Thursday, November 6, 2003
Money rules the roost in Asia
JANE MACARTNEY
SINGAPORE : A chinese billionaire's dream of carving out a capitalist corner in North Korea ends in ruins. In South Korea , a newly elected president struggles to rein in powerful conglomerates.
Thailand 's richest businessman becomes prime minister. The nexus between money and politics, seen everywhere from the United States to Italy and dramatically underlined in Russia by the arrest of oil tycoon Mikhail Khodorkovsky, is alive and kicking in Asia too.
And despite efforts since the 1997 financial crisis to promote transparency and improve corporate governance, chances are that with a slew of elections across the region in '04, doing business in Asia will become more intricate.
Three of the elections will be in the Philippines, Malaysia and Indonesia - all swept into disarray in the 1997 maelstrom that exposed the close ties between politics and business and the narrow line between cronyism and corruption.
Nearly 22% of listed firms in Indonesia have political links, followed by 20% in Malaysia and 15% in Thailand , according to a study by Mara Faccio, an assistant professor at Vanderbilt University in Nashville , Tennessee . The study defined a firm as politically connected if a large shareholder or top director is a member of parliament, minister or head of state or is closely related to a top official.
While links linger, trends differ. Steve Wilford of consultants Control Risks in Singapore said Malaysia had witnessed a reassertion of the supremacy of politics over business and a weakening of links between the two.
In Thailand , the reverse was true: Prime Minister Thaksin Shinawatra, a former telecoms magnate, had packed his cabinet with business buddies instead of politicians. "The nexus in Thailand is in the camp of business and it is becoming more corporatist, but the jury is out on whether that is good or bad," said Mr Wilford.
Under the rule of Mahathir Mohamad, who stepped down on Friday, Malaysia for a long time backed an ethnic Malay business elite by privatising several state companies. But after the experiment ran into trouble, Mahathir acted to keep business at a distance from politics by appointing professional managers. Still, many question whether new favourites are emerging. Well-connected businessmen Syed Mokhtar won a sheaf of contracts in the final days of Mahathir's term in office.
But most regard Malaysia as a model of separating business from politics when compared with the Philippines . "There you have business families and politics inextricably linked," said Mr Wilford. "If you have no money or corporate power you are a political nobody. The links are obvious, profound and deeply damaging." Far more subtle are the links in countries whose systems bear a closer resemblance to Russia - places such as China with a system caught between communism and capitalism. The list of Chinese business magnates who have fallen foul of the authorities lengthens daily. On Tuesday, the head of a Shanghai-listed brewery, 45-year-old ethnic Uighur Aikelami Aishayoufu, went missing with liabilities of $100m. Flower baron Yang Bin, ranked China 's second-richest man by Forbes magazine in '01, is now serving 18 years for commercial crimes. Shanghai property magnate Zhou Zhengyi was arrested in September in an investigation over questionable bank loans.
Few doubt that many more tycoons could be arrested in China for misdemeanours, but those toppled have been usually seen as scapegoats in struggles for power among the top leadership or between Beijing and booming and increasingly autonomous regions.
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