It does not mean that when things become interesting, as in Asia today, we should flee. Ill winds abound in international trade and business, but few ill winds fail to bring good tidings in their wake. The economic chaos in Asia brought long needed economic reforms. It has opened economies, created investment opportunities and altered the economics of sourcing, sales and competition throughout the world. In India, the same day nuclear tests were conducted, a second group of blasts were announced which many may have missed -- the Indian government approved some fifty foreign investment projects which had been mired in India's bureaucratic maze for years. In short-, medium- and long-terms, these blasts will prove more beneficial to India's people than its nuclear blasts. During interesting times, there are interesting opportunities.

Looking at the ruin of the world's fastest growing economic region in the last 30 years, East and Southeast Asia (ESA), one cannot help feeling dismay. The experience of Mexico's turnaround proved a disaster for Asia. It caused the overly optimistic forecasts that Asian economies return to their former growth rates within six months. Now in a stupor of economic and emotional depression, experts predict a recovery which will not arrive until well into the 21st century. Experts now point to the continuing debacle in Japan. Comparing ESA to Japan will prove more disastrous than comparing it to Mexico.

The comparison to Mexico was disastrous because it failed to consider the different structural causes of the two regions' malaise. There was excessive consumer debt in Mexico, low savings rates and a severe cash flow crunch for the Mexican government, though not for its major companies. Asian countries have traditionally maintained the highest savings rates in the world, however the cash flow crunch of huge government debt was compounded by the obscurantist accounting practices in most Asian nations and monstrous, unreported debt loads carried by many Asian companies. The financial systems of many ESA nations are basket cases. The situation does bear a resemblance to Japan's. What does not resemble Japan's situation is the response of the region's governments.

Since taking office, the Thai and S. Korean governments, which must still undertake a great many reforms, have instituted wider and deeper economic and structural reforms than Japan's has since its economy started collapsing in 1989. The Thais and Koreans have liberalized investment and ownership rules and made their accounting rules more transparent. Thai authorities recently arrested the former Governor of their National Bank and granted new banking licenses to outside investors for the first time in forty years. Korean authorities will soon mandate which Korean banks will be taken over; the managements of banks requiring government assistance due to poor management practices will be forced to resign. Both countries are working hard to attract foreign investors.

Though the Malaysian government would seem to be hiding its head in the sand by refusing to admit to economic difficulties, after some initial hesitation, began doing many of the right things to counteract them. It has cut sub-optimal government projects, such as building a new national capital, to make funds more available to the private sector. It has also started pumping liquidity into its financial system to ensure survival of domestic institutions.

Vietnam, which has escaped the worst of the crisis, has devalued its currency and has continued to simplify and streamline investment procedures. The Philippines had not gone too far down the road of Japanese style capitalism to avert disaster if quick actions were taken -- President Ramos reacted quickly.

Singapore, Hong Kong, the People's Republic of China and Taiwan, though feeling fallout from the difficulties of their neighbors, remain relative bulwarks of stability and economic probity. They are fighting hard to maintain their currencies' values in the face of a plummeting Japanese Yen to take pressure off the currencies of the weaker Asian economies.

Myanmar, Laos and Cambodia still do not truly count. Brunei is too small to and the Anglo-Asian countries of Australia and New Zealand are holding their own so far. That leaves us with Indonesia and South Asia, primarily India and Pakistan. Developments in the latter two countries have, for the moment, wiped Sri Lanka and Bangladesh off the map for all practical purposes.

Indonesia still has many obstacles to hurdle, but its two greatest have been cleared: President Soeharto has stepped down, and his hand-picked successor, President B. J. Habibe, has agreed to early elections, the need for political and economic reform, and an end to the Soeharto's monopolies. The military, under General Wiranto, has managed this transfer of power with only about 1200 deaths. The General is supporting reforms, so long as they proceed in an orderly and peaceful fashion. He also countered an apparent threat to the new government from President Soeharto's son-in-law, General Prabowo Subianto by removing him from his command. More importantly, when Prabowo showed up at the President's office with troops loyal to him, the President's undermanned military guards, rather than surrendering him to Prabowo, immediately moved him to an adjoining palace where they could defend him if necessary. The military's support for the Indonesian Constitution and peaceful change goes far beyond the support of one solitary general and a select guard. Though General Wiranto is Prabowo's superior, in Indonesia's military structure Prabowo commanded the majority of troops and could have overwhelmed any resistance had his troops supported him. Thirty-two years ago when General Soeharto held Prabowo's position, his troops supported him rather than the constitution -- 500,000 Indonesians died in his move to the presidency. Things really are looking up in Indonesia.

Every time India starts to build economic momentum, it stubs it toe. This time however, even its government does not seem able to dim its economic future. Economic reform and India's inherent strengths have pushed India's economic growth over 5%. Foreign Direct Investment, economic reforms and liberalization have pushed India's old, socialistic industries to higher productivity, higher quality, and international competitiveness. India has the greatest number of engineers in the world after the US; it is the third country in the world to build and export a super computer; and it has world class universities and research labs. More importantly, many Indians who threw themselves into euphoric saber rattling after the nuclear tests have realized their only gain: greater insecurity for themselves and their children. They are beginning to face up to the effect of their government's actions and press for more responsible governance. In Pakistan, with its more fragile economy, the government has already started lobbying for world pressure to force India to sign the Nuclear Test Ban Treaty, and thus reduce the financial burdens of their nuclear competition with India. Indian political figures who initially endorsed the government's actions are beginning to backtrack. Neither country has a rogue government: Peace will come; economic growth will continue; both governments will face up to their new responsibilities.

Wherever we look in Asia we see the devastation of ill winds -- we should also see the good tidings in their wake. It is time to push forward in Asia, to learn the region, its economic players, and its environments. The authors in this special issue will introduce you to India's commercial castes and communities; the Overseas Chinese who dominate business in Southeast Asia; business services strategies in Australia; the relationships Japan's automakers maintain with their suppliers; and channel management in China's burgeoning economy. They will introduce you to different ways of doing business and to different economic players; to risks, challenges and opportunities. Business marketers should manage the risk, accept the challenges, and seize the opportunities which Asia lays before them today.

George T. Haley
May, 1998