>> MIM Speaks
CHANGES NEEDED TO OVERCOME WOES
MAY 10, 1998 -
THE STAR
THE current economic crisis has attracted world attention.
Much of the crisis is due to a mix of reasons from misaligned
exchange rates to government over-regulation, banking crisis,
loss of competitiveness, speculative attacks and unproductive
investments, among others.
Many international bodies have given a helping hand to deal
with the crisis. They include the World Bank, International
Monetary Fund and Asian Development Bank.
For its part, the Konrad Adenauer Foundation initiated a
regional seminar entitled "Structural Change: A Necessity for
Asean Countries" in Manila last March.
The conference was certainly an appropriate one, with
participants hailing from all the Asean countries. Paper
presenters were from the region, including Hong Kong and South
Korea.
It was realised that there was indeed a need to relook at our
strategies and rethink our policies in the economic, political
and social spheres.
Professor Tan Chwee Huat of the National University of
Singapore spoke about government business relations using
Singapore as a model.
He spoke about the catalytic role that Statutory Boards, for
example, the Jurung Town Board, played in spearheading new
activities and identifying main thrusts for the government's
development policy. Some of the Statutory Boards embarked on.
automation, R&D related to science and technology and
information technology.
As a further step to the development efforts, companies like
Temasek and Keppel Group, with government equity shares, were
introduced, dealing with activities from petrochemicals,
shipbuilding to financial services.
Professor Tan emphasised that the managers heading these
groups were chosen on merit and had very little or no
political linkages. He went on talk about Singapore's
expedience in overseas ventures like the Suzhou Industrial
Park in China, IT Park in India and others.
The paper's emphasis was that the right type of projects
should be chosen. The calibre and ability of senior management
was important. As to whether the Singapore experience could
be emulated elsewhere, the participants felt that while much
could be learned from Singapore, the size of the country, its
hinterland, and its population size and mix would make it
difficult for others to "copy."
We know things have not been that easy for Singapore at the
Suzhon Industrial Park. However, its work ethics, management,
leadership, creativity, and, to some extent, transparency are
well worth emulating.
Another interesting topic was Chinese businesses and
"connections" in this part of the world. The presenter, Go Bon
Juan, made it very clear that Chinese businesses in South-East
Asia were suffering as much as any other businesses during
this economic slowdown.
Go felt that, generally, Chinese businesses are more effective
at lower levels of the economy, while the larger ones are
inter-linked with other stronger and "connected" partners.
He pointed out that Chinese businesses have been "convenient
milking cows" to interested parties in some parts of Asean and
were good scapegoats for a country's economic problems. It is
true that they have been speculative, involved in cronyism and
prone to "capitalflight" at the first sign of trouble.
The present troubles have made the Chinese taipans poorer by
billions of dollars. The collective net worth of Asian tycoons
fell from US$225bil to US$164bil in seven months.
Much of the loss, says Go, is not due to the Chinese style of
management but to the crisis itself. One of their strong
points is that "Chinese businessmen do have connections with
the government and know how to maximise or utilise those
connections for their businesses." Of course, among them were
some cronies too.
The lesson learned from the above would be that Chinese
businessmen have proven to be good business partners. They are
individualistic and therefore their connections are more on a
personal basis.
There is no need to look for scapegoats as such but to look
into our mutual strengths. It would be good to build on their
strength in business and connections with partnerships and
strategic alliances.
When speaking of corruption, some of the speakers felt that
democracy was not a solution to corruption. In fact, it gives
rise to what is called political corruption. What democracy
did was to free people from tyranny.
However, in a democratic society, the avenue to demand
transparency, to remove corrupt officials, and to insist on
fair play, is certainly more possible than in a less
democratic society.
While South-East Asian countries could do with more democracy,
according to one speaker d should not go for rampaging
individualism - individualism at the cost of the larger
society.
The same speaker pointed out that Asian values, to some
extent, justified authoritarianism. What of corruption,
cronyism and nepotism?
Another point raised was the distribution of wealth, which
seems to go into fewer and fewer hands; in Many cased the gap
between the very rich and the very poor is widening.
What is important for Asean countries is the fact that the
right people (the majority of the populace) benefit hum
developmental programmes.
Talking of development programmes, some members felt that some
governments had embarked on prestigious projects that really
did not give rise to productivity or technology transfer.
In some cases, the budding of those structures had led to the
indiscriminate destruction of the environment, which is now
beginning to show through blankets of haze, extreme heat,
shortage of basic necessities Ore water and "Third World"
diseases.
A paper presented on South Korea's chaebols (large Korean
businesses) and conglomerates was indeed very interesting. The
author, Dr Dave Kong, emphasised how important the clan was to
Korean society.
According to Dr. Kong, when one is talking about Hyundai, one
is really talking about the Chung Juyong family, and when it
is Samsung, one is talking about the Lee Byung-chul family.
Of the top 50 chaebols in 1984, only two were run by
non-family members. Twenty-seven were run by the founder
himself, 19 by the founder's son, two by the founder's brother
and two by professional managers.
"The essentially familial nature of Korean society extends to
politics as well. Park Chung-hee is related by marriage to Kim
Jongpil and the Poongsan group, while Kim Jong-pil is married
into the Kolon group," says Dr Kong.
Next to family connection is elite education, with 67% of
businessman and 73% of the top civil servants hailing from
Seoul National University, Korya or Yonsei University.
As for corruption, says Dr Dave "the exchange of money for
political influence was not just an open secret; it was common
knowledge. Indeed, woven into the story of Korean economic
success is an underside of systematic influence peddling and
corruption."
The close connections those chaebols had with president Park
gave them opportunities to embark on huge commercial projects.
Although there was corruption, President Park, due to his
standing, was able to control them, and there was also a
balance of power between the businesses and the government.
However, with the turning to democracy in 1987, the chaebols
became very strong and things began to get out of hand. Under
authoritarianism, corruption was controlled, but with the
transition to democracy, there was increased demand for
pay-offs.
The lesson learned is that when a particular group is too
powerful, they will tend to sway things their way. With
democracy, parties must be strong but willing to accept
criticism whether from the business or the public at large.
In fact, steps should be taken to encourage effective
opposition. The conference itself-was useful as participants
could hear from experts and share their thoughts.
There was considerable agreement that there was a need for
structural changes in Asean countries, namely, greater
transparency in the running of the county, the awarding of
tenders and the appointment of people With cohere to deliver
the goods. In short less government and more market forces.
All the above forces the question, that next? The answer calls
for tactical action that win ensure economic growth and the
provision of education and skills to match the economic growth
- to work towards prosperity that is to be shared by a larger
part of population, to love and value nature (air and water
his free' we were taught in school; well not really there is
always a price to pay), to uphold values that are useful and
to build on our strengths.
To accept criticism and not to be so touchy as to lump o1 of
them as useless, and lastly to be honest enough to admit our
mistakes and start putting the house in order.
How should this be? Not by revolution but by evolution - an
evolution with sonic revolutionary elements that keep pace
with time, need and balanced development.
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