epilogue

From a macro-economic perspective, the recovery of the south-east Asian economy in recent years boils down to two things: exports, and the boom in China that began in 2003. South-east Asia’s manufactured exports, as we have seen, are driven by multinational companies outsourcing processing work, efficient but small-scale local contractors, and the quiet industriousness of Asian workers; the godfathers are only marginally involved. The extent to which exports rescued south-east Asia from the financial crisis has been little recognised. Readers of newspapers may be forgiven for thinking that all of the world’s export processing activity has moved to China, and that this perceived change was a significant factor in the Asian crisis. In reality, south-east Asian exports since 1997 – after a brief pre-crisis and crisis dip – diverged little from their long-term average growth rate of the past thirty years.1 Because they are globally competitive, export manufacturers managed to fund post-crisis growth from operating cash flows or – in the case of multinationals – through fresh investment from parent corporations. Lower valued-added processing work has migrated to China (and Vietnam, and Bangladesh) at a rapid clip, but this started well before the crisis and will continue. More specialised tasks, or ones requiring the kind of intellectual property protection unavailable in China, have continued to expand in south-east Asia. Semi-conductor exports from Malaysia and the Philippines, for instance, have rocketed in the past decade. At the same time, multinationals have reacted to the possibility of US and European export constraints against China because of the country’s ballooning trade surplus and artificially cheap currency2 by identifying, and sometimes using, alternative suppliers around the region.3 This is the same game as was played in the early 1990s, when the Clinton administration threatened China with sanctions over its human rights abuses; Nike, as one example, made half its sneakers in China and half in Indonesia, just in case. Exports were the south-east Asian pillar that did not crumble after the crisis. The one that did was domestic investment, much of which comes from the godfather companies that dominate local (as opposed to external) economies. When the crisis hit, regional banks – many of them controlled and manipulated by godfathers – were revealed to be insolvent and could no longer lend. Tycoons, awash in unsaleable real estate and other unproductive assets, were unable to borrow until politicians bailed them out or economies recovered sufficiently to ease their surfeit. The share of south-east Asian Gross Domestic Product accounted for by investment fell by more than ten percentage points after the crisis.4 The result was that the contribution of net exports leapt. Nominal exports as proportion of GDP in the territories we are following increased from 45 per cent in 1997 to 65 per cent in 2006.5 Governments, quite aware of what was coming to their rescue, bought up foreign exchange inflows to keep their currencies (and hence exports) cheap, resumed informal dollar pegs and piled up reserves.6
Many godfathers, though not active in processing of manufactures, were big beneficiaries of a second export resurgence after the crisis – commodities. This was driven by demand from China, a country which began a powerful investment-led boom in 2003 that saw growth spike up to more than 10 per cent a year, where it has remained ever since. To manufactured exports whose end-users are mostly in Europe, America and Japan, China’s dirigiste industrialisation programme has added demand for south-east Asian soft and hard commodities – Malaysian gas, Thai rubber, Indonesian lumber, and so on. Unlike manufacturing, these are sectors in which godfathers are very active, because they depend on political concessions. South-east Asian tycoons who lost large sums of money in China during the 1990s in that decade’s real estate boom and bust made back larger sums in recent years in the China commodities bonanza.7 Typical beneficiaries include Robert Kuok and Eka Tjipta Widjaya with palm oil and other plantation commodities, and Ananda Krishnan, who has private oil and gas concessions. The Chinese engine also powered an explosion in Asian gambling, since casinos and most forms of betting are illegal in the People’s Republic but cross-border travel for its citizens has been liberalised. The Lims’ vast Genting Highlands casino complex near Kuala Lumpur began to specialise in cut-price junkets for Chinese punters, but the biggest beneficiary was Macau, since 1999 a Special Administrative Region (SAR) of China. The former Portuguese colony became an enormous money laundromat, providing costly diversion for the Chinese masses while cleansing the ill-gotten fortunes of many a Chinese government official and state enterprise manager. The expiry of Stanley Ho, Henry Fok and Cheng Yu-tung’s casino monopoly in 2001 – and the arrival of competing US casino operators – turned out to be less important than the floodtide of new Chinese money into Macau. In 2006, the SAR overtook Las Vegas as the world’s biggest gaming town by turnover.8 The ageing Stanley Ho may be dribbling these days, but he is also smiling and richer than ever. What good fortune it was that the Second World War caused him to cross the Pearl River estuary from Hong Kong.
The Tab
If not the average godfather, who did pay the price for the Asian financial crisis, a malady so serious that south-east Asia’s gross domestic product has only just returned to 1995 levels? The answer requires a detour into the lives of so-called ordinary people. In theory, it is possible to measure changes of wealth in different societies by calculations based on macro-economic data: economists try to calibrate both financial wealth – summing cash, bank deposits, stocks, bonds and investments overseas – and physical wealth – real estate, plant and equipment, inventories, and so on. By both measures, converted into US dollar terms, south-east Asians were still worse off at the start of 2007 than they were in 1995, despite the return of solid economic growth.9 Macro-economic wealth measures, however, suffer from all kinds of methodological weaknesses and it is probably more instructive, when considering who suffered most from the crisis, to look at simpler indicators like real wages and poverty.
Beginning with the city states of Singapore and Hong Kong, it is hard to escape the conclusion that those who picked up the tab for the crisis were the people who had least to do with its creation and were least able to pay. This was partly the result of deflationary pressures unleashed after 1997 and partly the result of deliberate government policy. In Singapore, on the government’s own data, real incomes of the poorest 40 per cent of the population fell between 2000 and 2005, even as strong economic growth resumed. The biggest losers were people over fifty who were made redundant from already poorly paid jobs and discovered that, for all its wealth, Singapore offers almost no state unemployment benefits. At the same time, the city’s administration continued a long-standing policy of cutting income tax for the richest segment of the population – the highest level was cut from 28 per cent in 2000 to just 20 per cent today; the corporate profit tax rate was also shaved. In contrast to these moves, indirect taxes paid by everybody were increased in 2007 – local value-added tax was put up from 5 per cent to 7 per cent. Bizarrely, government ministers said this broad-based tax increase was necessary to provide a little extra support for the poor. Raffles Institution- and Cambridge-educated Harry Lee Kuan Yew, justifying tax policy, told journalists: ‘This is a tough and competitive world.’10 The local population acquiesced for the two usual reasons: people in neighbouring countries are relatively poorer and more mistreated, and Singaporeans are justifiably terrified of Harry’s wrath. To the business traveller, confined to the Central Business District, it is difficult to imagine there are such things as poverty and an underclass in Singapore; but a short taxi ride into the city’s public housing estates reveals just that.
In Hong Kong, the tab for the Asian crisis also fell squarely into the lap of those less able to pay it. Despite some increases in welfare provision under the administration of the last governor, Chris Patten, a trend to greater poverty in the city was apparent throughout the 1990s, and the crisis exacerbated this as many people’s real wages fell. The benchmark for poverty in Hong Kong is normally given as the proportion of households living on less than half the median monthly household income, which is itself a remarkably low US$1,290.11 By this measure, the poor increased from 11.2 per cent of the population in 1991 to 15 per cent in 1996 and 18.3 per cent in 2000.12 Because most rich Hong Kongers send their children to private schools overseas, one quarter of children in Hong Kong schools are now from impoverished families, putting further pressure on a public education system that has traditionally been grossly underfunded. The crisis also hit the earnings of people who had considered themselves more middle class. By 2001, only 15.6 per cent of household income was going to the less well off half of the population.13 The main difference between Hong Kong and Singapore in terms of the broad impact of the crisis was that the former retained its currency peg. This meant that deflationary pressure in Hong Kong was borne solely by the stock and property markets, and not the exchange rate. Tens of thousands of home owners – almost all from the richer half of the population – were pushed into negative equity for a decade until average residential prices began to approach 1997 levels in late 2006. This shock to the professional classes may have contributed to the remarkable politicisation of Hong Kong in recent years.
In Thailand, Malaysia and Indonesia, the urban middle class was also hit hard, but the real suffering fell to tens of millions of people pushed back under – or close to – the poverty line as real wages dropped, unemployment and under-employment increased, and the cost of daily necessities rose. Urban middle-class wealth was hit first, in 1997–8, as stock and real estate values collapsed, and real urban salaries fell. The impact on the less well off arrived more slowly, but five years later the crisis was undeniably severe. The crisis had a common geographic trait, where the initial impact hit big cities – especially the capitals – and then spread slowly but inexorably to the rest of the country. In Thailand, most estimates suggest that around 1 million people out of a population of 60 million were pushed back into poverty.14 In Malaysia, where little domestic research on poverty has been conducted since the crisis, the proportional impact was likely similar. In Indonesia, where inflation eroded real wages by around 40 per cent, the poverty rate doubled during the crisis to 27 per cent of the population, or 54 million people.15 Absolute poverty then receded somewhat before trending up again from 2005; some welfare groups estimated 80 million Indonesians were living in poverty in 2006.16 An equally lamentable legacy of the crisis is the number of persons in south-east Asia living just above the poverty level. The World Bank’s 2006 World Development Report, whose theme was ‘equity and development’, showed the proportion of the population living on more than its indexed US$1-a-day poverty threshold, but on less than US$2 a day, was 52 per cent in Indonesia and 32 per cent in Thailand.17 The comparable ratio in Argentina was 14 per cent and in Brazil 22 per cent.18
It is to be hoped that the Philippines, whose economic unravelling began in the last years of Marcos, does not provide a guide to future poverty and employment performance in the rest of the region. According to the 2006 World Development Report, 15 per cent of Filipinos were living in absolute poverty, and 47 per cent subsisted on an income between US$1 and US$2 a day. Half the 12-million population of Manila lives in shanty towns that line the expressways, rail tracks and waterways of the metropolis. After twenty-five years of repeated economic crises, the Philippines’ economy is now critically dependent on the overseas earnings of an estimated 10 million, mostly female workers – out of a population of 80 million – employed as child carers, nurses, and more in richer states around the world.19 The working population continues to move abroad and no country is more dependent on remittances to keep itself afloat: US$12 billion sent back in 2006 amounted to some 15 per cent of the Philippines’ gross domestic product.20
The Politics
There is little doubt that godfather economics have been the agent for much of the increased poverty and inequality in south-east Asia. The tens of billions of dollars of bank asset write-offs and corporate bail-outs for the businesses of the few were borne in the form of inflation, reduced welfare spending,21 higher taxes and lower real wages for the many. None the less, the godfathers – so many of whom have recovered their fortunes – were only the agents of this calamity. Real responsibility rests with the politicians who allowed godfather economics to exist in the first place. In the introduction to this book it was stated that post-crisis south-east Asia finds itself at a crossroads at which it must make a political choice between a descent towards the levels of inequality and social alienation, and repetitious economic crises, associated with Latin America, or a higher road that leads to sustainable growth and greater social equity. This is not a rhetorical construct designed to shock the reader. Post-crisis, absolute poverty in the Philippines is worse, and in Indonesia as bad, as in South America, while the proportion of people in the Philippines, Indonesia and Thailand living on less than US$2 a day is significantly greater.22 A poverty profile that compares unfavourably with Hugo Chavez’s Venezuela is a serious matter. Inequality – as opposed to poverty – in the four major south-east Asian countries we have followed, as calibrated by the standard Gini coefficient,23 remains less severe than in Latin America, but it is worsening.24 In Hong Kong and Singapore, inequality has increased to such an extent in the past decade that the city states’ Gini coefficients are now the same as that of urban Argentina.25 Politics has a lot to answer for in south-east Asia, and it is with a contemporary political tour that we must conclude. For without political change, the region is likely to find itself stuck on a Latin American highway.
It was the Philippines that pioneered post-colonial political failure in southeast Asia, and developments there since the crisis have given little succour to optimists. The old political élite, restored by godfather progeny Corazon Aquino after Marcos’s departure in 1986, appears as entrenched as ever. The current president, Gloria Macapagal-Arroyo – herself the daughter of a former president – spends much of her time fending off congressional attempts to impeach her because of the possibly unconstitutional manner in which she ousted her predecessor, Joseph Estrada, in 2001, and allegations of vote-rigging in her own election victory in 2004. In a development that has strong Latin American echoes, there has been a frightening increase in extrajudicial killings of government critics, including journalists, academics and social activists, on Ms Macapagal-Arroyo’s watch, although she is not implicated personally. The Philippine police say there have been 110 political murders since 2001; Amnesty International has documented 240 cases; Kerapatan, a local human rights group, claims more than 700 – the latter tally would put the annual average toll in line with the 3,000 people who disappeared during Marcos’s two decades. Philip Alston, a United Nations special rapporteur for extrajudicial killings despatched to Manila in early 2007, described the armed forces of the Philippines – units of which even government officials admit are responsible for many of the murders – as in ‘a total state of denial’.26 Ms Macapagal-Arroyo, who in February 2006 declared a state of emergency that allows warrantless arrests of alleged enemies of the state, blames the constitution for political instability. She says the Philippines needs to switch to a single-chamber parliamentary system. But while Ms Macapagal-Arroyo’s arguments are not without merit, her efforts to secure constitutional change have shown little respect for democratic norms. In December 2006 she used her majority in congress to vote away the senate’s veto; this led to widespread popular protests and a hasty retreat. Faith in the political process is falling, communist insurgency is present in most provinces, and the local élite remains the most selfish and self-serving in the region. The Philippines best-known living author, Francisco Sionil José, lamented in the Far Eastern Economic Review in December 2004: ‘We are poor because our élites have no sense of nation. They collaborate with whoever rules – the Spaniards, the Japanese, the Americans and, in recent times, Marcos. Our élites imbibed the values of the colonizer.’ The Philippines, in short, has never moved on from the colonial era and the patterns of amoral élite dominance that it created.
Thailand has long echoed the polity of the Philippines and today the similarities are more apparent than ever. From the 1980s, the Thai economic élite – by standing for and winning an increasing proportion of seats in parliament – began to overrun the political process and merge economic and political vested interests into a unified oligarchy. This development reached its apogee, post-crisis, with the rise of Thaksin Shinawatra, before the bitterness and jealousy that his rule engendered within the élite opened the door to another military coup. Life after the coup, which took place in September 2006, showed that politics in the south-east Asian country with the least colonial legacy continues to fail almost as badly as in the Philippines. The white man is not to blame for everything wrong with the region. Within months of his investiture, the military’s new ‘civilian’ prime minister, General Surayud Chulanont, was at odds with the junta leader General Sonthi Boonyaratglin. Policy was a shambles, with the administration committing itself to an ill-defined ‘sufficiency economy’ dreamed up by King Bhumibol. Policy appeared to lean towards nationalism and protectionism, and led to hasty moves to impose limited exchange controls and to amend laws relating to foreign-owned businesses. The stock market and foreign investment went into a tailspin, the government back-tracked, and the finance minister – a minor member of the Thai royal family – resigned in February 2007. In the south, the government continued Thaksin’s brutal campaign against a Muslim insurgency and the insurgency became worse. Meanwhile Thaksin, in exile with his billions intact, toured the world, giving interviews in which he presented himself as a humble saviour of the people undone by ruthless generals. In Bangkok, in a testament to Thai political hypocrisy, large cracks appeared in the runway of the new airport, Thaksin’s flagship infrastructure project. It was a political comedy in which the joke, as ever, was on the Thai people. The military promised yet another new constitution, a referendum and elections by the end of 2007, but it was far from clear if the generals would bow out.
The Philippines, and to a lesser extent Thailand, are reference points for politicians like Lee Kuan Yew who argue that too much democracy is bad for development. But all these countries really prove is that democracy comes in many flavours and is only one component of a functioning liberal polity that requires an efficient, independent judiciary, police force, bureaucracy and central bank. In the absence of the latter institutions, the Philippine and Thai élites are able to assemble blocks of rural and urban working-class votes, operate in shifting coalitions that produce little real turnover in political power, and carry on as they please without fear that policemen, judges or central bankers will stand up to them. South-east Asia provides few lessons in the failings of democracy; it offers many in the complexities of making democracy work.
The Malaysia-Indonesia Variant
In Malaysia, the studied manipulation on ethnic lines of the country’s nominal democracy presents another ugly picture as the fiftieth anniversary of independence approaches in 2007. The Malay aristocracy – and its parvenu successor Mahathir – have held unbroken power for half a century by combining the mainstream Malay vote with Chinese and Indian support fearful of the Islamic opposition. A vast patronage network, largely paid for by political contributions from Malaysia’s godfathers, has grown up around the ruling National Front coalition and its United Malays National Organisation core. In 2004, voters granted Mahathir’s successor, Abdullah Badawi, a general election landslide – 198 out of 218 seats – after he promised a fresh start, with economic deregulation, reforms to the sometimes brutal police force and a serious fight against corruption. But little has changed; the anti-corruption and police reform campaigns in particular went eerily quiet after victory was secured. Badawi talked for a while about curtailing Malaysia’s costly positive discrimination policies, which created a generation of bumiputra rentier capitalists and contributed to widespread poverty among ethnic Indians, but has since reversed course.27 He fears an UMNO rebellion if he challenges positive discrimination and, in 2006, announced a new MYR2 billion fund to help Malays buy real estate. This will not be enough for a new generation of UMNO leaders – many the sons of former leaders – who have grown up on a diet of hand-outs and want only more of the same. At UMNO’s annual congress in November 2006, delegates made some of the most racially inflammatory speeches in living memory. One promised to ‘bathe in blood’ to defend the rights of the Muslim majority against the Chinese and Indian minorities. The Minister of Education brandished a traditional keris dagger to signify the strength of his passions, and was urged to use it. Many Malaysians say there is less interaction among the different racial groups in the country now than there was thirty years ago. Those who hope for a reversal of this trend, and a reduction in ubiquitous cronyism, took heart from the release from prison in 2004 of Mahathir’s former deputy, Anwar Ibrahim. Anwar has attempted to unite opposition political parties on a common platform. His own party, Keadilan, is multi-racial. But given the way UMNO works, if Anwar ever becomes a serious political threat, the chances are that it will welcome him back into the fold with a senior government post; and it is quite possible, based on past performance, that Anwar will accept.28 It is hard to imagine what will change Malaysia’s political trajectory. Without change, waste and economic inefficiency will remain high and growth lower than it otherwise would be.
Indonesia is the one ‘proper’ country we have considered where there has been a measure of political progress since the financial crisis. This was far from a given when Suharto fell in 1998. The governments of Abdurrahman Wahid and Megawati Sukarnoputri, from 1999 to 2004, were characterised by frenzied regional power grabs, corruption on a par with or worse than the Suharto era and a descent into sectarian conflict in different parts of the archipelago. Susilo Bambang Yudhoyono, who became the first directly elected post-crisis president in 2004, did well to stabilise the situation. Unlike governments in the Philippines and Thailand, he dealt with insurgencies that are rooted in poverty and inequity as much as in ideological dissent by negotiation, as well as ‘wars on terror’. A deal struck with rebels in Aceh in northern Sumatra, where more than 10,000 people have died in conflict with security forces since the late 1980s, brought disarmament and peace in 2005. Sectarian conflict in the eastern provinces of Maluku and Sulawesi, which claimed thousands of lives between 1999 and 2001, also eased. SBY, as the president is popularly known, does not represent a political watershed; he was a senior Suharto general and has a tendency to equivocate that is typical of Javanese political culture. But, despite rising poverty, most Indonesians consider him honest and a representative of broad community interests. SBY’s approval rating in opinion polls in early 2007 was close to 70 per cent, well ahead of the vote share that brought him to power. Economic growth has returned to a level around 6 per cent, inflation is under control and the currency has appreciated. Meanwhile, the president has made some effort at institutional reform. He formed an executive team modelled on the West Wing of the White House in an attempt to force change in Indonesia’s gargantuan bureaucracy. A greater share of tax revenues has been distributed to local authorities in the hope that devolution will make government more efficient. Fuel subsidies were slashed in order to balance the budget and tentative steps were taken to reduce the number of businesses controlled by the military and to subject its members to civilian courts. It would be unduly sanguine to say that progress on reform has been impressive – many undertakings have been half done or delayed – but change has been sufficient for retired army chiefs Try Sutrisno and Tyasno Sudarto to start railing in public that the new democratic arrangements are a recipe for ‘chaos’. In Indonesia, these lamentations are probably a sign of progress. Despite the generals’ condemnations of democracy, in the long struggle to reform Indonesia’s venal judiciary and its powerful military–business structures, SBY faces less risk of a coup than exists in the Philippines or Thailand. The Indonesian military, though corrupt and greedy, is traditionally responsive to public opinion and SBY’s popularity is undeniable. More of a threat is a challenge from deputy president Jusuf Kalla in the 2009 general election. Kalla, from a pribumi godfather family that grew rich on state concessions in the 1950s, has sometimes been a useful – and certainly more charismatic – adjunct to SBY in power. But the prospect of a local tycoon family holding the presidency is not an attractive one; it could lead Indonesia into the Philippine and Thai political morass. With luck, Indonesian voters will recognise this.
Predictable Singapore
About that favourite refuge of Indonesian scoundrels, Singapore, there is little to say of its politics in recent years. In 2006 the ruling People’s Action Party (PAP) won its tenth successive election victory, with 67 per cent of the vote. The PAP deployed its vast political machinery, made the usual promises of additional housing funds for working-class constituencies that supported it and threats of grant denial for those that did not, and was reliably supported by the state-owned media. PAP lawyers also rolled out the traditional defamation suits against opposition politicians who said anything perceived to be defamatory, and most of them quickly grovelled rather than face Singapore’s equally traditional outsize awards of damages.29 The main opposition leader was briefly incarcerated before the poll – for questioning the judiciary’s independence – and again after it, for speaking in public without a permit.30 It was a first election victory for Lee Kuan Yew’s son Lee Hsien Loong; the old man retains his cabinet seat with the preposterous title of Minister Mentor. Like UMNO, a big part of the PAP’s success is that it appears unassailable and can therefore co-opt most politically ambitious newcomers; more than a fifth of its candidates in recent elections have been first-timers. None the less the PAP’s support did fall in 2006 – from 75 per cent of the vote in the previous general election – and the government’s post-crisis drive to woo offshore money with tax cuts, while balancing its budget with indirect tax increases, is producing stresses in society. Gross Domestic Product growth returned to a level around 8 per cent in 2006, but aggregate private consumption growth was at 3 per cent; in part this reflected much faster expansion in foreign-owned, as opposed to local, business. Similarly, a foreigner-driven boom in the luxury real estate market compares with local mortgage growth of just over 2 per cent. Singapore and Hong Kong, by most measures, are the two most unequal rich cities in the world and this is becoming increasingly noticeable. Those who wish to complain in Singapore, however, must consider that the government has lately tabled penalties for nineteen new public order offences and increases in the tariffs for nineteen existing ones – ranging from public gatherings to postings on the internet.31 It is also worth recalling that tranquil Singapore maintains what is probably the highest rate of state executions in the world, well ahead of China or Saudi Arabia.32 Political change is improbable before Harry Lee passes from the scene.
Hong Kong: Another Kind of Leadership from the Periphery?
Around south-east Asia, much of the political problem is that the main countries pass on (and pass off as ‘normal’) the same, bad lessons – that manipulated democracy is a valid substitute for a free market in politicians, that concession-based domestic economies are an alternative to real competition, and that high headline growth rates alone signify sustainable development. In this respect, the real political hope for south-east Asia in the next few years may be Hong Kong, a city on the geographic edge of the region. It is the one place that shows signs it might provide much-needed leadership. What social scientists call ‘demonstration effects’ are extremely important for developing countries: the model established by Japan, as will be outlined below, has been critical in influencing former colonies South Korea and Taiwan, and in helping them become very much richer than south-east Asian nations despite comparable post-war starting points;33 in Europe, the demonstration effects of the European Union have provided a guide for the remarkable, and under-reported, economic and political progress of eastern European states since 1989. Although Hong Kong is at the periphery of the region, south-east Asia’s business community does already look to the city for a lead in economic and business ideas. Hong Kong has the region’s dominant capital market, an economy twice the size of Singapore’s, and the most important indigenous industrial capitalists in a part of the world that is grossly over-dependent on multinational manufacturing investment. Going forward, it is just possible that Hong Kong can also provide the kind of political demonstration effects that south-east Asia needs.
The politicisation of the Hong Kong population in recent years has taken most people by surprise. In the colonial era, political development was repressed by two forces: the fact that until the 1990s most of the population was made up of first-generation immigrants with a limited sense of Hong Kong identity; and the determination of governors despatched by the British Foreign Office to stymie the rise of popular politics, a policy that was dressed up in the fanciful notion that people of Chinese descent are inherently ‘apolitical’. The expression of a clear Hong Kong political identity was further delayed in the 1980s when a large proportion of more wealthy local people took out insurance against the resumption of Chinese sovereignty by applying for foreign citizenship. Opinion polls have consistently shown that those who hold foreign passports are less likely to concern themselves with politics, or to vote.34 None the less, a latent desire for change was brewing by the 1990s, and it began to boil under the last governor, Chris Patten. By the time Patten was appointed by British premier John Major in 1992, after Major lost patience with the Foreign Office’s obsequious and inept handling of the relationship with China, the majority of Hong Kong people were locally born and had a clear identification with the territory. Patten, a career politician with no knowledge of China, then made a cathartic determination – to handle Britain’s last big colonial exit on the basis of political principle. He introduced substantial changes to Hong Kong’s electoral arrangements – which were within the letter of formal handover agreements with China, though contrary to prior undertakings made by British officials to Chinese mandarins behind closed doors – and finessed the closest thing possible to fully democratic elections in 1995.35 Pro-democracy politicians triumphed and gained in public stature. Patten defied Beijing to reverse the electoral changes when it resumed sovereignty in 1997. This is indeed what happened, but the genie of political pluralism in Hong Kong was already out of the bottle and has never been forced back in. Patten’s baby-kissing, public walkabouts and his willingness to put himself before the legislature and debate with its members gave Hong Kong a taste of something new. He was, and remains, extremely popular in the city, despite the fact that he speaks no Chinese and arrived with minimal knowledge of Asian history.
The impact of Patten is impossible to unravel from other forces – the long-term rise of a distinct Hong Kong political identity, the maturation of local politicians, popular recognition that decades of growth had not made most people rich – but it was significant. On 1 July 2003, six years after Patten had departed, all the trends towards greater politicisation in Hong Kong became shockingly apparent in a single event. After the first chief executive, Tung Chee-hwa, tabled anti-subversion legislation that was sought by Beijing, more than half a million people – 10 per cent of the population – took to the streets to denounce both the attack on civil liberties and the tycoon’s leadership. To anyone, like the author, who lived in the politically insipid Hong Kong of the early 1990s, the spectacle was amazing. The bottom-up, phlegmatic and non-revolutionary politics of ordinary people – as opposed to top-down management by élites – had arrived in Hong Kong, and by association in south-east Asia.
Little more has been heard about anti-subversion laws. Instead, the political agenda has switched to reform of Hong Kong’s electoral arrangements. The pre-Patten colonial system restored by Beijing in 1997 means that small-franchise, business-based Functional Constituencies controlled by conservative professional and godfather interests – once beholden to Britain and now to China – hold the balance of power in the Legislative Council. In this respect, political reform is absolutely a tussle between the man on the street and the economic élite. Separately, there is the question of how to elect the chief executive, who is currently chosen by an 800-member Election Committee packed with supporters of Beijing. The struggle for democracy in Hong Kong has produced much the most interesting game of political chess in southeast Asia. On one side are big business, related vested interests and China, and on the other Hong Kong voters who – when allowed to in geographic constituency elections – show overwhelming support for pro-democracy and pro-economic deregulation candidates.
The most important piece on the board is Donald Tsang, a former senior colonial civil servant and the Beijing-endorsed replacement for failed tycoon leader Tung Chee-hwa. Tsang is an élitist and as naturally deferential to power in the form of China as he was to power in the form of the British Foreign Office (he retains the affectation of wearing bow ties from that era). But he is also smart enough to grasp the concept of public opinion. His first move, in 2005, was to propose marginal alterations to electoral arrangements for his own job in 2007, and Legislative Council elections in 2008. Unfortunately, he failed to understand just how much Hong Kong has changed or the scale of the popular demand for more responsive government. The measures could not secure the necessary two-thirds majority in the Legislative Council, because they had almost no mainstream support. Tsang then said there would be no changes in 2007 and 2008. This, however, only undermined his capacity to divide his opposition. The main political parties, and senior former civil servants such as Patten’s chief secretary Anson Chan, coalesced around proposals for a staged transition to democracy in both legislative and chief executive elections between 2008 and 2016.36
In March 2007 Tsang was formally ‘elected’ by the unreformed, Beijing-dominated Election Committee. His victory was a foregone conclusion,37 but the manner of Tsang’s election campaign painted him into a corner that looked increasingly like Tung Chee-hwa’s. He failed to build a political image based on popular aspirations and instead relied on the traditional, establishment support of the godfather class. His campaign chairman was the Bank of East Asia’s Sir David Li, who also provided plush corporate offices as a campaign headquarters. Tsang’s major donors were a Who’s Who of vested tycoon interests. Almost every godfather in the territory, and in many cases god father children and senior executives as well, put up a standard HK$100,000 donation suggested by the Tsang camp. Three major families – those of K. S. Li, Peter Woo and Stanley Ho – each contributed a total of HK$900,000. Tsang’s plutocratic backers paid in seven times more money than he spent on the election; the balance was given away to charity.38 Just as the original news that Tsang would take over from Tung Chee-hwa in March 2005 had become public because of remarks made to journalists by gambling godfather Stanley Ho, so the 2007 election reinforced the notion that the tycoons are at the centre of the Hong Kong political system. Tsang won, but the manner of his victory failed to provide any serious popular legitimacy. The campaign for political reform was probably strengthened by the fact that Tsang was unable to deliver the appearance of a broader political support base under existing electoral arrangements. If he does not accept the need for substantive reform, Tsang risks a drift towards Tung-like unpopularity. His higher risk – but, given the state of public opinion, more realistic – strategy is to go quietly and firmly to Beijing and say that without a timetable for political reform Hong Kong may become ungovernable. This would have to be backed by an implicit threat of resignation. Supplication or aggressive confrontation will yield nothing in China; a simple statement of facts, and the possibility of another change in chief executive, just might.
Most likely, of course, Tsang will gamble that he can get away with doing nothing serious on political reform, that economic growth will temper popular interest in politics and that China will not be foolish enough to provide another tipping point – like the anti-subversion legislation – that will bring people on to the streets. He may be right, but Hong Kong is the most interesting political story in south-east Asia precisely because he may also be wrong. The population has understood the élite’s grip on politics and wants it unclasped. There is now unremitting political noise around the need for a competition law and deregulation of the domestic economy. The godfathers are under siege in a manner they have not been before. The Chinese-language print media is much more aggressive than a decade ago. And the old ruse of justifying restrictive economic and political practices on the basis of sociological and cultural differences rings ever more hollow. As Edmund Terence Gomez, the leading academic authority on political–business ties in southeast Asia, observes: ‘The Asian crisis broke myths about authority.’39 In this respect, an analogy with British history is not unreasonable. Hong Kong has left its Victorian era, where the mere trappings of authority were enough to secure deference to political and economic power, and entered an Edwardian one, where the expectations of the élite versus everybody else are misaligned. The godfathers and some civil servants carry on as if nothing has changed, insisting that the old ways are the best ways and that anyone who disagrees with them is a troublemaker. The bulk of the population, meanwhile, has much increased personal and political aspirations, and elected politicians are beginning to react to these, but it is far from clear how the political will of what Winston Churchill referred to in the 1910s as ‘the left-out masses’ will be accommodated. The upshot is a curious spectacle in which Hong Kong is in many ways much more sophisticated and cosmopolitan than it was in 1997 and yet at the same time is filled with billionaires and government leaders who express absurdly arcane and patronising political views without even a hint of irony.
It should be stressed that, while political reform in Hong Kong would certainly lead to economic deregulation, it would not likely mean the end of the established godfathers. They have too much money already and, as the nephew of one of the richest men in south-east Asia puts it: ‘In general, money makes more money.’40 However, deregulation would be enormously important in raising the glass ceiling that is placed over younger, more innovative, and manufacturing- and technology-oriented corporations. At present, these companies occupy a parallel world, with their productive operations across the border in China. There is nothing for them to do in Hong Kong because all the economic space in the domestic economy is occupied by an entrenched élite. Hong Kong’s leading industrial entrepreneurs, Michael Ying of clothing business Esprit and Patrick Wang of micro-motor maker Johnson Electric, have entered the ranks of the world’s billionaires in recent years,41 but by contrast with service sector tycoons they enjoy zero political and policy influence in Hong Kong. It is also indicative of where the easy money lies in Hong Kong that industrialists tend to sell down their equity once manufacturing-based enterprises have reached a certain scale and put money instead into passive investments like real estate.42
At a minimum, political and economic reform in Hong Kong would make the place fairer, and this is the best possible argument for change. Contrary to official spin, Hong Kong – like the rest of south-east Asia – is a very unfair place. The richest businessmen are rich because of cartels and monopolies, while everybody else pays artificially high prices and receives unnecessarily poor service, because of those same restrictive arrangements. A fabulously wealthy tycoon class which pays no tax because it takes its income in tax-free dividends stands in stark contrast to a working population that is almost unique among rich societies in being denied a minimum wage while having to pay inflated prices for food, electricity, gas, banking services, real estate and much more.43 The lack of popular input into the political process also means that things that make life tolerable for the less well-off in other rich cities are absent in Hong Kong. There is almost no urban parkland (it takes up development space), there is minimal attention to environmental quality (pollution is becoming rapidly worse and tycoons, who spend much of their time overseas, appear not to care) and constant road building (approved by a wealthy minority that owns cars) further degrades the areas in which most people live. Hong Kong is an exercise in shared hard work and extremely unfairly distributed returns on that work. Increased political responsiveness and economic deregulation are rational, necessary and possible. In this respect Hong Kong is the one place that could show people throughout south-east Asia that a better life than most of them are accustomed to is entirely practicable.
The Model that Worked (Better)
If the above analysis of Hong Kong’s political potential seems to be driven by wishful thinking, it is worth remembering that Asia does have an alternative, proven model of development that has made societies richer, more equal and freer than those in south-east Asia. The model is far from perfect, but it points up the dialectic weakness of those who argue, for instance, that because the poverty rate in a country like Thailand fell from two-thirds of the population in the 1960s to under 10 per cent today, south-east Asia can be adjudged to have done just fine. Such a line of thinking only works if one severely limits one’s expectations. If, instead, a comparison with north-east Asia is undertaken, it becomes apparent just how important politics are to economic development. The north-east Asian model developed by Japan more than a century ago was based squarely on political choices; it remains the only model to have taken a significant non-white country from poverty to developed nation status. The fact that one of the two states to have followed the Japanese demonstration effect – Taiwan – is a Chinese society is a further indication that culture and race are actually rather marginal to economic development, despite the determination of south-east Asian leaders to try to prove the opposite. Taiwan is just as Chinese as Hong Kong or Singapore, but in economic terms it is much more like Japan, while the city states are thoroughly south-east Asian.
Three things set the north-east Asian model apart from the south-east Asian one, and they all come down to politics. The first is that Japan, South Korea and Taiwan each implemented land reform and thereby ensured they would enjoy a bottom-up development process in which almost everyone had a little bit of capital on which to build a better life. In south-east Asia, political élites avoided land reform. The most egregious case is the Philippines, which, as has been noted, boasts the most selfish and self-serving political class, based heavily in landed wealth. The ability of north-east Asian governments to force through land reform was complemented by a broader political commitment to social equity. The Gini coefficients of Japan, South Korea and Taiwan are 0.25, 0.32 and 0.24 respectively. In south-east Asia they begin at 0.34 in Indonesia and track quickly out to more than 0.5 in Hong Kong and Singapore.44 Political inclusiveness in north-east Asia is also reflected in countries’ toleration of organised labour in the form of trades unions. Politicians may not have liked the unions much but they did not, as in south-east Asia, set out to crush or emasculate them, or argue that independent worker representation would hinder development (which it obviously did not).
The second characteristic of the north-east Asian model is that when governments tried to pick economic winners – as all developing states are wont to do – they gave their backing to manufacturers and businesses with a demonstrated capacity to originate technologies. Almost all the favoured corporations in Japan, South Korea and Taiwan were family-based, and quite used to bribing politicians, but they were not firms whose activities were restricted to trading and services. As licences for economic rents in finance and utilities, and access to capital, were doled out, these valuable cash flows were therefore less likely to remain trapped with a narrow, unproductive business élite that could not compete globally. A Samsung or a Hyundai was a sprawling family conglomerate, but it was also a business some of whose subsidiaries produced branded, globally traded goods. The south-east Asian conglomerates, by contrast, were not disciplined by global markets and when granted a concession simply farmed out the technology requirements and much of the work to multinationals. The long-term implications of this ‘technologyless industrialisation’ – as Yoshihara termed it two decades ago – tended to be masked by high growth rates, gleaming urban skyscrapers and the fact that large-scale export capacity was being created in south-east Asia by foreign investors. It is controversial to say so, but there is a strong case to be made that the nature of this export-oriented industrialisation actually reinforced the lack of international competitiveness in south-east Asia, because it reduced the pressure for more effective domestic economic policy. Today, South Korea and Taiwan enjoy per capita GDP between three and twelve times higher than that prevailing in the four main south-east Asian countries.45 In the early 1950s, the difference was negligible. South Korea and Taiwan – like Japan – have internationally successful, branded corporations; south-east Asia has almost none.
The third difference in the north-east Asian model is that political systems have always been taken more seriously, relative to south-east Asia, as drivers of development. When Japan began its modernisation in the late nineteenth century, there was a concerted, open-minded debate about what type of political institutions would best suit the country. After much investigation, Japan copied most of its constitution from Germany and moved beyond the largely sterile – and very old – debate about cultural exceptionalism that plagues the Asian region. In the post-Second World War era, when Japan repeated the rapid development trick under a constitution modified by Americans, South Korea and Taiwan both experienced long periods of military dictatorship. Nevertheless, as the limitations of authoritarian leadership became apparent in the 1980s, the countries showed considerable capacity to make political and institutional adjustments. South Korea and Taiwan undertook painful but determined transitions to democracy. When South Korea became much the most affected country in north-east Asia during the financial crisis, political maturity was again apparent. Kim Dae-jung, a long-time democracy and human rights activist, was elected president in 1997 and initiated the most effective reform process to have occurred in the main crisis countries. One measure of South Korea’s relative success in addressing the financial melt-down is that its US dollar exchange rate in early 2007 was back where it was in 1996, while the dollar exchange rates of the major south-east Asian countries have not similarly recovered. South Korea has its problems, but its political, institutional and economic record since 1997 puts south-east Asia in the shade.
Saying No to a Free Lunch
The people of south-east Asia have been failed, more than anything, by their politicians. This is apparent not just in the historical failures of the post-independence political class, but in its inability to grasp opportunities for development that are readily available today. The most obvious of these is the benefits to be derived from an integrated ASEAN common market.
A theoretical ASEAN Economic Community, around which tortuous discussions on deregulation revolve, is a precise eponymous echo of the European Economic Community (EEC), set up by six disparate states in 1957. But there the similarities end. Fifty years ago, the European Union, as it is called today, was already characterised by robust political leadership. The founding members of the EEC – France, West Germany, Italy, Belgium, the Netherlands and Luxembourg – had been serious about market sharing for years, and in some respects moderated their aspirations to cut a deal in 1957. ASEAN, by contrast, has a tradition of much talk and little action. The group, now ten countries, supports a tiny, central secretariat based in Jakarta. Each member nation has a local secretariat, reflecting a political tradition of ‘non-interference’ in other members’ affairs. In effect, ASEAN is a pleasant club for regional politicians that has never moved on from its inception in the 1960s as a USled assembly of anti-communist allies.46 Talk of a common market and deregulation has been voluble since the Asian crisis, but reality lags far behind. In 2003, ASEAN committed itself to free trade in goods, services and investment by 2020; in early 2007 the deadline was brought forward to 2015. However, there is no detailed timetable, no compliance mechanism and no charismatic regional leader, or leaders, driving the process forward. One measure of the state of affairs is the creation, in 2007, of an elder statesmen’s Eminent Persons Group, headed by former Marcos acolyte Fidel Ramos, that pleads with ASEAN’s current governments for enforcement of stated objectives.
The lack of utilitarian leadership, and the capacity to seize stasis from the jaws of progress, is depressing. In Europe, market integration produced three decades of rapid growth in small and diverse countries already much wealthier than south-east Asian ones. The French called it ‘les trentes glorieuses’. Of course, much of the impetus for integration in Europe was provided by the Second World War, a cataclysm of which the Asian crisis is the palest imitation. None the less, south-east Asian economic imperatives are at least as strong as Europe’s were. ASEAN boasts a population of 560 million, compared with a little over 300 million in the current 27-member European Union. It competes for capital and attention with both China and India, where Europe has to reckon only with the United States. In doing so, ASEAN faces a simple challenge: to match the reality of low-cost export processing with the promise of a large domestic market. This should not be so hard, given that average per capita incomes are well ahead of those of China and India. But, in ten small pieces, the ASEAN sales pitch will never work; the region is presently a retirement home for also-ran middle managers from multinational companies. Without a common market, it can never be front-page global news.
It is impossible to know how long south-east Asia can defy the gravity of economic logic. In the post-crisis era, Malaysia, an extraordinarily well-endowed small country of 27 million people, was instrumental in blocking free trade arrangements in a region with twenty times its population; the drivers were a desire to protect a tiny, inefficient automotive industry and vested interests in palm oil. Around the region, the cost of such deference to minority interests can be seen in the fact that, post-crisis, most reckonings suggest that genuine intra-regional trade has fallen. Nominal exports power ahead but, once the evolving parts and components business passing through China is stripped out, it is clear that south-east Asia is as much a slave to Europe and America as ever. It is not expanding intra-regional trade – currently around 20 per cent versus well over 50 per cent in the European Union – because ASEAN will not reform. If political application does not change this, external circumstance eventually will. In a decade, south-east Asia’s post-war free ride from oil and gas and lumber reserves will start to exhaust. But change under these conditions, likely informed by popular political recrimination as the weakness of real, underlying economies is exposed, would be ugly.
And Finally, the Good News
If there is good news, post-financial crisis, in south-east Asia, it is this: that a traumatic experience has finally undermined the lie that the region’s economic story is a racial rather than a class one; or, put simply, that immigrants, rather than élites, are the problem. Attempts by ethnic Thai politicians in the summer of 1997 to pin the blame for the breaking crisis on ‘Chinese’ business interests elicited almost no public support. Subsequent popular opposition to the government of Thaksin Shinawatra, after 2001, made – remarkably – no reference to his Chinese ethnicity, or that of so many of his cabinet ministers. In Indonesia, it is widely believed – though not conclusively proven – that the military was behind many of the violent attacks on the Indonesian-Chinese community in the spring of 1998. But this probable attempt to prime racial tensions failed to produce the kind of murderous popular explosions that the country witnessed in the 1960s and 1970s. On the contrary, post-Suharto governments lifted bans on the use of Chinese-language signs and the public celebration of Chinese New Year with barely a murmur of dissent. The notion that responsibility for the crisis could be laid at the door of persons of Chinese ancestry simply did not wash.
If anything, Chinese-ness is rather trendy in south-east Asia these days, sometimes bizarrely so. The theatres of Bangkok’s original Chinatown are thriving, even though most of the players are now Laotian, the Chinese having moved on to better-paid work. Under Thaksin, most Thai Rak Thai election candidates made a point of putting their name in Chinese characters on their election posters. All this owes a lot to China’s economic rise, and to a desire to be seen to be in tune with what is presently perceived as ‘the future’, but it also reflects a waning of the capacity of indigenous élites to divide and rule their subjects. Time – since the end of large-scale immigration before the Second World War – has been both a healer and an educator. In the Philippines, race is a non-issue. Hong Kong has become a far more culturally relaxed, mature and integrated society since the end of colonialism in 1997. The exceptions are Chinese-majority Singapore, where Harry Lee Kuan Yew will likely take his dreary eugenic theories to the grave, and Malaysia, where the still relatively even demographic balance between ethnic Chinese and bumiputras allows the indigenous (if this term is still meaningful) political élite to plunder the country in the name of positive discrimination. None the less, around the region, the race relations story is a very positive one.
It is not the remit of this book to discuss China’s development, but there are profound lessons for the Asian giant – the source of so much of the southeast Asian immigrant population – in recent experience. Moreover, anything that concerns China will have certain implications for the rest of the region. Today, China is caught up, as it grows at annual rates that were familiar not long ago to south-east Asian countries, in its own fascination with cultural theories of development. It would do well to avoid them. Many senior Chinese government leaders, and a good many outside observers, have decided the country enjoys some cultural right to progress. The oft-stated analogue is Japan, another large, populous and culturally closely defined nation. Since Japan derived much early moral instruction from China, how could the latter not be better? This argument falls apart when one returns to the earlier discussion of contemporary political and economic systems. Set against the three things that define Japan and north-east Asia – land reform, the development of branded businesses that originate their own technology and compete globally, and an ability to adjust political structures – China actually looks, on balance, uncomfortably south-east Asian. Land reform did take place after 1979, allowing rural households to farm family plots as state tenants; but ownership of land has never been transferred, meaning that peasants cannot sell, lease or mortgage their fields; these things are the essence of real land reform. On the growth of global, technology-capable companies, the jury is out. China is a continent-size country, with a large domestic market that guarantees local manufacturers economies of scale unlike those in south-east Asia. Yet 60 per cent – and rising – of the country’s exports are being made by foreign companies, mostly on the export processing model familiar to Thais or Malaysians. The number of Chinese businesses able to compete on brand and product development, rather than as suppliers to multinationals, is tiny. On the willingness to engage political development and institutional pluralism – a market in politicians, free press, independent judiciary, and so on – China is behind south-east Asia. The risk of a south-east Asian debacle could, on the above metrics, be greater than that of a north-east Asian ride to prosperity and freedom. But things may change.
In the meantime, south-east Asia, like Latin America, provides an object lesson in how to do development the hard way. The road to a couple of decades of brisk economic growth, in a globalised world, is not so very hard to find. But the challenges of constraining political and economic élites that are embedded by class and history is very much greater. And herein lies perhaps the biggest challenge of sustainable development. It is truly remarkable that, as noted, Japan should have tackled effectively political and institutional as well as economic tasks more than a century ago – and without much fuss until the rise of Japanese quasi-fascism in the 1930s. The origins of that latent cancer are complex and contentious, but there is no doubt it has obscured the brilliance of the original Japanese modernisation programme. Subsequently, the world has found it surprisingly hard to improve on the performance. For all our modern, global institutions – an International Monetary Fund, a World Bank, global think tanks and business schools – we struggle as much as ever to understand how to make poor countries rich.
And It’s Good Night to Them
The reader will have noticed that the godfathers have been almost entirely absent from this final chapter. That is an inevitable consequence of the structural sleight behind this book – using these colourful, obscenely rich and interesting people to tell a bigger story about history, economics and development. The godfathers are merely the products of south-east Asia’s political environment and, ultimately, it is the environment itself that is the region’s big problem.
None the less, we ought to bid farewell to the tycoons. Whether you live in south-east Asia, or merely visit, spare a thought for these, and other, enchanting plutocrats: Li Ka-shing and Lee Shau-kee, out for an early morning round à deux at the Hong Kong Golf Club next to Deep Water Bay; is it too early for a small wager? Stanley Ho, adjusting his tuxedo button-hole, as half a dozen bodyguards look on while he prepares to open another casino. Madame Kwok inspecting Hong Kong’s tallest high-rise, the International Financial Centre, with her three middle-aged sons – Walter, Raymond and Thomas – in obedient tow. (Their wives are busy ordering another 5,000 bathrooms for a new estate on Kowloon side.) On the waterfront, a rather moody Simon Keswick attends a board meeting at the Tower of a Thousand Arseholes; damn those blood-sucking shareholders! The more relaxed Sir Adrian Swire and Sir William Purves, meanwhile, semi-retired to London, recline on corporate sofas in different parts of town and reflect on hospitality arrangements for Cheltenham and Ascot; (how the Asians do love horses). In Singapore, Ng Teng Fong picks up the phone and orders young Robert to take the afternoon flight from Hong Kong for a dinner with Harry Lee Kuan Yew. Up the road in Kuala Lumpur, Ananda Krishnan strolls across the city’s golden triangle with the ever-loquacious Dr Mahathir at his side; Quek Leng Chan might be watching them from his penthouse office suite, grinning as he puffs on a big cigar. In Bangkok, Dhanin Chearavanont is not at home; he has gone to Shanghai to check on his racing pigeons and all those Lotus supermarkets. In Jakarta, Anthony Salim is in a bit of bait – no one quite takes him seriously any longer and Budi Bloody Hartono has bought his bank; still, there are always China projects. In Manila, Lucio Tan picks up a paper at the golf club and reads of politicians threatening another tax evasion case against him; will these silly people never learn?
It is all go in godfather land. Whatever one’s opinion of them, the tycoons have led lives less ordinary – adjusting to colonialism, wars, independence and now, as several of them point out, the internet. It is not easy, which is part of the reason why immigrant, outsider families – with their hunger for success and recognition – are such a big part of the south-east Asian story. It is, however, a great shame that callow notions of racial and class superiority have been superimposed on this wonderful tale of human flexibility and enterprise. Some godfathers, and most of the region’s key post-war political leaders, really do believe that they are superior by dint of birth and education. None the less, as was stated in the introduction to this book, there are also godfathers who know perfectly well where the economic wind blows from in south-east Asia. They recognise that post-war progress has been a collective endeavour of immigrants and indigenes, with fault and value on both sides. They also know that the immigrant contribution would amount to very little without the unsung efforts of ethnic Chinese, Indian, Sri Lankan and other shopkeepers, petty professionals and small-time manufacturers whose energy – added to that of local populations – is the real source of the economic power of the region. One of the very wealthiest godfathers, reaching for a parable to capture regional reality in a few sentences, offers a final anecdote:
In more youthful days, the tycoon in question had as a favourite recreation long fishing trips in the South China Sea. He and family and senior managers in his businesses would go off for days at a time. On these voyages, the putative godfather was much taken with a man who had a tiny shop on the beach of an island where he and his crew would stop for provisions. This person, an ethnic Chinese, worked all hours of the day and was regularly woken in the middle of the night by local fishermen wanting diesel and other necessities before they set out for the fishing grounds at dawn. Often the fishermen were without money and demanded credit, which was invariably given. The storekeeper was an individual of unrelenting personal generosity. He married a single mother (hardly the done thing), a Hainanese woman, and took on responsibility both for her and for the daughter she already had. Over the years, the godfather and this man became good friends. The only difference between them, the tycoon observes, was that he was already rich by birth and superbly educated and went on to be a multi-billionaire, while the storekeeper never made any money from his ceaseless endeavour and dropped dead at a young age. ‘And that,’ concludes the godfather matter-of-factly, ‘is the real story of south-east Asia’. At this point he assumes the look of a man enjoying fond memories and proffers your correspondent a glass of very fine French wine.