ROUTLEDGE LIBRARY EDITIONS: MODERN EAST AND SOUTH EAST ASIA Volume 1 BEHIND THE MYTH BEHIND THE MYTH Business, Money and Power in Southeast Asia JAMES CLAD First published in Great Britain in 1989 by the Trade Division of Unwin Hyman, Limited This edition first published in 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 1989 James Clad All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-138-89258-3 (Set) eISBN: 978-1-315-69792-5 (Set) ISBN: 978-1-138-90120-9 (Volume 1) Publisher’s Note The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent. Disclaimer The publisher has made every effort to trace copyright holders and would welcome correspondence from those they have been unable to trace. -~- ---.--~ BEllINI) IE MYIII ''''''''11 -----.---.------­ BUSINESS,MONEY AND POWER IN SOUTHFAST ASIA ~ JAMES CLAD UNWIN HYMAN LONDON SYDNEY WELLINGTON First published in Great Britain by the Trade Division of Unwin Hyman Limited, 1989 © James Clad, 1989 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Unwin Hyman Limited. UNWIN HYMAN LIMITED 15-17 Broadwick Street London WIV IFP Allen & Unwin Australia Pry Ltd 8 Napier Street, North Sydney, NSW 2060, Australia Allen & Unwin New Zealand Pry Ltd with the Port Nicholson Press Compusales Building, 75 Ghuznee Street, Wellington, New Zealand British Liltrary Cataloguing in Publication Data Clad, James Behind the myth : Business, money and power in Southeast Asia. I. South-east Asia, economic development I. T itle 330.959 ISBN 0-04-302011-9 Typeset in ten on eleven point Plantin Printed in Great Britain by The University Press, Cambridge CONTENTS Foreword page xi Preface xiii 1 The End of an Era 1 A reluctant farewell - The Asean way - When bad news is good news - Watch what we say, not what we do - No shortage of shooting ­ Commodity windfalls - Chinese financiers and footloose factories - Second time around: Japan's regained ascendancy - Industrial images, industrial mirages - Sub-contracting or substitution? - Cutting down a resource - Commodity con games - Projectitis - Overlooking maintenance - A primitive business culture - The Chinese connection - The shadow of debt - The blunt side ofthe East Asian edge - An i ndigenous technological culture? - Home movies - The end of an era - References 2 Full Circle in the Philippines 27 Portent of things to come? - Behave or go home - Drawing comparisons - No portent from the Philippines - The Cojuangco factor - Specific charges - The arrastre business - Gambling dens, barter trade and other diversions - Plus fa change . . . - Plus c ' est fa mime c hose - What's in a name? - Early gains - Duty-free duppies - Broadcasting blues - Full circle in the Philippines? - References 3 Malaise in Brunei and Malaysia 43 I: Toll gates: a cautionary tale - Political troubles - The racial conundrum­ Banking problems - Commodity markets crumble - Scandal of scandals ­ NEP-otism at the share market - Sultans galore - Move over Mat Salleh? - Danmed dams - Other bright ideas - 'Looking East' II: The world's richest man - Bribes, backhanders and favours - Bank scandals - The Shell-fare state - CONTRA-dictory generosity III: Malay economics: getting it right - Malay business culture: getting it wrong - Longer-term problems - The religious conundrum - The educa­ tional time bomb - Ruminating about the Malay malaise - References 4 ADRI-culture: Dual Functioneering in I ndonesia 74 Number games - New Order, old habits - The archipelagic reach ­ The curse of oil- Khaki commerce - Technocratic influence - Cukong friends - The First Family - Hidden costs of business favouritism ­ Runs on rupiahs - The oil future - Revenue loss - Harbouring thieves ­ Musical pirates - Bogus notes of another kind - The bright side - Urgent needs, slow corrections - Intimations of change - But no easy way out ­ References m IV BEIDND THE MYfH 5 Boomtime in Bangkok 96 Southeast Asia's brightest star - Foreign fund managers flock to Bangkok - Mass capitalism? - Looks good on paper - Earlier growth models - Foreign investment invasion - Resourceful Thailand - The newest NIC? - Rocketing corporate profits - The mid-1980s: a trial run of trouble - Financial frights - Siam City's travail - Problems for Krung Thai - Boardroom bedlam - Risky whisky - Superbike Racer and Santa Claus - Another early warning signal: foreign debt - A narrowly-based success story - Once again, the Chinese - Addictive habits - Looming uncertainties - First uncertainty: the monarchy - Second uncertainty: the military - Third uncertainty: regional conflicts - Fourth uncertainty: Will the domestic 'demand base' be rich enough? - The parasitic city - The fast-baht crowd - Fifth uncertainty: disappearing forests - Sixth uncertainty: the wrong skills - Let's all be lawyers (or Civil Servants)­ Seventh uncertainty: infrastructure - Eighth uncertainty: laggard farmers - Vulnerable miracle? - Free riders after all - Korean comparisons ­ References 6 Singapore: the Exception that Rules the Proof 125 Success story - Crossroads or revolving door? - A glance at the recent past - 1985 - Entrepreneurs' lament - Reversing gear - The financial centre of Asean - The Pan-El shock - Home truths or awkward facts? - Meddling foreign journalists - An unhappy episode - Trading in a protectionist world - Political uncertainties - Internal politics - Hong Kong's future - Whither the yen? - Whither the state? - Politics and confidence - References 7 Chinatown 146 The Chinese puzzle - High turnover, quick return - Straight talk at the banquet - Awkward opinions - A recent exodus - A less than enthusiastic welcome - Thailand: easiest for Chinese - Muddling through in Malaysia - Indonesian Chinese: the region's wealthiest - Different kinds ofChinese - Ali on the lookout for Baba - Trying to explain the Sino magic ­ Community values - Chinese gain from new policies - Chinese corporatism - The cukong's cukong) - A royal tiff - Foreign bankers beware - Other alarums and excursions - Chinese credit lines - The Chinese juggernaut in perspective - Renewed nervousness - Chinatown's corporate future­ References 8 WeUsprings of Wealth: Southeast Asia's Commercial Crucibles 165 Asean share markets: much 'aduh' about rather little? - 1987 and all t hat­ Second thoughts about the bourses - Immature markets - Yes, we have no fundamentals - Baubles, bangles and ... Bangkok - Abortive paper mar­ kets - Mice that roar? - But qualified praise is due - Banking: whirlwind growth - Big banks ... and bigger banks - Where's the money going? ­ A vogue for private banking - Hong Kong jitters - Looking ahead - Some­ thing new: Asean's multinational corporations - The richest of them all?­ Astra Group's growth - Another crucible: industrial whistle stops - Spilling over? - No 'open skies' - Shipping: no open waters - Rust bucket labour mark~t - Investment incentives: another distortion - Corporate manage­ ment: form and substance - In the family way - Book-keeping illiteracy­