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At times over the past 3 years it looked very much like the old Asia would triumph in a region not torn apart, but certainly given pause, by the ravages of stock market and currency devaluations, and consequent political instability. Let's be clear, because incumbent politicians cannot be by default, given that they occupy the positions they do due to playing the game by the rules laid out by their existing local politico-industrial-commercial élite. They owe their positions to this power élite - as do politicians the world over - but in Asia with power even more focused in the hands of the few rather than the Rakyat, and where power is respected in it's own right - it is even more pronounced. The so-called Asia crisis was followed by a variety of strategies by government and commerce alike. Some blamed a related rojak of internal problems - over capitalization; easy loans, close government-business relationships, moribund business systems made lazy by 10 years of bubble-led and uncritical investment flows, and layers of fat and unproductive resources. Others blamed Western conspiracies and/or an unfettered global free-economy - at least publicly - and mainly for local consumption to divert blame and entrench their political power. Behind the scenes in these countries - as in Malaysia - business and commercial reform IS underway led by smart and professional management - though somewhat fettered by a culture of political propaganda and fear of change. We have seen unprecedented change in politics - unheard of in 10 years of stability where almost universal fast growth in prosperity meant the people left well alone and trusted government to manage the new wealth being accumulated. National governments have experienced party-political change, ranging from the radical as in the case of Korea, Indonesia and Pakistan and Taiwan, to less radical as in the case of Thailand, Philippines, and Japan. Hong Kong and Macau of course are special cases, as are Indo-Chinese countries, and China. That leaves Singapore - a country where business and government almost alone - saw the crisis coming before it hit. ..And Malaysia - like Singapore - having stronger fundamentals and less exposed to the side-effects of major corruption - where the ruling élite has managed to cling onto power. Countries which suffered the most during the crisis changed party-political power while those less affected did not change. Forget the free press, and political rhetoric. It is as simple as that. Most countries returned administrations notably less corrupt, less ruled by patronage and old-money, and more accountable to the people. (Pakistan - again a special case together with those mentioned above, and the Philippines being the probable exceptions on most criteria) But to ourselves as business people, both local and foreign, working in management in Asia, the key concern is whether these party-political changes are manifesting themselves in changing the old Asian business culture dominated by privilege and privilege rather than competence, secrecy rather than accountability, and face rather than substance. For party political changes do not necessarily beget more substantive changes in the culture and process of doing business in Asia. As stated earlier, there were times in the past when it looked like the old Asia would ride out the crisis. A Malaysian ruling élite clamping down on alternative views in the broadcast and print media, to the extent of even banning air pollution indicies as a way to encourage tourism; a new administration in the Philippines that seems closer to the crony-led and patronage based regime of Marcos rather than that of Ramos; continued corruption in Thailand. In other ways it was looking good - A Singapore opening up, encouraging creativity and rewarding performance at every level - well living up to it's "intelligent island" self-nomenclature. A South Korea blazing a reform trail where none had dared go before, and making inroads into a moribund chaebol-focussed business culture, reflecting in the strongest recovery (and from a long way back) of any of the worse affected economies. An Indonesia, from even further back than Korea and with internal sovereignty problems a-plenty, threatening to empower the phoenix from the ashes led by one of the smartest men in Indonesia, if not Asia. Every business person in Indonesia, though still very uncertain of the future, knows that the rules have changed. The Soeharto dynasty, so deftly carved out by the man who would be Javanese king is already in ruins. Bambung no longer rules the seas (ports and shipping) - Tutut no longer rules the things that crawl along the earth (tollways etc), and Tommy no longer claims dominion over the creatures that fly. None of that allowed us to claim the ascendancy of a New Asia, confident within the global economy rather than shying away from it, willing to compete on equal terms, and focussed on real performance rather the vagaries of Gucci-suited ruling élite sycophants and gentle genuflectors. That was until today... ...When a place before the laughing stock of Asia and representing the worst of cronyism and corruption, hammered in its own stake in the new plot for the New Asia. That place was the symbolic birthplace of the Asia crisis - where the excesses of a bubble economy which wanted so much to believe that there was always fish in the river and fruit on the trees that it turned it into a cruel, dream-like and then shattered "reality". In Bangkok yesterday, Deputy Prime Minister Sanan Kachornprasat resigned in the wake of an investigation by the National Counter-Corruption Commission that suggested he falsified his asset record, newly required by Thailand's new 3 year old constitution. In short, it is alleged that he conspired with a mate in an auto firm to state that he had a major debt to them. Why is this significant for business people like us? Surely it is just the usual rough and tumble of Thai politics? In the end everyone will say "Mai-Pen-Rai" and go back to normal yes? Well - no actually.... Firstly Sanan fell from grace by an act that is so prevalent in Thailand - falsifying certified documents - that it is almost expected. Nobody really takes such documents on face value. Any business-man who doesn't follow up the details of business documents lodged in Thailand is sentenced to a very short business career in the land of smiles. Who was paid off to put their signature to them? - is the first question any smart business person would ask... Secondly, the fact that Sanan had to resign is highly significant. Usually, these sort of "indiscretions" are an accepted way of life, can cause a lot of fun for a few days in parliament, then die a quick death as other issues of evil-doing bump their way impatiently up the queue, usually involving the person who made the first accusation. In Thailand, unlike some neighbours, our lively parliamentarians don't pause before casting the first stone. When the stones come hurtling back, everybody has a great time in the muck-raking pit, then clean up, put on their best suit and have a Singha together. Shake hands and its all over... The press will get bored after a few days anyway as there is always so much other juicy stuff to report. But now, demonstrated in a stunning way, the RULES HAVE CHANGED.... All around Thailand (and indeed the world) this morning are businessmen and pollies shaking in their boots. Lying to the people for personal gain is no longer acceptable, and your élite mates no longer have the power to cover your posterior, regardless of your guanxi and influence. Sanan is not alone - and indeed while the New Exasperation Party and Thai Rak Thai will of course seek to make political capital out of it today as a programmed reflex, more sober minds (are there any in the NAP?) may well be playing their cards close to their chest. Finally the Sanan incident has come close on the heels of two other events that by themselves didn't give us the confidence to pronounce that the New Asia is finally winning, but topped off by yesterday's event finally coaxed the old Rat onto his creaky Remington. As reported in Hari Ini a couple of weeks back, the Electoral Commission, another new body empowered by the Constitution to investigate electoral fraud and general shenanigans, annulled the results for around 60 winners in the recent Senate elections (the first ever in Thailand where the people could vote directly for candidates). Despite pronouncements that they were taking things seriously, some candidates, as is usual in Thailand, did like they always did with the extremely-reasonable expectation that with their influence, contacts and history of how Thai authorities have bigger mouths than big sticks, they would get away with it. Interestingly Sanan's wife was one of these. (And again we must underline that the Commission's evidence has not been (and probably never will be) released and these candidates are only under investigation, not found guilty, and able to nominate again for the replacement by-elections.) Summoned to a meeting these candidates continued their bluff, criticising the commission. Some of the most well connected people in provincial Thailand are on the Commission's little list, and indeed, their influence was used to attack the credibility of the Commissioners and their procedures. Again - it was a case of red-faced bluster by a group of highly aggrieved born-to-rule people caught with their pants down blasting the only way they knew how the new headmaster. The Electoral Commission knew that taking on Thailand's provincial élite was risky, never going to be a easy ride, and courageous. But they also knew that THE RULES HAVE CHANGED. A month back, one of Thailand's major companies was ordered to re-structure, a landmark decision for a corporate governing institute that in the past has been a pawn in the hands of the ruling Thai élite. Again - the company didn't know - but several did know - that THE RULES HAVE CHANGED. The power structure in Thailand is rapidly crumbling, the cement of long established patronage is showing signs of decay under the competitive onslaught of the global economy, and performance, rather than face - is finally having its day. It may be a significant day for Thailand, but for all in Asia, the writing is on that very crumbling brick wall, that those will fail who depend on the processes of the Old Asia to run their business. The winners will be those who know that THE RULES HAVE CHANGED, and diligently examine what they are - and what they mean for business success.
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© Asian Business Strategy & Street Intelligence Ezine 2000
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