whom the army finds lacking. All this is designed to prevent voters from electing the “wrong” leaders, in the army’s view, as they have done at every opportunity over the past 15 years.

Image result for ASEAN Forging ahead --Economic Intelligence Unit

Democratic institutions are not yet quite that weak in the region’s two biggest countries, Indonesia and the Philippines, but in both liberals have more cause for fear than hope. Filipino voters, justifiably frustrated by the way that a few prominent families dominate politics, and by how recent economic growth has failed to reduce the high poverty rate, elected Rodrigo Duterte as president last year. Alone among the five candidates, he seemed to care about ordinary people; his brutal anti-drug campaign has appalled foreigners but is popular at home.

Mr Duterte reminisces fondly about the dictatorship of Ferdinand Marcos and seems to crave dictatorial power himself. He has declared martial law on the southern island of Mindanao (see Banyan), and often muses about doing the same nationally. He veers between indifference and hostility to troublesome principles such as due process, the separation of powers and the rule of law—all of which need shoring up, not weakening.

An election for Governor of Jakarta in April, meanwhile, has harmed Indonesia’s reputation for religious tolerance (see next story). Islamist agitators campaigned against the Christian incumbent, Basuki Tjahaja Purnama, falsely claiming that he had insulted the Koran. Anies Baswedan, one of his rivals, embraced their shameless attempt to stir up sectarian tension, and won. Prabowo Subianto, a tub-thumping nationalist who lost the presidential election in 2014, backed Mr Baswedan. The fear is that Mr Prabowo, inspired by Mr Baswedan’s success, will try to foster similar divisions at the national level.

But it is Myanmar that most encapsulates the region’s democratic reversal. When the army ceded power last year to Aung San Suu Kyi, its Nobel-prize-winning opponent of 30 years, expectations were astronomically high, even though the constitution the generals had written severely limited her powers. That has made her government’s craven and repressive acts all the more bewildering. It has charged more reporters with defamation than did her military-backed predecessor. She has been shamefully silent about the continuing persecution of the Rohingya, a Muslim minority, not even admitting, let alone trying to stop, the army’s well-documented campaign of rape, murder and destruction against Rohingya villages. It does not help that since Donald Trump became president, America, long the loudest champion of liberal values in the region, has more or less let the subject drop.

This article appeared in the Asia section of the print edition under the headline “More money, less freedom”–The Economist